Economy Humming, Time to Hire?

This is a partial transcript from Your World with Neil Cavuto, December 3, 2003, that was edited for clarity.

Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

NEIL CAVUTO, HOST: I’ll admit it. It is one of those vague, achingly gray numbers that people -- well, they usually ignore. It’s called worker productivity. In other words, how much stuff we’re all churning out for our pay.

It soared 9.4 percent in the latest period. Far stronger than first reported, far stronger than anyone thought. And it usually goes like this: bosses reluctant to hire more people, work the people they have to the bone, only then grudgingly hiring more workers.

Stocks jumping big-time for a while today, then finishing with moderate gains today on this sentiment: that the hiring time has come. Has it?

Linda Chavez says you bet it has. She’s president of the Center for Equal Opportunity and former labor secretary nominee for President Bush. But Michael Brown has his doubts. He’s chairman of the DNC Finance Committee.

Linda, to you first. What do you make of this big boom in productivity?

LINDA CHAVEZ, PRESIDENT, CENTER FOR EQUAL OPPORTUNITY: Well, I think it is absolutely great news. And of course if I were a Democrat, I’d be beginning a novina to St. Jude, the patron saint of hopeless causes, because of course the economy was supposed to be something that was going to be giving the Democrats there a way to defeat President Bush next year.

The fact is that higher productivity really means the country’s economy is in fact percolating along. And it won’t be long before we see more jobs. In fact, we have been seeing more jobs for the last three months, and the figures will be out on Friday for this November. And it looks like we’re going to see another fourth month of job gains.

CAVUTO: Michael Brown, what do you think of that?

MICHAEL BROWN, CHAIRMAN, DNC FINANCE COMMITTEE: Well, first, I need correct two things. Democrats are not sad that the economy is going well. We are obviously pleased. Everyone should be pleased.

And the second thing I want to correct is that Democrats are worried about how to beat President Bush. There are so many ways to beat the president. He has neglected the foreign policy peace, we all know about that.

CAVUTO: But Michael, is the economy...

BROWN: It clearly has no impact on...

(CROSSTALK)

CAVUTO: Less of an issue now?

BROWN: Well, no. It’s always going to be an issue. But remember, this economy had nowhere to go but up. So of course it’s looking like things are percolating, and that is wonderful. But until there are actual jobs -- and if there were some good job numbers, you’d better believe the administration would be talking about them. They can’t talk about them because there aren’t any.

CAVUTO: Well, Michael, to be fair, we’ve had three months of gains -- Michael, if you could just answer my question here.

BROWN: I’ve answered.

CAVUTO: If the gains are in the 150,000 to 300,000, that some estimate, could come out on Friday, would you change that tune?

BROWN: No, because the tune is going to be from CEOs around this country and small businesses to actually bring people back after they laid them off. That is the true test.

This economy, again, Neil, had nowhere to go but up. So of course things are looking wonderful and that is great. Everyone is please about that. But until there are more jobs produced, until this president shows that he can get people back to work, that is the true test of whether this economy has bounced back or not, not the other indicators.

CAVUTO: Linda, do you worry that the size of these job gains have been paltry of late? I guess you have to crawl before you walk and walk before you run. But the fact of the matter is, as Democrats have pointed out, as some economists have pointed out, these job gains have not been impressive thus far. How soon do they need to be?

CHAVEZ: Well, I think that we are going to see more impressive gains. I mean, 150,000 is not anything to sneeze at, particularly if you are one of those 150,000 that got rehired. And that’s what we’ve been seeing over the last few months.

BROWN: Of course not. But Linda, President Clinton made 22 million new jobs. You’re talking about 150,000. At some point, we need to try to say...

CHAVEZ: We have been through some rough times, Mike. As you know, we have been through some rough times. We had an attack on this country that had a devastating loss. And, by the way, the economy wasn’t doing so great in President Clinton’s last year.

But we do have now tax cuts that have stimulated the economy. And these productivity gains, as Neil suggested, are going to eventually, I think, lead employers to go out and hire new people. The fact is...

BROWN: But you’re hoping. There is no plan. You’re hoping. There’s no plan. This president has no plan.

CHAVEZ: Well, I don’t believe in centralized...

