• This is a partial transcript from Your World with Neil Cavuto, November 4, 2003, that was edited for clarity.

    Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

    NEIL CAVUTO, HOST: November is picking up where October left off. Tyco International (TYCO) will be slashing 7,200 jobs from its workforce. This after consulting firm Challenger, Gray & Christmas announced job cuts (search) that arose 125 percent just last month. So what if we do not see that pickup in job activity? What happens then?

    With us from Washington is Dr. Laura Tyson, former Clinton economic adviser.

    Laura, good to have you.


    CAVUTO: This so-called jobs recovery -- we’re not seeing it in any pronounced way. What do you make of it right now?

    TYSON: Well, I think that we need to have several quarters of sustained, strong growth in final demand in order to generate enough certainty about the need for additional employment.

    A significant increase in productivity has occurred in the U.S. economy, and what that means is, in order to get job growth, you actually have to have very strong final demand growth.

    Now we just had one quarter of very strong final demand growth. You need several, and you need them at least at the rate of about 4 percent. So, whether the job numbers are significantly improved over the next several months really depends upon the speed of the economic recovery.

    CAVUTO: All right. So, if we have average 50,000 to 100,000 new jobs every month, is that enough?

    TYSON: Well, it certainly is not enough to bring the employment record of the Bush administration to a position where it will be easy for them as a campaign issue.

    They will be, I’m sure, by any reasonable estimate of likely job growth, down a million jobs or more. They will be significantly down going into the elections.

    CAVUTO: But I think most Americans, Laura, would give a wide latitude here, that something happened between the Clinton administration leaving and now, like, I don’t know, September 11.

    TYSON: I certainly think that might be true. I wouldn’t deny that.

    I think the major issue about employment really is the productivity and, therefore, the need for the economy to grow very fast and, also, the danger that the jobless nature of the recovery will lead us to take trade actions, which I think are inappropriate because I don’t, for example, believe and I don’t think the numbers support the view that it is unfair competition for the outsourcing of U.S. groups.

    It is really the cause of the jobless recovery. I think of this fundamentally. We’ve had a long period of relative stagnation and a very high level of productivity, so firms have been very, very careful about bringing on additional employment.

    CAVUTO: And so that isn’t a Republican or a Democratic issue. That’s just a welcome-to-the-new-world issue.

    TYSON: It’s not a Democratic or a Republican issue. What I would say is I personally think more could have been done to stimulate the economy. One can debate how the Bush administration went about trying to deal with the economic stagnation, and I think they chose the wrong policy, but that’s a different issue.

    CAVUTO: Oh, I don’t know. I don’t know. A 7.2-percent growth in the latest quarter. If that ain’t stimulus...

    TYSON: But, Neil, as you know, if you give the economy a big boost in government spending and a significant tax cut, you’re going to add a lot of demand to the economy.

    CAVUTO: Would you say the tax cuts worked?

    TYSON: I think the tax cuts worked, but I think that another set of tax cuts would have worked equally well and would not have had the long- term deficit effects that these tax cuts are threatening the economy with.

    So, yes, tax cuts were called for because the economy was slow. So I have no problem with that. I’ve always been a Keynesian at heart, and I’ve always said that. These were the wrong tax cuts.

    For example, unemployment, just one way to think about this. A very big reason why employment numbers have stayed soft in the United States is the weakness of the 50 states’ budgetary position.

    Now a way that the Bush administration could have a bit more effectively generated job growth in the United States was to give significant temporary support to states around the nation, instead of a dividend tax cut.

    CAVUTO: Well, we don’t know. We don’t know, right?

    TYSON: Well, I think we do know.

    CAVUTO: It’s guesswork. It’s guesswork.

    TYSON: I think we do know, in fact, the multiplier effect for state tax relief or state spending relief is much greater than a dividend tax cut.

    CAVUTO: Well, Doctor, it’s like economists arguing points. We’ll get nowhere on this one. But thank you very much.

    Dr. Laura D’Andrea Tyson, former presidential economic adviser.

    TYSON: Nice to be with you. Thank you, Neil.

    CAVUTO: Now the other side from a pretty established, well-known Republican, the former Treasury secretary of the United States, Nick Brady.

    Nick, good to have you.


    CAVUTO: Tax cuts. Do they work?

    BRADY: I think they did. You know, when you have a 7.2-percent increase in the GDP this last quarter, it’s a combination of things, tax cuts, low interest rates, consumer spending. I don’t think there’s any argument from anybody...

    CAVUTO: I guess the argument, Nick, as you know, is that it doesn’t last long, that it’s sort of like a nicotine fit, and then, after that, what are you left with?

    BRADY: Well, we’ll see. I think you’re going to see a good, strong fourth quarter, and you know the economists I talk to think it’s going to go into the first and second quarters of next year.