This is a partial transcript from "Your World with Neil Cavuto," July 2, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: At issue is the economy and the latest jobs report (search) that was meager by almost anyone’s stretch of the imagination. Earlier I talked to the treasury secretary of the United States, John Snow, and I asked him if he is worried.


JOHN SNOW, TREASURY SECRETARY: The 112,000 additional jobs, according to the payroll survey, confirmed the fact we are in a good recovery. You know, 259,000 under the household survey (search). This economy is in a strong, robust, far-reaching and pervasive recovery that is touching all corners of America and creating jobs in virtually every single sector. No, we’re in a good recovery.

CAVUTO: But now the fact that it wasn’t as strong or as robust as some had predicted maybe in a way that helps you, right, sir, the Federal Reserve would be less inclined to aggressively hike rates? What do you think?

SNOW: Well, the Fed of course puts a lot of emphasis on labor markets and per-unit labor costs and the employment numbers. I’m not going to forecast what the Fed would do. But I will say that these numbers, taken in conjunction with everything else we see in the economy, is a reason for real confidence in the future.

CAVUTO: Do you think, secretary, it confirms the tax cuts worked? I mean, there has been some dispute as to whether they were skewed to the wealthy and all that, we can get into this class war all we want, but that the growth we have seen, the million-plus jobs growth this year seems to show a connection to the tax cuts or the low interest rates. What do you think?

SNOW: Well, absolutely. I think there is no doubt about the fact that the proximate cause, the direct cause for the strength we are seeing in the economy today is the president’s jobs and growth bill which, you know, took effect about a year ago. And since it has taken effect, we have seen the economy on a much, much better path, much stronger path, and we are seeing, you know, a million-and-a-half jobs created since that legislation took effect.

CAVUTO: As you know, sir, the president’s stewardship of the economy, the Democrats always say, is that we have had a net loss of jobs, the first since Herbert Hoover. do you think there is any likelihood before the November election that you would have made up the million-plus jobs he has yet to gain to show a net gain in jobs?

SNOW: Of course, what they are referring to is the payroll numbers. If you look at the household numbers, we are already way, way ahead. We are on a good path. I don’t want to predict the number of jobs. But, the private sector is talking about 200,000 to 300,000 jobs a month, 150 to 300, somewhere in there. Those are good job assumptions it seems to me. Remember, most of those jobs were lost in connection with 9/11, and the recession that the president inherited, about 2 million jobs that first year. And now we are on a really strong path, a broad-based recovery touching virtually every sector of the economy, and we are going see that continue, I’m confident of that.


CAVUTO: Treasury Secretary John Snow.

And now the other side of the coin. Joining me now is former labor secretary of these United States, Robert Reich, he’s author of a new book "Reason: Why Liberals Will Win the Battle for America."

Secretary always a pleasure, thank you for joining us.

ROBERT REICH, FMR. LABOR SECRETARY: Neil, good to see you.

CAVUTO: Let me ask you a little bit about what Secretary Snow was saying, that this growth will likely continue. Do you agree?

REICH: Well, growth certainly looks like it is going to continue, the question is not so much productivity growth, it is jobs growth. I expect jobs growth will continue, Neil, but a lot of people were very surprised, again, in a non-partisan way, most mainstream economists had assumed that we would see about 250,000 or at least 230,000 new jobs in June, and we are seeing a rate that is way, way below that. Very meager job growth.

CAVUTO: All right, still, as you know better than anyone, Secretary, these numbers can be fairly erratic and revised dramatically. Having said that, I kind of looked at trends here so my simple mind can understand it, and I see over 200,000 jobs a month being gained over the last seven or eight months. Do you see that trend continuing?

REICH: Well, let’s put it this way, Neil, if this were a standard recovery we would see many more jobs than that. We are, as John Kerry keeps saying, but a lot of mainstream economists also say, we are almost 2 million jobs below where we were in the year 2000. A lot of jobs to be made up. The disturbing thing is that the median wage really, adjusted for inflation, doesn’t seem to be going anywhere. It is not just the number of jobs we need to worry about, it is also the quality of those jobs. In fact, in the report we had this morning we saw that median weekly wages adjusted for inflation increased just a tiny fraction, 2 cents, and that is not enough to keep up with inflation. Now there is a silver lining here.

CAVUTO: Let me — pursue that point.

REICH: I was just about to give you a silver lining, Neil, I wanted to give you a silver lining.

CAVUTO: Silver away.

REICH: And that is the inflation hawks on the Fed are less likely, it seems to me, to have their way in terms of increasing short-term rates. And we are not going to see — I think it is less likely, now, again, you can’t take one month’s figures out of context, but we are less likely, somewhat, to see the 2 1/2 to 3 percent Federal Funds rate come December.

CAVUTO: OK. I just finished reading Bill Clinton’s book, Secretary. And in it, while he has high praise for you, he seems to imply that you were not in keeping with the more moderate Democratic approach, you were a traditional liberal, I’m kind of paraphrasing here, but especially in what the government could do for the disadvantaged. Was there a disconnect with you and that administration, that you were not — you felt that you were not heard?

REICH: Neil, I was a deficit dove. I wasn’t a deficit hawk, but everybody on that economic team was united in the notion that we had to bring down those huge deficits. We inherited $300 billion a year as far as the eye could see.

CAVUTO: So you guys are talking, there’s no bad blood between you at all, I was trying to read between the lines.

REICH: Heavens, no, no, no, I haven’t read the book because it is too heavy for me.

CAVUTO: It is very heavy, it’s very thick, too, there. But thank God for airport delays, Secretary, it gives me a lot of time to read. All right, Secretary Reich, always a pleasure, thank you very much.

REICH: Good to see you, bye-bye.

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