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CNN Sunday Morning

Interview With Steve Forbes, Myron Kandel

Aired December 08, 2002 - 08:34   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CATHERINE CALLAWAY, CNN ANCHOR: Investors are holding their breath today, wondering how Wall Street will react this week to the president's firing of his economic team. Steve Forbes and Myron Kandel got together with our Peter Viles to discuss the president's house cleaning, and they examined the reasons for the shake-up and possible replacements.
(BEGIN VIDEOTAPE)

PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT: Joined by Steve Forbes, of "Forbes" magazine, and Mike Kandel of CNN. Tell us, what did Paul O'Neill do wrong? One of the smartest people in this administration. Certainly one of the richest. But he's out of a job. What was his mistake?

STEVE FORBES, EDITOR-IN-CHIEF, "FORBES" MAGAZINE: Well, one, he wasn't a team player, and, two, he was ineffective. He didn't put policy forth. He didn't know how to run it through the administration. He knew if you went to him, it stopped there, unlike some of his predecessors, where you knew if you got their ear, you'd get the president's ear.

VILES: Myron?

MYRON KANDEL, CNN FINANCIAL EDITOR: Well, I think Paul O'Neill is really a straight shooter and a very outspoken guy. And I don't think he was very much of a team player. He was not in agreement essentially with some of the Bush administration positions, and I think that -- and he wasn't able to really articulate a major economic program, but nobody else in the administration was either.

VILES: So we got a guy who wasn't a team player. Is that the problem, or is this an indication there's a problem with the economy that hasn't been solved? What does this tell us about the economy?

FORBES: Well, the economy is very slow. And I think the administration wanted to show politically that it was on top of the issue and they wanted to have a team in there that people would say was on a caliber of their military and diplomatic teams, which clearly this economic team was not. They did not come up with new tax proposals. They didn't do anything about the IMF. They took a pass on the scandals on Wall Street. Where was the leadership from the treasury on these issues?

KANDEL: Well, I agree with Steve on that up to a point. But don't forget, when this administration took office, the Dow was 18 percent higher than it is today. Unemployment rate was 4 percent, and we've discovered on Friday that it's now 6 percent. So I think this administration, being very politically sensitive and looking ahead for 2004, decided it better changed the team now and put some guys in office that can really do it.

FORBES: And I think you're going to see a much more muscular policy, including big tax cuts being proposed next month. And I have to chuckle that a year and a half ago, the administration was being criticized for having a tax cut, saying -- people said it was not needed. If anything, it was far, far too small. We were given a weak cup of tea when we needed a real bottle of bourbon.

VILES: Is there a plan here that just needs new leadership and a new team, or do we need a plan from this administration? Is there something out there?

FORBES: It's going to be a muscular plan. I think you're not only going to see the tax cuts being made effective immediately, and made permanent, but also new tax cuts on dividends, capital gains and the alternative minimum tax.

KANDEL: My pal Steve Forbes has never seen a tax cut he didn't like. But he's consistent. He's very consistent. When he ran for president, he felt the same way.

FORBES: If the medicine works, take it.

VILES: We do have a deficit, Steve.

KANDEL: I do want to point out that there really hasn't been a coherent economic program out of this administration, nor has there been one out of the Democrats in Congress. So I think both parties are at fault, and if we do get a muscular program, I'd like to see it. At least there could be something to work with.

FORBES: And I think, too, on the monetary front, one thing a treasury chief can do behind the scenes is urge the Federal Reserve it's not enough to cut the price of money, they got to make the money available. There's been a credit crunch for small and medium size businesses.

VILES: You said muscular twice. Myron, you said it once. Who's the muscular man to do this job -- or woman? I take it we're not going to hear about Arnold Schwarzenegger, but who do you like for this job? Let's name some names.

FORBES: I think there are some intriguing ones out there. Bill Archer, former head of the Ways & Means Committee. He was one member of Congress that not only knows taxes, but actually personally filled out his tax return each and every year. He knows it's a monstrosity. Wants to get rid of it. Same with Dick Armey. Phil Gramm would be a strong one.