BROWN: You’re hoping that that occurs.

CHAVEZ: I don’t believe in centralized economy. I don’t think President Bush does either. This is an economic engine that is driven by entrepreneurs out there, by corporations and many more small businesses. That is where jobs come from, they don’t come from the government.

The government doesn’t create jobs. People create jobs.

BROWN: Don’t say anything about a government job. I mentioned the small businesses around the country. That is the true engine of American business. We all know that. But if there’s no plan, all you are going to do is hope. And you are talking about 150,000 new jobs. That’s not enough. We need more.

CHAVEZ: Well, the way you get small businesses to hire is you make them not have to pay as high taxes, you give them the chance to keep more of their money so they can invest that money in their companies and not give it to Uncle Sam.

BROWN: And the president did that with his tax cut. The president did that with his tax cut. Has it worked?

CHAVEZ: And we’d like more tax cuts.

CAVUTO: Linda, could I ask you this, if this productivity boom is such the company is saying, you know, we’re doing OK with the existing work that we have, productivity is going off the charts. Maybe we don’t need to hire new workers. We’re doing just fine.

CHAVEZ: Well, fist of all, the increases in productivity, that is one of things that has been the difference between us and much of the rest of the world is our higher productivity. We should not be trying to suggest that we want lower productivity rates. And, at some point, yes, employers will say we’re not just going to make our workers work harder. We’re going to have to compensate them more to do so, and we’re going to have to go out there and hire more people.

And you are seeing that. You’re seeing that in some of the numbers in terms of the orders for more durable goods. You’re seeing companies that are running down their inventories and now have to look to be able to replenish those inventories. That is going to lead to more jobs, and I think we’re going to see that in a big way, beginning the first quarter of 2004.

CAVUTO: And you don’t see that, Michael, right?

BROWN: Well, just in your caption, under when Linda was speaking, it talked about, are jobs coming? I mean, it’s a question, it’s hopeful. Obviously you want them, but tax cuts are certainly not the answer. It didn’t work with Reagan and David Stockman. And it hasn’t worked with this president either.

CAVUTO: So what was the improvement we’re seeing, Michael? The tax cuts had nothing do with it?

BROWN: Well, it depends. They like to blame the Clinton administration for the last year of his economy, that it wasn’t great. They can’t have it both ways. You can’t say the president -- things don’t run in circular fashion in the economy. Certainly there are going to be ups and downs. But this administration would like you to believe the reason that the economy is doing bad now is because of President Clinton’s administration over the last year. That’s their plan.

CHAVEZ: Twenty-two million jobs were created...

BROWN: This president doesn’t have a plan.

CAVUTO: All right.

BROWN: Twenty-two million jobs in eight years. In the Clinton years, yes.

CHAVEZ: No, I’m talking about the Reagan years, and tax cuts led to that.

BROWN: But we are not talking about the Reagan administration. We are talking about this Bush administration...

CAVUTO: This is the problem. Is it fair, without debating the job gains or whatever, that when you see the kind of gains we have seen from the American worker, that just as the American consumer is giving this economy a jolt again, it is just the average American worker who is finishing the job?

CHAVEZ: And finishing the job and buying more. And by the way, I think we’re going to see very good numbers come out in terms of the kind of sales this season. And I think that is going to mean that people have more money in their pocket, they’re going to spend more money, and then companies are going to be able to hire more people. And we’re going to see those in the first quarter of 2004.

BROWN: I agree with that.

CHAVEZ: We’re going to see that those numbers are jumping.

BROWN: I agree with that. The problem is this administration is hoping that happens. He does not have a plan to put that in motion.

CHAVEZ: Well, I don’t think the president is the one who is supposed to have that plan. I think that if you allow companies...

BROWN: Oh, he’s not?

CHAVEZ: No, I don’t. I don’t think the president controls the economy. We are not a socialist economy.

(CROSSTALK)

CAVUTO: All right, guys.

CHAVEZ: This is not a planned economy. This is a free market.

CAVUTO: We’ll leave it at that. You both expressed your opinions well.

You must stop. I beg you to stop. All right, fine.

All right. Thank you both very much, Michael and Linda.

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