President Bush Shares His Outlook For The Economy & His Final Months In Office
Wednesday, March 12, 2008SUSIE GHARIB: President Bush told NIGHTLY BUSINESS REPORT today that he would like to see a stronger dollar. His comments came as the dollar hit a new low against the euro. It now takes $1.55 to buy one euro. The president said one way to stem the dollar's slide is to quote send signals to the world that overseas money is welcome in the United States. That was a key point the president made in a speech this morning, as he pressed his case for a free trade agreement with Colombia. Trade was one of the topics I discussed with President Bush when I sat down with him in the White House earlier today for a wide-ranging interview about the economy and other business issues. Mr. President, thank you for joining us today.
BUSH: Thanks. Welcome.
GHARIB: Let's begin by talking about trade. You were pushing hard today for a free trade agreement with Colombia. As you know, many polls show that Americans are very skeptical about trade. They're worried about the economy and they think that free trade means lost jobs. So why are you pushing for trade given the economic concerns?
BUSH: Well, first of all, I understand that trade creates anxieties amongst some of our citizens. I think the reason they do is that they're worried about either themselves or their neighbors losing a job as a result of trade. I mean, they hear stories about plants shutting down because of trade. And I understand those concerns. As I said in my speech today, however, the way to address those concerns is to actually provide benefits and educational opportunities for people to get the skills necessary to fill the jobs that are growing in America. I'm for trade because I know what it means to the overall economy. About 40 percent of our growth last year, which was fairly robust at times, was a result of us selling products into other markets.
I'm also for trade because it, like, makes sense. If you produce something somebody wants around the world, you want to be able to sell that product into a market at a lower cost. And when there's tariffs and barriers to trade that exist, it makes it harder to be able to move your product. And in this case, I was focusing on Colombia, which is going to be the next free trade vote up. That vote has national security implications to it. I think -- look, what I'm worried about is the nation losing its confidence and erecting barriers and saying we don't want to compete anymore and we don't want to open up markets and we're shutting down our market. And that will do a couple of things. One, it will be missed opportunity for our businesses and farmers; but also it could run up the cost of goods for our American citizens because the more goods there are coming into our country, the more opportunities there are for our consumers. It's likely to keep prices lower.
GHARIB: But the thing that everybody focuses on is, if we're having an export boom and it's really good for the economy, why are we losing so many manufacturing jobs?
BUSH: Yes, that's true. I think a lot of it has to do with technologies and the productivity of the workers. It's a problem in certain parts of our country. On the other hand, unemployment rate is 4.8 percent. Up until recently we had a good run of job increases. The economy has been robust and now we're in a difficult period, not because of trade, but because of housing and credit problems. You know, this country has gone through periods of isolationism and protectionism. Probably the most notable is in the '30s, with Smoot-Hawley tariffs and not worrying about what was talking place in Europe. And as a result, we ended up with World War II and a depression. Now I understand there's other factors that complicated the situation, but I just think it would be a big mistake to shut ourselves off.
GHARIB: Mr. President, your administration doesn't use the word recession, but many people on Wall Street and Main Street feel that we're in a recession or close to it, especially after these recent job numbers that you were talking about. Why the hesitation about the "R" word? Isn't it time to call it what it is?
BUSH: Because there's a definition for the "R" word and we haven't reached the definition. And secondly, I am confident in the long-term growth of the country. If you want me to say we're in a tough patch, having a tough time, it's bad -- times are rough. I'll say all those three, because that's the truth. And the key the American people have got to know is rather than fretting, we moved and we moved with a very robust, pro-growth package that will start moving money into the economy quickly. By the second week of May, people will start getting their rebate checks, plus we sent a signal to businesses large and small that there will be additional incentives this year for you to invest, which I think will lead to jobs.
GHARIB: But even in addition to all of that, there's still -- Americans have a lot of anxiety about the health of the economy. They see that businesses aren't hiring; consumer confidence is way down. Is your administration looking to do more on the economy? Are you working on contingency plans?
BUSH: Well, we're always -- first of all, the money hasn't even kicked out yet. I mean, the thing about Washington is that even before the money has hit the streets, which most people think will actually have a beneficial -- fairly beneficial effect on growth, in the third quarter in particular, people are now starting to invent other things to do. And my concern is that we pass law and regulation that will make it more difficult for the economy to recover. And so the answer to your question, I'm always open for good ideas, but what I'm not open for is a lot of government intervention into our economy that will be counterproductive in the long run.
