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President-elect Bush Comments on Fed Interest Rate CutAired January 3, 2001 - 2:46 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU WATERS, CNN ANCHOR: We are now going to take you to Austin, Texas, where president-elect George W. Bush is speaking.
(JOINED IN PROGRESS)
GEORGE W. BUSH, PRESIDENT-ELECT OF THE UNITED STATES: I do want to announce that Larry Lindsey will be an assistant to the president for economic affairs. I look forward to Larry's advice and counsel. I'm so honored he's agreed to join the White House. He'll be a fine addition.
Secondly, I am pleased that the Fed has cut the interest rates. I think the cut was needed. It was a strong statement that measures must be taken to make sure our economy does not go into a tailspin.
One of the messages Mr. Greenspan sent was that we need bold action, not only at the Fed, but I would interpret that to mean bold action in the halls of Congress to make sure this economy stays vibrant. And to that end, I think it's really important for members of the Congress to understand that the tax relief plan I've put forth is an integral part of economic recovery.
I say recovery because a lot of folks in this room brought some pretty bad news: that their sales are slowing, that they're having to trim back their work force. It's going to be important for the president to work with the Congress to do what's right to make sure that our economy grows. And tax relief, meaningful, fair tax relief will be a stimulus.
We need to make sure our nation is a nation of free trade and less regulation. We've got to make sure that our society where lawsuits don't drive capital out of the private sector, capital so needed to make sure the people can find work.
And so, one of the common themes here in this meeting was, was that in order to make sure Americans can find work that we've got to be mindful of the warning signs.
And today, Alan Greenspan was mindful of the warning signs by taking a bold step. When I get sworn in as president, I intend to take another bold step and that is to ask the Congress to work with us to enact tax reform and tax reductions.
I'd like to ask Larry to say a few words and I'd like to ask Jack Welch of General Electric to say a few, as well.
LAWRENCE LINDSEY, ASSISTANT TO THE PRESIDENT-ELECT FOR ECONOMIC AFFAIRS: Thank you, Mr. President-elect. It's going to be an honor to work with you and it has been an honor to campaign with you. I think we have the right man to lead us the years ahead. So thank you for having me on your team. You've got some work to do, it sounds like from this morning.
JACK WELCH, CEO, GENERAL ELECTRIC: Well, we all appreciate the opportunity to come down here and have an open dialogue with the environment that we're facing.
WELCH: It really has been a significant slowdown in the fourth quarter. Some people say we didn't come back for it very well from the vacation. And it's been steadily declining.
And I think the move by -- as you pointed out, Mr. President -- Mr. Greenspan was welcomed by everybody here. And we are going to need the bold action that you're proposing to get this economy back on track.
BUSH: Yes, Tom, a couple of questions.
QUESTION: Mr. President-elect, first, did you get a heads-up on this rate cut from Mr. Greenspan?
BUSH: No, I did not.
QUESTION: And second, do you think that this will possibly make it harder for you to rally bipartisan support for your big tax cut?
BUSH: Not in the least, because I think that -- I think if you were to talk to the business leaders here, they'll tell you that a rate reduction of 0.5 percent is not enough to serve as a stimulus to encourage capital formation, economic growth, job creation; that it's going to require, not only monetary policy reform, but also, fiscal policy reform.
QUESTION: Mr. President-elect, will Mr. Lindsey be doing both jobs of the Council of Economic Advisors and the National Economic Council, or will you be appointing people to those position, too?
BUSH: We'll let you know.
Not to diminish Mr. Lindsey, no.
LINDSEY: Are you going to pay me double?
BUSH: As you can see that's the sticking point.
QUESTION: Mr. President-elect, good afternoon. When you talk about a bold first step when you talk to the members of Congress, in regard to your tax cut relief package, will you lay it out in the aggregate, in other words, the $1.3 trillion package as a single undertaking, or try to spread it out over a legislative year in order to do it incrementally?
BUSH: I think it's going to be important for us to cut the rates. And I think we are going to need to move quickly to do so. And I mean the rates on everybody who pays taxes.
I think one of the things you'll find when you talk to some of these business leaders is that there is deep concern about consumer debt; that folks are going to need to have more money in their pockets to not only live but to pay off their debts.
All rates -- it will help small businesses. There are a lot sole proprietors that create a lot of jobs that are going to need relief in this environment. And so it's important for the Congress to hear that this is a economic recovery plan.
