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.
LAURA D’ANDREA TYSON, PH.D., FORMER CLINTON ECONOMIC ADVISER: Nice to be with you, Neil.
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.
NICHOLAS BRADY, FORMER TREASURY SECRETARY: Thanks, Neil.
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.
I think the thing that amazes me is the mournful tone of the Democrats about what’s obviously working. I mean they’re sorry things are turning around so positively.
CAVUTO: Well, they do pounce on the one area where we’re still weak. We haven’t seen enough jobs growth. We saw the Tyco layoffs announced today. We’ve seen Sony indicate that it’s going to, you know, get rid of 20,000 people worldwide.
So they’re pouncing on that and saying it is a jobless recovery and what jobs we are gaining -- we don’t know what’s going to happen Friday, and the...
BRADY: Let’s start from the decline in manufacturing production and employment started in 1999 under the Democrats. So I think the president’s been very generous in not calling that to everybody’s attention. That’s the truth.
Secondly, when you have a 7-percent increase in GDP, you won’t find an economist anywhere in the United States who isn’t going to predict job growth in the fourth quarter of this next...
CAVUTO: You don’t buy, as Dr. Tyson was saying before, Nick, that it’s possible that with these productivity gains and jobs that have gone offshore that a lot of these people won’t be rehired.
BRADY: Well, I don’t know about those particular jobs -- one job or another job. But I think what’s going to happen is you’re going to get jobs growth in the fourth quarter, and you’re going to get it next year.
You can’t have this kind of an expansion without it. I’m sorry it doesn’t please the Democrats, but that’s what’s going to happen.
Let me just put one pitch in. When you have a Republican president, a Republican House, a Republican Senate, and you get things moving in one direction, that builds progress. That’s what we’ve got. It’s too bad the Democrats don’t like it, but it’s going to be good for the American people.
CAVUTO: Yes, but you’re a pretty savvy political pro in your own right, and here’s what I asked you during the break, and that is the economy, which is thought to be the divisive issue for the White House, isn’t, and Iraq, which is thought to be its trump card, is. Are you worried about that?
BRADY: Well, I’m not worried about it because I think -- you know, what the president just said is that we’re at war, and I agree. We’re at war. So, when you’re at war, you’re going to have casualties, and he’s the sorriest person in the world that we’re having casualties. We all are, but if you believe we’re having a war, the casualties come with it.
So is it a trump card? I don’t think it’s a trump card necessarily, but it’s one of those periods of time in American history where you’ve got to believe the leader that this is what we’re going to do, how we’re going to do it, we’re not going to quit, and we’re going to get the job done. So we’ll see what the people think.
CAVUTO: All right. Nick Brady, always good seeing you. I like this goatee. It’s very regal. All right. Just wanted to let you know.
Nicholas Brady, the former Treasury secretary of these fine United States.
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