GHARIB: I'm glad you brought that up because that is an idea that's floating around about the housing situation. There's a lot of concern that the situation is getting worse and some people think that the Federal government should use its resources to directly help struggling homeowners. And is there a way that you would use taxpayer dollars to provide assistance to homeowners as long as they would pay the government back? Or do you rule out using taxpayer money altogether?
BUSH: Well, I haven't seen any -- I'm not exactly sure of the plan where the government becomes kind of the lender of last resort. I haven't heard that. I have heard about using taxpayers' monies to buy empty houses, which I think would be a huge mistake. That plan doesn't help homeowners. That plan helps lenders. And we want to help homeowners. And precisely what we're doing is to -- we are using taxpayer credit to help people refinance their homes through FHA, as well as Henry Paulson and Alphonso Jackson's plan, bringing people together in the private sector to help renegotiate notes so people can stay in their homes. So our focus has been on helping people renegotiate and stay in their homes. It has not been on using taxpayers' money to help lenders.
GHARIB: So are you saying that you're really not in favor of using taxpayer dollars, even if you heard a really good plan?
BUSH: No, I haven't said that. I just need to hear what the good plan is and without having lasting long-term damage to the economy. I'm not exactly sure what you're referring to, but I do know one plan that's been floated out there was to take $4 or $5 billion and buy empty homes. And I think that would -- that doesn't help the problem. That, frankly, makes it harder for the market to adjust and provides relief for those who lent the money in the first place, not those who borrowed.
GHARIB: As Paul just mentioned, oil topped $110 a barrel today. Those record high oil prices are of concern to President Bush. In my White House conversation with the president this afternoon, I asked him what the U.S. can do to bring prices down.
Mr. President, I understand that Vice President Cheney is on his way to Saudi Arabia and that he'll be meeting with King Abdullah. Now, the Saudis have said that the high price of oil is a result of the weak dollar and because of speculators in the financial markets and not because of how much oil that they're producing. What is it going to take for Dick Cheney to convince them otherwise?
BUSH: Look, there's all kinds of speculation about the price of oil, but one thing is for certain. Demand is greater than supply. And demand is increasing as a result of what has been a very robust U.S. economy, even though we are slowing down. China's economy is growing; India's economy is growing, and they're requiring more and more oil and gas to fuel their economies. And yet there is not a lot of new supply heading into the market.
No question that the value of the dollar has affected the price of oil, but I'm convinced that it's supply and demand that's really creating the major portion of the rise. And I hope that the king will listen very carefully to the vice president when he makes the following points: one, high oil price is damaging markets; and two, the other thing the vice president will say, which is interesting, is that high oil prices are stimulating an enormous amount of venture capital money into alternative forms of energy, which I strongly support, by the way.
And there's no quick fix to a situation that's got us to where we are. How much extra oil there is on the market is up for debate, but the vice president will make the points. And the reason he is going to say that is because he, like me, is worried about the family that's trying to get by in tough economic times by buying gasoline at $3.25 or whatever it is, the average is right now in America.
GHARIB: Well, you've pressed OPEC to increase oil production
BUSH: I did.
GHARIB: And they didn't do it. Let's say that OPEC did pump more oil. How much do you think that that would bring down oil prices, by $20, $30?
BUSH: You know, I don't know. You're going to have to ask the experts that. I'm just a simple president. But I really don't know what it would do. I do know that the main problem is supply and demand and excess supply obviously would help. Obviously demand is going to slow down a little bit. It's going to slow down some here in America. I don't know whether China's demand will slow down appreciably or not. But the two main economies that are driving this excess demand is the U.S. and China. And one thing is for certain for the longer term, is that we have got to become less dependent on oil, foreign oil. And I gave a speech the other day to the renewable energies conference that laid out our agenda that does just that.
GHARIB: As you know, oil prices are now at $108. They're going higher. Goldman Sachs is saying $200 oil. Do you think that $200 oil is really going to happen? And do you think Americans just have to get used to the idea of paying $3, $4 or maybe more, for their gasoline?
BUSH: Well, I can't -- it's hard for me to forecast price. I do know that the faster we can get alternatives to the market, the better off Americans will be. That includes, you know, more hybrid automobiles. That includes more ethanol. That includes cellulosic ethanol research that we think will come to market relatively quickly. It means we're going to have to speed up as best as we can battery technologies so that folks in New York City can drive on electricity. And, by the way, they don't want to be driving a golf cart, you know. It's going to have to look like an automobile. And so on the automobile front... As a matter of fact, we passed a law that mandate a $36 billion worth of renewable fuels to be used in 2022, I think it is. And so there's a significant law in place that will encourage diversification. It just can't happen overnight, unfortunately.
