Published January 13, 2015
Treasury Secretary Paul O'Neill doesn't see the U.S. economy falling back into a recession, despite stock market turbulence, Americans' eroding confidence and a fitful recovery.
In an interview with The Associated Press on Monday, O'Neill expressed confidence that current difficulties, including the roller-coaster stock market, would be overcome.
"The fundamentals of our economy, I continue to believe, are sound," O'Neill said. "As I travel around and talk to people in communities, I find people are more calm than one would assume."
His upbeat hat the administration is only interested in hearing from like-minded Republican business executives who support Bush's policies.
He also dismissed the notion that the timing of the forum had anything to do with Wednesday's deadline for top chief executives to certify with securities regulators that their financial statements are accurate.
"The absurdities that people will suggest about things like this are just mind boggling to me," said O'Neill, who contended that the more than 200 participants in the discussions were selected for their expertise on the economy.
After bolting out of the starting blocks at the beginning of the year, the economy lost considerable momentum in the spring, growing at a rate of just 1.1 percent in the second quarter. That's down from a brisk 5 percent pace in the first three months of the year.
Some private economists are predicting sluggish growth for the second half of this year, while others worry that the recent plunge in stock prices triggered by a wave of corporate accounting scandals might push the economy into a "double dip" recession.
"I don't see the basis for that in the data that we are looking at," O'Neill said. "No, at the moment, I don't see a double dip out there."
O'Neill credited the $1.35 trillion tax-cut package advocated by President Bush and passed by Congress last year, along with the Federal Reserve's 11 interest rate cuts, for pulling the economy out of a recession that began in March of 2001.
But O'Neill said more needs to be done to help the recovery.
He called on Congress to make last year's tax cuts permanent, to pass terrorism insurance and the president's energy program, and to increase protections for workers' pensions, an issue that gained national prominence after thousands of workers at Enron saw their retirement savings disappear with the energy giant's collapse.
With Wall Street suffering through the worst bear market since 1974, a downturn that has seen $7 trillion in wealth wiped out since the spring of 2000, Bush's economic team has come under heavy criticism for its inability to calm investors.
O'Neill, who has been singled out for much of that criticism, bristled at suggestions that his comments have at times sent the wrong message to financial markets.
He contended that President Franklin Roosevelt was highly praised for his communications skills, but was still unable to end the Great Depression of the 1930s with his words.
"Even the great communicator couldn't talk his way out of that economic circumstance," O'Neill said.
"Most of the people I know don't like it when the markets go down, and I can tell you I can relate to that," O'Neill said. "I don't like it either, when the markets go down. But it doesn't have anything to do with being secretary of the treasury."
But critics on Wall Street contend that O'Neill has failed to inspire confidence because he is not perceived as credible and on top of things.
And his unscripted utterances have occasionally rattled rather than soothed markets -- most recently when he sent the Brazilian currency plunging to a record low after making remarks that were interpreted as a refusal to extend further loans to Latin America's largest economy.
O'Neill insisted that the administration has been consistent in its views on when it is appropriate for the International Monetary Fund to offer support to countries in trouble. The IMF last week, with the administration's backing, extended Brazil a new $30 billion loan package.
After hosting a session on the recovery and job creation at Bush's economic forum Tuesday, O'Neill will travel to Portland, Ore., Seattle and Denver this week to talk to people about the economy, visiting a variety of factories and schools.
O'Neill said he had found nursery schools to be the most fun of all.
"It is one of the few places in the world where there is no guile and pretense," he said.