QUESTION: To follow up, is it your preference to do it in as large a part as possible as soon as possible as opposed to spreading it out over time?
BUSH: You're talking about the tactics there in the halls of Congress, and my preference is that we get the job done. That's my preference. And whatever it takes to get the full job done is what I support.
Obviously, I'd like to see the rates cut. I'd like to see us get rid of the death tax, and I'd like to see us do something on the marriage penalty as well. But the main part of the discussion here has been about cutting the rates on people who pay taxes.
Because the folks in this room understand that when you couple that with interest rate reductions, the fiscal ramifications of a tax rate cut will help spur this economy. And there is a unanimity here that we need to help spur the economy, that the warning signs are real, that people's bottom lines are being affected which hurts the ability for our American citizenry to find work.
STAFF: Thank you.
BUSH: Too bad.
BUSH: Next time.
WATERS: We got that live signal out of Austin, Texas. We've had some interference on the satellite. But you heard Jack Welch, chairman of GE, talk about the declining movement for business profits in the fourth quarter.
One of the reasons the meeting was called in -- in Austin today, you heard the president-elect say that the interest rate cut that was advanced today by the Federal Reserve Board was not enough, although he did say that Alan Greenspan was mindful of the warning signs and took a bold step. And the president-elect said when he first takes the oath of office, he will take the next bold step, and that will be, as you heard him talking about when the satellite went down, cutting the income-tax rates. He says the tax cut will stimulate the economy in which now profits are down and the business environment is stagnating.
Part of this situation down there in Austin today was the naming of the top economic adviser to the new president. He's Larry Lindsey, chosen to become the chairman of the Council of Economic Advisers.
This man was on the Federal Reserve Board between 'the 91 and '97. He was a special assistant to the president during the former Bush administration, and he was a former Harvard economics professor.
Major Garrett has been covering the situation all day. Major, you're take on what you heard?
MAJOR GARRETT, CNN CORRESPONDENT: Well, a couple of quick things, Lou. First of all, Larry Lindsey, the president-elect named him to the chairman of the Council of Economic Advisers. That's a longstanding economic advisory post within the White House. Now, President Clinton created a second economic advisory post, the National Economic Council, one that was closer to the West Wing, closer to the president himself.
Now, the president-elect did not name anyone to that post, and when he was asked about it, he said, well, we'll let you know. This could be a signal that the president-elect is moving back to a more traditional relationship between the White House and his economic advisers.
Secondly, a crucial political statement that the president-elect made. He said he wants lower tax-rate cuts, meaning lower marginal rates. The highest marginal rate in the country right now is 39 percent. The president-elect during the campaign proposed a rate down to 33 percent, 6 percent lower for the highest rate in this country.
Now, it is a very controversial position on Capitol Hill. Most Democrats will tell you they will never support that. Even some Republicans are worried about that, primarily because they fear a reduction in marginal rates could return us to deficits, that it could shrink the amount of revenue the federal government collects.
Now, the president-elect has already said that he wants to lower marriage penalty taxes, the estate tax. Those have strong bipartisan majorities in Congress.
But by putting down the marker again today in the light of this Federal Reserve interest rate cut that he still wants lower marginal rates, the president-elect is making it abundantly clear to all who are noticing that he's going to push for the full $1.3 trillion tax cut and he's going to push for it this year -- Lou.
WATERS: And is it not true, Major, that the Bush people are using the slowing economic factors to promote their $1.3 billion tax plan? And does not the Fed move today take some of the political punch out of that?
GARRETT: Well, that was certainly the assessment of the Clinton administration. Many Clinton administration figures criticized the president-elect for talking down the economy. But as the president- elect just made very clear, he believes the fed Move is vindication, that they were right, that there is a contraction in the economy, particularly in the manufacturing sector. Higher energy prices present a real and present danger to economic growth, and that consumer confidence is sagging.
He said all of those things add for the need for a simulative package: one on the fiscal side, meaning tax cuts, one on the monetary side, meaning lower interest rates. The president-elect said you need to do both of these things, you need to do it now. And he also made an interesting pitch, Lou, to the Federal Reserve chairman, Alan Greenspan. One thing he could do, the president-elect said, to help the economy would be to get on board the president-elect's tax-cut proposal. Usually, you don't see presidents asking the Federal Reserve chairman so directly to lobby on their behalf -- Lou.
WATERS: Well, we've heard it now. Thank you, Major Garrett, down there in Austin, Texas.
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