The Bottomless Economic Pit

This is a rush transcript from "On the Record ," March 2, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: And tonight: It is getting worse. Today, the Dow plummeted below 7,000, the stock market diving to a 12-year low. Even Warren Buffett says our economy is in shambles. How and when is this going to stop? Steve Moore, senior economics writer for The Wall Street Journal and the co-author of "The End of Prosperity" joins us. Boy, that was a introduction, wasn't it? Don't you feel much better?


VAN SUSTEREN: Do you feel much better?

STEPHEN MOORE, WALL ST. JOURNAL, "THE END OF PROSPERITY" CO-AUTHOR: We were talking, you know, before the show. I mean, we both feel like we're going to be 75 years old before we can retire. Everyone's lost so much of their retirement income in their 401(k)s and IRAs. It's just -- I never thought I would see the day we would be back below 7,000.

VAN SUSTEREN: Why, though? I mean, like, is there no point of recovery? I mean, there -- is it that the stimulus money hasn't filtered into the system, or I mean, like -- I mean, every day we think we've bottomed out, but we haven't.

MOORE: Yes. I think two problems. One is after everything the government has done over the last six months, we still have a credit crisis. Businesses can't get loans from banks. I talked to manufacturers and owners of stores, and they say, Look, we're just not selling anything. I mean, it's almost like the economy has really just ground to a halt, and it's been that way now for six months.

And the truth is, Greta, if you look at the situation, we've passed stimulus bills. We have passed these debt bills. We have passed bank bailout bills, auto bailout bills. Nothing the government has done has seemed to have worked.

VAN SUSTEREN: All right, some companies seem to be hit worse than others. In fact, you prepared a chart. You've actually looked at -- what companies have been -- have taken a faster downturn?

MOORE: That's right because I was looking at some of the industries that Barack Obama took a shot at back when he came out with his budget and in his...

VAN SUSTEREN: Took an unfavorable shot at.

MOORE: ... state of the union. Exactly.

VAN SUSTEREN: Not trying to (INAUDIBLE) but one that he's criticized.

MOORE: Right, the ones, for example -- let's take pharmaceuticals. Pharmaceutical stocks have fallen, you know, by about 15 percent in the last week because those would be victims of some of the controls that he wants to put on them. Another example is the manufacturing firms. They've done very poorly in the last week. They fell by more than the S&P 500, and that, in my opinion, is partly because of this global warming cap and trade system that he wants to put out.

Watch Greta's interview

VAN SUSTEREN: How about health care?

MOORE: Health care stocks did really poorly, down I think 15 or 20 percent. And so you're talking about -- it's not just random. I think that if you want to do well, if you want the economy to do well and you want stocks to do well, you don't go out and attack the industries that are the core functions of people's retirement funds.

VAN SUSTEREN: Is he doom and gloom? Because, I mean, at the top of the show, I couldn't been more doom and gloom than anybody, saying it's gotten worse and we're down below 7,000, and then we dropped all these points. But is -- the market is so vulnerable to a sense of optimism. Is he doom and gloom on this?

MOORE: Well, you know, he -- a couple weeks ago, when he was trying to pass the stimulus plan, he was all doom and gloom -- It's going to be the end of the world if we don't pass this stimulus plan! Last week, when he gave his talk, he was much more upbeat. I think it's important for presidents to be upbeat because this is partly, Greta, a confidence game.


MOORE: You know, America...

VAN SUSTEREN: Can't lie to the American people, but...


MOORE: I mean, if the commander -- if the guy in the Oval Office is - - and by the way, I would fault George Bush for this. Remember, Greta, when he was selling his bank bail-out bill, he went on national TV and said it's going to be a catastrophe if we don't pass this.


MOORE: We need a little bit of optimism from the White House! But you know, I have to say, it's also irresponsible at this time, when we're in a market crash situation, to be talking about things like raising the capital gains tax, raising dividend tax. We should not be raising taxes at this time, and it's only giving people more of a frightful feeling about where the economy is at.

VAN SUSTEREN: Is tomorrow going to be worse?




VAN SUSTEREN: Is it really going to go down tomorrow? I mean, like, we keep thinking that it can't go down any more...

MOORE: Right.

VAN SUSTEREN: ... But do you expect it to go down tomorrow?

MOORE: Gosh, I mean, who knows? But the fact is, you know, we have seen a 22 percent decline percent in stocks this year. This has been the worst -- remember when Barack Obama said, We don't want a lost decade? Unfortunately, we've had a lost decade. Stocks are today where they were back in 1997. That means for 11 -- 11 years now -- we've lost all the gains for 11 years in the U.S. economy and stock market.

VAN SUSTEREN: All right, we've only got 20 seconds left. At what point should we expect to have good news, all these stimulus, all this -- if it's going to work, when...

MOORE: Well...


VAN SUSTEREN: I know, but let's say it's -- if it's going to work, when?

MOORE: If it works, it's going to start to work in the next couple of months. Those dollars are already getting -- getting spent out there, so...

VAN SUSTEREN: Next month.

MOORE: ... let's keep our fingers crossed.

VAN SUSTEREN: All right, let's hope that you're -- you're wrong, right?

MOORE: Yes. I hope I am.

VAN SUSTEREN: All right. Steve, thank you.

MOORE: Thanks, Greta.

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