VILES: Three Texans. Myron?

KANDEL: I don't think any of those three are really going to make...

FORBES: How about Evans? Another Texan.

KANDEL: Four Texans. OK. Well, I think Don Evans, secretary of commerce, very personally close to the president, has a good shot at it. I think the president wants loyalty. And he knows he'll get it from Don Evans. Somebody I would like to see considered is Marty Felstein (ph).

VILES: Served under President Reagan, sure.

KANDEL: And he may be too outspoken. Well, that cost him his job during the Reagan administration.

FORBES: Twenty years ago, during the early Reagan administration. That's right.

VILES: How about Rudy Giuliani? His name seems to come up for every big job. Homeland security, SEC, now this. Is he a candidate here? Is he a legitimate choice?

FORBES: Oh, I think he's got his eyes on a different post. And I don't think Mr. Bush is willing to give that up quite yet.

KANDEL: I think that's a joke, mentioning Rudy for the secretary of the treasury. As you know, Rudy's name comes up whenever there's any opening at all. So I think that's why we've heard it. I don't give it any substance at all.

VILES: Charles Schwab from Wall Street, what do you think of that name?

KANDEL: Well, Schwab is an interesting -- the president met him or really got to know him during the economic summit recently, and apparently liked a lot of the things he said. And Schwab has taken out a number of ads really attacking the Wall Street establishment. So he's a Wall Streeter, but anti-Wall Street, and that's...

(CROSSTALK)

FORBES: He's gotten the reputation of being in favor of the investor. He pioneered discount brokerage. And he has recognized that there's been a taint on research, which you can't say about him.

VILES: Well, here's where the ads where they had the guy in the boiler room saying, let's put some lipstick on this pig.

(CROSSTALK)

VILES: If you work on Wall Street and you want this job, is that a disadvantage right now?

FORBES: Two years ago it was seen as a supreme advantage. Now it is a huge disadvantage. You have to prove you weren't really part of Wall Street even if you were living there.

(END VIDEOTAPE)

CALLAWAY: And you can hear more from Steve Forbes today on "LATE EDITION." That's coming at noon Eastern time.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired December 8, 2002 - 08:34   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: Investors are holding their breath today, wondering how Wall Street will react this week to the president's firing of his economic team. Steve Forbes and Myron Kandel got together with our Peter Viles to discuss the president's house cleaning, and they examined the reasons for the shake-up and possible replacements.
(BEGIN VIDEOTAPE)

PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT: Joined by Steve Forbes, of "Forbes" magazine, and Mike Kandel of CNN. Tell us, what did Paul O'Neill do wrong? One of the smartest people in this administration. Certainly one of the richest. But he's out of a job. What was his mistake?

STEVE FORBES, EDITOR-IN-CHIEF, "FORBES" MAGAZINE: Well, one, he wasn't a team player, and, two, he was ineffective. He didn't put policy forth. He didn't know how to run it through the administration. He knew if you went to him, it stopped there, unlike some of his predecessors, where you knew if you got their ear, you'd get the president's ear.

VILES: Myron?

MYRON KANDEL, CNN FINANCIAL EDITOR: Well, I think Paul O'Neill is really a straight shooter and a very outspoken guy. And I don't think he was very much of a team player. He was not in agreement essentially with some of the Bush administration positions, and I think that -- and he wasn't able to really articulate a major economic program, but nobody else in the administration was either.

VILES: So we got a guy who wasn't a team player. Is that the problem, or is this an indication there's a problem with the economy that hasn't been solved? What does this tell us about the economy?

FORBES: Well, the economy is very slow. And I think the administration wanted to show politically that it was on top of the issue and they wanted to have a team in there that people would say was on a caliber of their military and diplomatic teams, which clearly this economic team was not. They did not come up with new tax proposals. They didn't do anything about the IMF. They took a pass on the scandals on Wall Street. Where was the leadership from the treasury on these issues?

KANDEL: Well, I agree with Steve on that up to a point. But don't forget, when this administration took office, the Dow was 18 percent higher than it is today. Unemployment rate was 4 percent, and we've discovered on Friday that it's now 6 percent. So I think this administration, being very politically sensitive and looking ahead for 2004, decided it better changed the team now and put some guys in office that can really do it.

