One on One with Brian Gardner, Washington Analyst with Keefe Bruyette & Woods
Monday, January 28, 2008
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SUSIE GHARIB: The state of the U.S. economy is expected to be the centerpiece of President Bush's state of the union address tonight. Joining us now with some analysis of what to expect from the president when he speaks to the nation, Brian Gardner, Washington analyst with Keefe Bruyette & Woods. Hi, Brian.
BRIAN GARDNER, WASHINGTON ANALYST, KEEFE BRUYETTE & WOODS: Good evening, Susie.
GHARIB: So what do you think is going to be the key economic message that President Bush wants to get across to the nation tonight?
GARDNER: I think he's going to start off by acknowledging there are some challenges. I don't think he wants to be seen as not understanding what is going on in the country. He's not going to be overly bullish on the economy. But he is going to look to the long-term. And I think he is going to talk about a sense of optimism and a good sense for the long-term future of the economy.
GHARIB: What more do you think he's going to say about his proposed fiscal stimulus plan?
GARDNER: I think there will be a lot of reiteration of what we heard the latter part of last week. He's going to stick pretty closely to the script of the plan that was agreed to by his administration and House Democratic and Republican leaders. That will be a package of some tax rebates, some housing proposals and on the business side, some accelerated depreciation and expensing for businesses.
GHARIB: Beyond the stimulus plan, do you think President Bush will make proposals for any other economic issues?
GARDNER: Yeah, I think he's going to go back to his core which is to extend his tax cuts, the ones that his administration passed back in 2001, 2003, most notably the tax cuts on the rates on capital gains, dividends and individual rates. It is very unclear at this point whether he can get those through this year. You know it doesn't look too good, but at the same time I'm a Giants fan. I never thought that the Giants would be playing in the Super Bowl this weekend. So take that for what it's worth.
GHARIB: You heard our report about home sales, do you think that -- and how the grim news about the whole housing sector -- do you think that President Bush will use the state of the union address to deal with any other proposals to prop up the housing sector?
GARDNER: Yeah, he's going to mention the housing GSEs, the government sponsored enterprises. We don't hear a lot about them in state of the unions. We don't hear them a lot out of the mouths of presidents in pronouncements in general, but he has been talking about them more since the summer. And you are going to hear about them tonight. They are Fannie Mae and Freddie Mac and he is going to be talking about raising the loan limits of the size of loans that they can buy and then securitize and sell in the secondary market.
GHARIB: What does Wall Street need to hear from President Bush this evening, especially in view of the market turmoil that we've seen recently and you know, all the concerns about the economy?
GARDNER: Yeah, you know, I don't think the market is really paying attention to this evening's speech as much just because of what was said last week. I think the fact that the stimulus package came out and the outlines were detailed last week, I think that was actually the more important of what is going to be said tonight. They will be looking for just a sense of reassuring some big themes. I think they want to see how much he'll push the extension of the tax cuts. But again I'm somewhat skeptical that you're going to see those by the end of this administration.
GHARIB: Brian, as you know the economy has been a dominant theme with the presidential candidates. Is there anything that you think that the Bush speech could influence, debate on the campaign trail?
GARDNER: Well, you know, it's interesting. Some things are starting to leak out from the White House about what he will say. And I saw some themes that were reminiscent of what Senator McCain mentioned in his victory speech in South Carolina and that is a role of limited government. And I think that was something that McCain was starting to tap into. And I thought it was very interesting. I think he wants to stay out of politics as much as possible. It will not help Republicans if he gets too involved. And Democrats will jump all over it and criticizing him in using it for his -- their campaigns.
GHARIB: Just to wrap it up, people are already starting to assess the legacy of George Bush. What do you think is his economic legacy?
GARDNER: I think overall it is pretty good, not great, but it has actually come full circle. When you consider that just before he was inaugurated, we had the Fed with an emergency cut right before inauguration day, 2001, we're back to another emergency cut. We went through some tough times, especially early in his administration. I think they did OK.
GHARIB: All right. We'll leave it there. Brian, thanks a lot for coming on the program.
GARDNER: Have a good night, Susie.
GHARIB: My guest tonight Brian Gardner, Washington analyst with Keefe Bruyette & Woods.
