Transcript: Treasury Secretary John Snow

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

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NEIL CAVUTO, HOST: U.S. home sales stronger than thought last month. Orders for factory goods a lot stronger than thought last month. Twin economic news that has my next guest very happy this day.

With us now, I'm honored to say, the Treasury secretary of these United States, John Snow.

Mr. Secretary, good to have you.

JOHN SNOW, TREASURY SECRETARY: Neil, good to be back with you. That is good news.

CAVUTO: You're coming up to the roof of the building here.

SNOW: The best view in town...


CAVUTO: It is a great view. And your home is next-door there.

SNOW: I think so.

CAVUTO: Let me talk a little bit about the economic news today. It surprised people. On the strong side.

Nancy Pelosi was saying -- and she'll extend on these remarks tomorrow, Secretary -- that without jobs it means nothing. What do you say?

SNOW: Well, what I say is that you don't get jobs until you get the economy growing. When you get the sort of numbers on durables and new home starts that you are getting today, jobs are going to follow. This economy has really turned the corner, and jobs will follow.

CAVUTO: Do you worry that they haven't? I know we had 360,000 or so in the last five or six months. That is good. She and others argue arguing it is not good enough.

SNOW: Well, it's not good enough. I agree. We want to create more jobs. There is a little confusion on the jobs question, though, because of the difference between these two surveys.

CAVUTO: Right.

SNOW: The Household Survey shows over the course of the last two years some 2.4 million jobs created. The other survey, the Payroll Survey, the establishment survey, shows a loss of some 300,000 jobs. That is 2.7 million jobs. That is a gap that is hard to explain.

CAVUTO: We've used the same apples and apples, oranges and oranges argument before.

SNOW: Right.

CAVUTO: And the feeling seems to be that the Democrats are going to ram down this administration's throat you had the worst record since Herbert Hoover on this. How will you counter that?

SNOW: Well, we are going to get jobs. A good, strong growing economy creates jobs. This will create jobs. The survey of industry indicates they're beginning to hire again. The initial claims for unemployment were the lowest in a long period of time. The unemployment rate...

CAVUTO: Is there a fear, though, Secretary, that maybe the jobs with this outsourcing issue, with this productivity issue that makes the economy in this country the envy of the world, maybe we're doing so well that this is the best we can do.

SNOW: No, no, no. Look, I'm mighty optimistic about this economy. We haven't changed the basic laws of economics.

When businesses see their order books fill up, when the cash register is jingling, businesses want to expand. And they expand and they hire people. They are starting to see those order books fill up. They are starting to see the cash registers jingle.

And as that happens and continues to happen, they are going to expand their businesses. Because, by expanding, by hiring people, by growing, they create more profits for those businesses.

CAVUTO: But, still, the government is having a problem with money. As you indicated yesterday, Medicare could be running out of money sooner than expected. Social Security, something has to be done to fix that before it gets in deep doo-doo.

SNOW: Right.

CAVUTO: Are you concerned that the only way around this is to either dramatically cut government spending or start hiking people's taxes?

SNOW: Those really aren't the options.

CAVUTO: What are?

SNOW: We have better options than that. Well, on Social Security, we -- the president has put forward this idea of personal accounts, of injecting additional savings into the whole system, where people have their own accounts. And they take some part of that money that they would be paying into the Social Security system, earning a very low rate of return, put it into the equity markets, put it into capital markets, and earn a higher rate of return. That would help fill the gap.

CAVUTO: You are not dissuaded lately how the markets have done over the last...

SNOW: Over the long term, you know, as well as I, that the capital markets of this country return very, very good returns.

CAVUTO: Would you be forced, Secretary, raising the retirement age?

SNOW: Well, not for people near retirement.

CAVUTO: Let's say you are 30 years old.

SNOW: Well, I don't want to rule anything in or anything out in terms of the long-term solution. Presidents...

CAVUTO: I mean, that is an easy way -- well, let's say you make it 72, which isn't out of the question. A lot of people are living a lot longer. Why not for younger potential retirees?

SNOW: You saw where Chairman Greenspan put that on the table. I think what we need, rather than to press prescribe a solution, is to get a strong bipartisan consensus. This can't be done by the White House alone; it can't be done by Congress alone. And I worry about...

CAVUTO: But those aren't practical solutions that matter, are they not?


SNOW: But I worry about any particular proposal being politicized. What we need to do is look at the facts. The facts are, the system isn't sustainable. We have got the baby boom hitting us here in a few years, and that's going to mean that the denominator shrinks, the numerator grows.

CAVUTO: Fewer people paying in.

SNOW: Fewer people paying in.

CAVUTO: We've got to do something.

SNOW: People living longer. The math is inescapable. We have to do something.

The private accounts are a promising path. There may be others. What we need do is bring leaders in the Congress, the executive branch, public life, generally, the private sector to closure on this.

CAVUTO: All right. Mr. Secretary, always a pleasure. Thank you very much.

SNOW: Great to be with you.

CAVUTO: All the way up to the roof of the building.

SNOW: Delighted to be with you, as always.

CAVUTO: Wow. Quite an energetic guy. We're going to delay your retirement age. All right. Secretary John Snow.

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