Treasury Secretary: Economy Is Strong

This is a partial transcript from "Your World with Neil Cavuto", February 24, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: The administration may have another big worry on its hands. A new report shows that consumers are not very confident about the economy. The number one concern is jobs. Well, you know, I spoke with U.S. Treasury Secretary John Snow and asked him if he is worried about jobs.


JOHN SNOW, TREASURY SECRETARY: No, we have got an economy that is really strong, and growing. And that is indicated in really virtually all the numbers you look at. That Consumer Confidence Index is one of many, many, many indices. That is one that, as you know, is a -- jumps around a lot.

CAVUTO: Yes. But, you know, as some were doing, at least on Wall Street, sir, as they were pouncing on that, is a sign that maybe the market had run ahead of itself, that they were pre-guessing a perfect economy and it might not be. What do you think?

SNOW: You can't take one index like that. At the same time, we had the chain store sales up over five percent. Real nice pickup.

The real thing to keep our eye on is GDP, is the economy growing and expanding? Is manufacturing coming back? Is housing staying strong? Is construction staying strong? Are exports growing? And on all those counts, we are looking awful good.

CAVUTO: The exports are growing, helped by a weaker dollar. So is it in our interests that we have this weaker dollar?

SNOW: Well, you are asking me to comment on something I don't comment on. And that is the...

CAVUTO: I thought by doing it in a backward way you would.

SNOW: And that's the relative value of various currencies. What I will assert, though, is if that, if we keep the American economy strong, productive -- we have the best workers in the world, we've got the best businesses in the word. We are five percent of the world's population, which means that 95 percent of the market is outside the United States. And we have the lowest tariff barriers in the world. We need lower the tariff barriers in the rest of the world so our agricultural sector, our service sector, our service sector, our manufacturing sector can market to the rest of the world.

CAVUTO: The fact that the president came out swinging last night, to respond to all these Democratic critics on everything from Iraq to the economy, Mr. Secretary, raises at least the question that you folks are worried that this president is in danger this November. Are you?

SNOW: You know, I'm not involved in the politics. I'm involved in economic policy. But on economic policy, let me say that our critics have all the wrong answers. Raising taxes, gosh, that would be a disaster. That would be devastating for the economy.

CAVUTO: Senator Kerry says he only wants to raise the taxes for the upper income folks.

SNOW: Right.

CAVUTO: Why do you argue that would be disastrous?

SNOW: Well, because those top categories of the income category include millions of small business owners, who are the engine of growth in this country. When you look at where the economy is really moving forward, it is small business. They create 75, 80 percent of all the jobs. It would be devastating to hit the job-creating sector with a big tax increase.

CAVUTO: I know you are the Treasury guy, but would you have preferred the president be facing Howard Dean than likely John Kerry?

SNOW: I -- listen, I'm going to let the Democrats sort out their own primaries. I'm -- we're going to point out the things that we think make sense. And we differ from -- we differ from any of those candidates on a number of fronts.

CAVUTO: Who came up with the 2.6 million-job figure, Secretary? I know you disavowed it, Commerce Secretary Evans disavowed it. But the president almost looked apologetic having to disavow it.

SNOW: Well, what is that? That is an assumption that comes out of a macro-economic model. It is actually...

CAVUTO: But did these numbers ever get run by you? I know it was the chairman of the Council on Economic Advisors who came up with that, but you are the big cheese, economically. Did someone run it by you?

SNOW: Well, let me tell you what I do focus on, what is on my mind. It's not assumptions and economic models. It is the realities we face. And the realities, I'll come back to that.

These realities are awful good. The president deserves an awful lot of credit for taking the steps. The tax reductions that he put into effect last year, have really made a phenomenal change in the course of this economy. Think where we were a year ago and think where we are today.

CAVUTO: So you argue the tax cuts did that.

SNOW: Absolutely.


SNOW: Absolutely. There can't be any other question about that.

CAVUTO: When your chairman of the Council of Economic Advisors had said that outsourcing of jobs is good for the U.S. economy, you know many economists agree with that, longer term.

SNOW: Right.

CAVUTO: What about you?

SNOW: Well, you are talking, of course, about Greg Mankiw, who is an extraordinarily able economist, one of the top economists in the country. And he has indicated he was misinterpreted. The statement he made lacked sufficient clarity.

Our focus is on as many jobs as possible. We worry about every single American who loses a job. And we want this economy to expand and to grow to create as many jobs as possible.

We have got the best workers in the world. We have the best, most competitive, innovative businesses in the world. And as I say, five percent of the population is in this country, 95 percent is offshore. We need to be able to market offshore.

So keeping trade barriers low, and continuing to keep the American economy expanding through engaging in trade. The worst thing we could do, Neil -- the worst thing we could do would be to pursue a policy of economic isolation.


CAVUTO: All right. That is where we're going to pick up with Treasury Secretary John Snow tomorrow in part two of my interview of how he feels about the Chinese and whether it's time to get like Tony Soprano with them is a point tomorrow.

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