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Special Report

All-Star Panel: Politics of US economic outlook

This is a rush transcript from "Special Report," July 3, 2012. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

STEPHEN MOORE, WALL STREET JOURNAL: This was really disappointing news for the economy, because the one area that has really been doing well over the last couple of years has really rebounded and hiring workers has been the manufacturing sector of the economy. Now we're seeing that area slow down. So you wonder where the growth is going to come from in the economy if even manufacturing has slowed down.

(END VIDEO CLIP)

JOHN ROBERTS, GUEST HOST: Stephen Moore of the Wall Street Journal talking about the contraction in American manufacturing, the first in three years.

We're back with our panel.

A.B., is this a result of what's going on in Europe? Have we here in the United States caught the contagion?

A.B. STODDARD, THEHILL.COM: This is what contagion looks like. Not only is the Eurozone in crisis and no one is confident it's going to be repaired soon enough to make a difference. But the Chinese economy is contracting. They are buying fewer of our goods. And because the dollar is weak against the euro our products are more expensive when they buy them.

We are not looking at estimates for good growth for a long time let alone before the next election. And if I could repeat myself we do have this fiscal clip coming at the end of the year that both parties and the president know is coming. It is freezing taxation rates or blowing them up so the companies don't know what their rates will be in '13. There's no reason for them to hire and we can't expect any improvement until that is resolved.

ROBERTS: Charles, you think this is as much about the president's policies as you do what is happening in Europe?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Of course. I mean the Europe thing is another one of his dodges. It was the tsunami, it was -- it was the bad weather, it was the supply lines in Japan, it was the Bush administration. It was -- now it's Europe and China. It's always something else. The thing is he gave us the largest stimulus in galactic history and it was supposed to actually start our own economy internally and create demand. That was all about it. I mean he said that's the Keynesian idea you create demand. It's all gone, and the money is gone, and we're growing in 1.7 percent.

(CROSSTALK)

ROBERTS: There's talk about --

KRAUTHAMMER: That's why.

ROBERTS: There's talk about QE3, another round of quantitative easing.

KRAUTHAMMER: It's not going to help Obama because it would kick in after the election.

ROBERTS: You know something that's coming right up. Some of us will be working tomorrow. And I thank you, gentlemen, for coming in. A.B. is going to barbecuing hamburgers. But big number coming out at the end of the week, and that is the June jobs number.

What does all that we see now, Stephen, portend for that figure?

STEVE HAYES, THE WEEKLY STANDARD: Well, this might be one of those rare occasions where the -- you know, when the job numbers are bad we keep hearing that this was an unexpectedly bad job number. I think people are expecting a really bad job number -- jobs number this time. I mean every indication -- we've gone -- we have gone from sort of a period of stasis, a period of treading water to a period of moving backwards to now, the potential that things really bottom out. And, you know, if that's the case it obviously has horrendous implications for the U.S. economy for the so-called recovery. But it also has significant political implications here potentially.

ROBERTS: There were some predictions, A.B., of less than one percent growth between now and the end of the year, which for the entire year based on the numbers we've seen so far, it's not far to go from there back in the recession again.

STODDARD: I think that given the picture we are going to be talking about teetering at the edge of a recession again and again. If you look at the numbers and the manufacturing outlook right now, it's really hard to see how this is fixed in the short-term.

ROBERTS: President has got a bus trip of two Midwestern states, Ohio and Pennsylvania, coming up, Charles. He's going to be touting his economic record. Is that a record to run on?

KRAUTHAMMER: Well, the theme, all he can salvage is to say we're growing, we're getting -- we're healing but slower than I would like. Well, the numbers at the end of the week on the unemployment in June are bad, and the way that the growth rate is 1.7 percent you can't decrease unemployment. It's too slow a growth rate. He is not going to have that narrative anymore. That we're getting, we're improving but too slowly. We'll be slipping backwards.

So I think it can be devastating. Look, this is the third summer of recovery in a row. That's not a summer of recovery. Three strikes and you're out.

ROBERTS: Right. Now talking about this idea of the record to run on, Mitt Romney looked like he had lost his signature issue three months ago when the economy looked like it was cooking along. Does he have his signature issue back again?

HAYES: You know, that's a very good question. And certainly the Romney camp thinks so because they're talking about virtually nothing else. I mean in light of the health care decision and the enthusiasm that that generated among conservatives, the $5 million roughly in 24 hours, team Romney seems to be pivoting back to the economy. They want to be talking about the economy. And I think in the anticipation of these jobs numbers.

The question I would ask, though is, is that big enough? Is that enough? I mean, yes, everybody tells pollsters that they want -- that the economy is number one. Unemployment is the number one issue. But it hasn't had the effect on the race that one might expect at this point.

I mean the Gallup Tracking poll yesterday was Obama 48, Romney, 43. After two horrible months for President Obama. So is the economy enough? Is it OK to run on the one issue? I think that's something that the Romney team is having to grapple with right now.

ROBERTS: All right. We'll see how they do.

Thanks so much for joining us. A.B., enjoy the holiday and we'll see you gentlemen again tomorrow.

That's it for the panel.

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