One On One With Allan Hubbard, White House Chief Economic Adviser
Thursday, September 01, 2005SUSIE GHARIB: As the White House mobilized to deal with the damage from Katrina, President Bush met with Federal Reserve Chairman Alan Greenspan today and then with his economic team. A short while ago, I talked with Allan Hubbard, the president`s national economic advisor and asked him what was discussed at the Greenspan meeting.
ALLAN HUBBARD, WHITE HOUSE CHIEF ECONOMIC ADVISOR: Obviously we talked about Katrina and we talked about the impact of Katrina especially on the individual people down there with the president so concerned about it. Then when we talked about the economic impact and basically talked about the economy in general.
GHARIB: Mr. Hubbard, did Alan Greenspan express any concern about the direction of the economy because of Katrina?
HUBBARD: Well, obviously you know, I don`t feel comfortable talking for Alan Greenspan, I think should you speak directly to him, but the chairman feels very good about this economy. We`re obviously all very concerned about the people in Louisiana and southern Mississippi and southern Alabama. Especially those who have lost loved ones, especially those who have lost their homes and temporarily lost their jobs and the president is doing everything he possibly can to assist them in using all the resources of the Federal government.
GHARIB: President Bush said today that he sees the disruption in the energy sector as temporary, so how long are Americans going to have to pay $3, $4 a gallon for gasoline? Is it two months? Is it six months? Is it a year?
HUBBARD: Obviously it`s impossible for me to tell you where gasoline prices are going to be. It all depends on the market. It all depends on supply. It all depends on demand. What`s most important is we deal with the short-term problems that we face. As you know we lost three major pipelines and I`m happy to report that all three are back up, one at 100 percent, one at 80 percent and one at 50 percent. And they`re soon to be all be up at 100 percent and that`s very, very important to achieving gasoline distribution throughout the country to avoid any disruptions and that`s going to happen very, very quickly.
GHARIB: How much of an economic hit will this be for the economy?
HUBBARD: Well, obviously in the short term it`s going to be a hit. New Orleans, southern Louisiana, southern Mississippi, southern Alabama are very important to our economy. So in the third quarter, it will reduce growth by not an insignificant amount, but the economy will continue to grow above 3 percent. And then the fourth quarter it could have some impact. But in the long run, it`s not going to have any impact. And in fact, as we rebuild those communities, it will have a positive impact on the economy. What`s most important is to rebuild those communities as quickly as possible so people can return to their homes, return to their jobs and return to their normal way of life.
GHARIB: President Bush this afternoon urged Americans not to buy gasoline if you don`t need it. Is the administration considering any kind of demand rationing if necessary?
HUBBARD: That is not necessary at all. But as the president said earlier today, there will be disruptions because we have nine refineries down and again we`re working very hard with the owners of those refineries to get those refineries back up. We had the three pipelines that have been down and again they are back up. The president is doing, has made other decisions that are very important to making sure the disruptions are as small as possible and last as short a period of time as possible. Just today he asked that the Jones act be waived where we can use foreign ships to move oil and gasoline from Houston to the east coast to make sure that the east coast is well supplied. He`s also asked for waivers by the EPA so we can use winter gas right now and again make more gasoline available so we can use gasoline from Europe right now and again to make more gasoline available.
GHARIB: Mr. Hubbard, you mentioned a couple of times as we`ve been talking about the many people who have been homeless and have jobless and we all see that, I think everybody is very concerned about that. What is the government going to do in terms of helping those people? Are they going to be any kind of cash assistance or some kind of financial assistance?
HUBBARD: Again, you should talk to FEMA and to the homeland security folks about that and to get into those details. But this president and I`ve seen him in operation this week, he is doing everything in his power. He`s making decisions on the spot to do everything he can to assist these people in restoring their lives to normalcy. Obviously that can`t happen overnight. I mean there were thousands of homes wiped away. The floods in New Orleans are going to take a long time to deal with. But the president is committed to doing everything possible to assist these people and to help them return to their normal lives.
GHARIB: And how about with businesses, like the airlines, that were vulnerable even before Katrina. Is the government considering any kind of aid for the airline industry?
HUBBARD: Again, the economy overall remains very, very strong. We are without question the fastest growing economy of any developed country in the world. We have very low inflation. We have very low unemployment. We`ve produced over four million jobs in the last two-plus years. And there`s nothing to suggest that the economy is not going to continue to grow and continue to prosper and that we`re not on a sustainable basis just like we were before Katrina. There`s no question, there are additional challenges to businesses. But I`m confident these businesses will respond positively and will continue to prosper.
GHARIB: All right. We`ll we`re going to have to leave it there. Mr. Hubbard, thank you very much for speaking with NIGHTLY BUSINESS REPORT.
HUBBARD: Thank you very much.
