This is a rush transcript from "Hannity," January 7, 2011. This copy may not be in its final form and may be updated.
SEAN HANNITY, HOST: America is still years away from a normal economy, that's according to the Federal Reserve chairman and speaking today about the jobs performance, Ben Bernanke testified before the Senate Budget Committee providing a new projected timeline for so-called economic recovery.
(BEGIN VIDEO CLIP)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The projection submitted by the Federal Open Market Committee or FOMC showed that notwithstanding forecasts of increased growth in 2011 and 2012, most participants expected the unemployment rate to be close to eight percent, two years from now. At this rate of improvement, it could take four to five more years for the job market to normalize fully.
(END VIDEO CLIP)
HANNITY: And that's bad news, not only for our ailing economy but also for President Obama's reelection campaign come 2012. Now, Bernanke fought to defend his controversial plan to buy up to $600 billion of treasuries and tried to explain the concept of quote, "quantitative easing to the committee." But ranking member, Alabama Senator Jeff Sessions, he remains skeptical.
(BEGIN VIDEO CLIP)
SEN. JEFF SESSIONS, R-ALA.: Is quantitative easing, parts of Treasury bills, is that what you meant when you said printing money?
BERNANKE: I think there are some folks out there who think that we are literally printing money and putting it in circulation, that is absolutely not happening.
SESSIONS: But it does have a tendency, does it not, to increase the circulation of dollars, which like more apples in the marketplace makes the apple less valuable?
(END VIDEO CLIP)
HANNITY: And here to explain what all this really means, we go to our economic expert, columnist, author of the brand new book, "Basic Economics," the one and only Thomas Sowell. Mr. Sowell, professor, welcome back, thanks for being with us.
THOMAS SOWELL, AUTHOR, "BASIC ECONOMICS": Thank you for having me.
HANNITY: You know, when Bernanke says that it is going to take four for five years to normalize the job market, well that, by my Math, Dr. Sowell, adds up to a lost decade.
SOWELL: It does and it never took that long for any previous recession to recover prior to the federal government starting to intervene in the 1930s. You know, for over 100 years, the Federal government never intervened when there was a recession. That was not considered to be their job. None of those recessions or depressions ever lasted as long as the ones we've had since the federal government started intervening. Now, the role of the Federal Reserve especially is bad. I mean, it was set up for the purpose of having fewer bank failures and having fewer contractions of the money supply. But after it was set up, we had biggest bank failures and the biggest contraction of money supply in history. So, if you go by the facts instead of the rhetoric, the track record of government intervention just does not stand up.
HANNITY: I don't think government officials understand the economy as you do. And the title, you know, of your book is "Basic Economics." So, I have a simple question, how bad is the economy right now in your estimation?
SOWELL: The economy is bad. But the question is, really, how can it recover? And I think the Federal government is trying to make the economy recover instead of letting the economy recover. And once you go down that road, you can't back out, you can never stop interfering because in order to let the economy recover on its own, because you have already committed yourself to this. If you would stop doing anything and the economy recovered in six months as it might well do, you would be totally discredited.
HANNITY: You know, it's interesting you say, make versus let. Because it seems like America is making the very same mistakes that Japan made as they experienced their lost decade and they never fully recovered. And now that China's economy has surpassed Japans' economy in terms of its position in the world. I mean, would you forecast -- go ahead.
SOWELL: What is so ironic is that the communists are easing up and freeing up more elements of their economy, while we are clamping down and moving in the direction of more government control of ours. I mean, no one would have predicted this 20-years-ago.
HANNITY: Well, you talk a little bit about this in the book. As I was reading at earlier today. Let me ask you about the job numbers today. Because the administration and Democrats are touting this as a major, you know, recovery or evidence of a recovery. Here's what we discovered today. The number of unemployed, nonfarm payroll employment increased by 103,000, lower than expected. Here's what stuck out in my mind. The number of unemployed, fell by five times the number of jobs added. So, in other words 550 -- 556,000, these are people we no longer count any longer versus the 103,000 jobs they are talking about.
SOWELL: Absolutely. It is completely misleading because of the way unemployment is defined. If you get half a million more people to give up looking for a job, the unemployment rate would go down. But I don't think we regard that as something that we want to happen.
HANNITY: There are a lot of people, I often read your columns, I'm reading your book right now. And there are people that I talk to, that I really respect a lot that think that the idea for the economy to come back is difficult for a lot of different reasons. Some of the reasons they're telling me is because, how high unemployment is, very similar to the Bernanke's comments, you know, that we still have a housing bubble, that we are sitting on, that is about to hit perhaps in a year or two, three years. Gasoline, our dependence on oil and other factors, inflationary fears. If you look into your Thomas Sowell's crystal ball, you know, what would you tell your friends about what the future is going to be like?
SOWELL: Well, I stay away from crystal balls. I don't make any predictions that are shorter than 50 years from now. And I've just turned 80 so I'm in the clear. It is hard to predict, partly because you never know what the politicians are going to do. And I think that very fact itself will make recovery difficult. Think of an investor. The investor has an investment that is going to payoff in three years he doesn't know what the tax rate is going to be in three years. This notion of extending the tax system for two more years that's wonderful for all the investments that are going to come to fruition within two years. I'm not sure how many investments there are like that.
HANNITY: How old did say you are?
HANNITY: No! That is impossible. You don't look a day over 40!
SOWELL: My goodness, bless your heart. Have your glasses checked.
HANNITY: All right. Well, anyway, Dr. Sowell love the new book, "Basic Economics." As always we really appreciate your insight and your wisdom. Thanks for being with us.
SOWELL: Thank you.
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