GHARIB: Right, right. You mentioned that one of the reasons that's driving up the price of oil is the dollar. You have said that you are for a strong dollar. Do we have a strong dollar now?
BUSH: We have a dollar that's adjusting and I am for a strong dollar. One reason I am for a strong dollar is because I want, you know, people to -- I think it helps deal with inflation. And you're right, the weakening dollar has affected our capacity to be able to purchase energy. We're dependent on energy from overseas. Our dollar doesn't buy as many barrels of oil as it used to and so therefore it's more expensive for the American people. And that's why I'm for a strong dollar; one reason.
GHARIB: But the dollar is down against the euro, something like 45 percent, over the last six years. And today it hit a new low against the euro.
BUSH: No, I know. And it's not -- those aren't good tidings, if you're for a strong dollar like I am.
GHARIB: Would you like a stronger dollar?
BUSH: I would, absolutely. And there are certain things that we can do. We can send signals to the world that their capital is welcomed into the United States, that we'll fight off protectionism and that we'll deal with this. You know, the dollar was strengthened when people realize the relative strength of our economy. And one of the things people are watching carefully is, will the United States government put policy in place to stimulate growth without affecting long-term growth? In other words, without passing laws that make it harder for investment or harder for capital to move or harder for markets, labor markets, to remain flexible. And so that's why I said early on here in this discussion is that, you know, we put policies in place that are temporary and robust, that we think will affect growth, that without damaging the environment for capital investment or entrepreneurial growth.
GHARIB: I'd like to talk to you a little bit about sovereign wealth funds.
BUSH: Sure.
GHARIB: You know, we're becoming more and more dependent on foreign capital and some of it is coming from these sovereign wealth funds. Do you think that they're making a positive contribution, especially in this current climate, or do you see risks that they're using money for a political agenda?
BUSH: Well, first of all, it's our money. And a lot of the time -- and therefore I think it makes sense for us to encourage them to reinvest in our country. Secondly, we have got policy in place to make sure that they don't reinvest in industry that have got significant national security concerns attached to them. And so my answer is, absolutely we ought to welcome the capital back. It makes no sense not to welcome the capital back.
GHARIB: But a lot of people are very worried that America is for sale.
BUSH: Right.
GHARIB: How do you think the U.S. should respond to these investments?
BUSH: I think we ought to be able to say to the American people, you know, we're not going to allow people to buy industries or technologies that will jeopardize our national security or put you at risk. On the other hand, we ought to welcome their money back. I can remember years ago when, you know, it was said that the Japanese were going to buy up America.
GHARIB: Right.
BUSH: And this is just how things work. There's capital flows back and forth in the interest of America. And, you know, the other option, of course, is just to throw up walls. And this question, actually, goes to the heart of the trade question. I mean, do you want to be active in the global economy? Do you want to be trading? Do you want to have access to markets? And if you do, then you also got to recognize capital needs to move freely, as well.
GHARIB: Mr. President, if there were one thing you could do for the economy in the next 10 months of your presidency, what would it be?
BUSH: Oh, gosh, it would be more than one. It would be to speed up the excess inventory of houses so that the housing market would get back on its legs. But I'd also like to see that price of gasoline drop a significant chunk.
GHARIB: And for the next president of the United States, what's the most important piece of economic advice that you can offer?
BUSH: Make the tax cuts permanent. Because one of the things is these are uncertain times and one of the biggest uncertainties out there in a couple of years is to whether or not the working man's taxes are going to go up and whether or not taxes on small businesses will go up. And one of the ways to deal with uncertainty is to create certainty in the tax code.
GHARIB: So do you think whether the next president is a Democrat or a Republican, they're going to listen to your advice?
BUSH: I think the Republican will and I don't think the Democrat will.
GHARIB: Mr. President, thank you so much for your time. We really appreciate it.
BUSH: Thanks for coming.
GHARIB: The president's comments offer a preview of what he's likely to say on Friday when he's in New York speaking to Wall Street and business leaders at the Economic Club of New York. And as you know, Paul, we're going to be covering that event. And the president joked with me that he might just talk off the cuff on Friday, instead of giving his prepared remarks.