FORBES: And I think you're going to see a much more muscular policy, including big tax cuts being proposed next month. And I have to chuckle that a year and a half ago, the administration was being criticized for having a tax cut, saying -- people said it was not needed. If anything, it was far, far too small. We were given a weak cup of tea when we needed a real bottle of bourbon.

VILES: Is there a plan here that just needs new leadership and a new team, or do we need a plan from this administration? Is there something out there?

FORBES: It's going to be a muscular plan. I think you're not only going to see the tax cuts being made effective immediately, and made permanent, but also new tax cuts on dividends, capital gains and the alternative minimum tax.

KANDEL: My pal Steve Forbes has never seen a tax cut he didn't like. But he's consistent. He's very consistent. When he ran for president, he felt the same way.

FORBES: If the medicine works, take it.

VILES: We do have a deficit, Steve.

KANDEL: I do want to point out that there really hasn't been a coherent economic program out of this administration, nor has there been one out of the Democrats in Congress. So I think both parties are at fault, and if we do get a muscular program, I'd like to see it. At least there could be something to work with.

FORBES: And I think, too, on the monetary front, one thing a treasury chief can do behind the scenes is urge the Federal Reserve it's not enough to cut the price of money, they got to make the money available. There's been a credit crunch for small and medium size businesses.

VILES: You said muscular twice. Myron, you said it once. Who's the muscular man to do this job -- or woman? I take it we're not going to hear about Arnold Schwarzenegger, but who do you like for this job? Let's name some names.

FORBES: I think there are some intriguing ones out there. Bill Archer, former head of the Ways & Means Committee. He was one member of Congress that not only knows taxes, but actually personally filled out his tax return each and every year. He knows it's a monstrosity. Wants to get rid of it. Same with Dick Armey. Phil Gramm would be a strong one.

VILES: Three Texans. Myron?

KANDEL: I don't think any of those three are really going to make...

FORBES: How about Evans? Another Texan.

KANDEL: Four Texans. OK. Well, I think Don Evans, secretary of commerce, very personally close to the president, has a good shot at it. I think the president wants loyalty. And he knows he'll get it from Don Evans. Somebody I would like to see considered is Marty Felstein (ph).

VILES: Served under President Reagan, sure.

KANDEL: And he may be too outspoken. Well, that cost him his job during the Reagan administration.

FORBES: Twenty years ago, during the early Reagan administration. That's right.

VILES: How about Rudy Giuliani? His name seems to come up for every big job. Homeland security, SEC, now this. Is he a candidate here? Is he a legitimate choice?

FORBES: Oh, I think he's got his eyes on a different post. And I don't think Mr. Bush is willing to give that up quite yet.

KANDEL: I think that's a joke, mentioning Rudy for the secretary of the treasury. As you know, Rudy's name comes up whenever there's any opening at all. So I think that's why we've heard it. I don't give it any substance at all.

VILES: Charles Schwab from Wall Street, what do you think of that name?

KANDEL: Well, Schwab is an interesting -- the president met him or really got to know him during the economic summit recently, and apparently liked a lot of the things he said. And Schwab has taken out a number of ads really attacking the Wall Street establishment. So he's a Wall Streeter, but anti-Wall Street, and that's...

(CROSSTALK)

FORBES: He's gotten the reputation of being in favor of the investor. He pioneered discount brokerage. And he has recognized that there's been a taint on research, which you can't say about him.

VILES: Well, here's where the ads where they had the guy in the boiler room saying, let's put some lipstick on this pig.

(CROSSTALK)

VILES: If you work on Wall Street and you want this job, is that a disadvantage right now?

FORBES: Two years ago it was seen as a supreme advantage. Now it is a huge disadvantage. You have to prove you weren't really part of Wall Street even if you were living there.

(END VIDEOTAPE)

CALLAWAY: And you can hear more from Steve Forbes today on "LATE EDITION." That's coming at noon Eastern time.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com