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| TREASURY SEC. ROBERT RUBIN | |
 July 1, 1999 
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Sec. Robert Rubin steps down after four years at the helm of the Treasury Department. He reflects on his term, the causes of the current economic boom, and what the important issues of next year's elections should be.
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JIM LEHRER: Treasury Secretary Robert Rubin. Mr. Rubin was a successful Wall Street investment banker before coming to Washington in 1992. He first headed the newly-founded National Economic Council for President Clinton and then was named Treasury Secretary in 1995. His successor, Lawrence Summers, was confirmed by the Senate late this afternoon. I spoke with Secretary Rubin from the Old Executive Office Building a short time later...
ROBERT RUBIN: Nice to be with you, Jim. JIM LEHRER: The Senate just confirmed Larry Summers as your replacement. So your last day is what, tomorrow? ROBERT RUBIN: He was just confirmed 97-2, and he'll be sworn in sometime tomorrow, at which point he will be secretary. JIM LEHRER: Okay. So I can still call you Mr. Secretary tonight, though? ROBERT RUBIN: You can call me Mr. Secretary or anything else that you'd like, Jim. |
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| Raising the rates. | ||||||||||||||||||||
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JIM LEHRER: All right, sir. The Federal Reserve decision yesterday to raise interest rates-- how do you read the impact of that so far?
JIM LEHRER: So you don't think... ROBERT RUBIN: And I think it is always very important to remain watchful with respect to inflation. JIM LEHRER: But you don't see the same dangers of inflation that the Fed does down the road? ROBERT RUBIN: Well, as I said, Jim, I'm avoiding commenting on the Fed, but really just expressing my own views, and I don't think that my views are necessarily inconsistent with their views. But I... as I said a moment ago, I'm really just expressing my views. JIM LEHRER: Sure. How would you describe the relationship you had with Federal Reserve Chairman Greenspan? ROBERT RUBIN: We have had an extraordinarily good working relationship, Jim, and it's really been Larry Summers, Alan Greenspan and myself, the three of us, we have lunch or breakfast once a week, it usually lasts about an hour and a half. A fair bit of it is spent discussing whatever's in front of us. Some of it is more general discussion about the economy or whatever else is of interest at the moment. And that relationship, I think, has really been enormously useful when we've had to deal with crises and with serious issues. The Asian financial crisis, for example, and the American... United States leadership that was essential to dealing with the Asian financial crisis, would, I think, have been far different had we not had that relationship. |
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| A good working relationship. | ||||||||||||||||||||
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ROBERT RUBIN: Yeah, but I think, Jim, that it's a good example of how people can have, as you correctly say, different political views, and if they share a seriousness of purpose-- which all three of us certainly do-- and if they put their egos aside in dealing with each other-- which all three of us certainly do-- and if they go at issues analytically, and make it their sole purpose the effort to try and think things through, then people can work together despite having very different political views. And then secondly, I think just very chemistry. You know, we sit and we talk about all kinds of things, and it's good-humored, and sometimes even very funny, although the jokes might not be the kind of jokes that most people would enjoy. Jokes about the yield curve, for example, are not maybe broadly amusing, but we find them funny. JIM LEHRER: Alan Greenspan, as an individual aside, a lot of people believe that the Federal Reserve has too much power over the U.S. economy. Do you agree with that?
JIM LEHRER: But why should it be independent? I mean, you've got the Congress of the United States, which is a democratic body, elected, responsive to the people, the executive branch in which you serve. Why should there be one element of all of this that is completely independent? ROBERT RUBIN: I do believe that economic policy should be the province of the elected administration and the elected Congress. That's how a democratic society works. But I still think that there is a set of issues that are not best addressed in that context, and it's particularly these issues around inflation, because there is an enormous tendency, I think, in any democratic society to want to do more than is fiscally prudent. And the best counterbalance to that, it seems to me, is an independent central bank, and the best evidence of the validity of what I say or what I just said is that if you look around the world, you will find that economies that have not had independent central banks are tending to move toward greater and greater independence for their central banks. So I would say that this issue of monetary policy is an exception to the general rule that accountability of an elected administration, elected Congress, is how economic policy should be dealt with. |
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| When will the bubble burst? | ||||||||||||||||||||
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ROBERT RUBIN: I don't think anybody knows the answer to that question, Jim, and I think five, ten, and 15 years from now, people will be writing Ph.D. theses and books about this period, and I suspect what you're going to find is that there have been forces at work that none of us know. But I think what you can say is that there are certain actions that could be... that have been taken in the private sector and in the public sector that have contributed enormously to the good economic conditions that we've had. And I think it is very important that the private sector continue to focus on being competitive, which they've done a very good job on over the last, say, 15 years or so, and the public sector continue to focus on fiscal discipline, on investing in our public schools, our inner cities, so that we have a productive workforce, and very, very importantly-- although it's not always popular-- on American leadership with respect to the broad range of issues in the international economy that affect what happens here at home economically. JIM LEHRER: But a layman looks at this and says, "Wait a minute, can this last forever like this?" And what's the answer?
JIM LEHRER: Sure. Mr. secretary, on a more personal basis, there's been much conventional wisdom around Washington for some time that you were very tempted to resign out of disgust with President Clinton over the Monica Lewinsky matter, but you chose not to because you were concerned about what your resignation... the impact that resignation would have on the markets and the economic system. Straighten us out on that. What are the facts there? ROBERT RUBIN: That assumption, if it... I actually had not heard too much of that, but if that is some people's assumption, the assumption is totally untrue. The president made terrible mistakes, he acknowledged he made terrible mistakes. I have tremendous regard for this president, Jim. He came into office knowing what he wanted to do in this broad set of issues that faced our economy. He came in at a very difficult time. He's made a lot of very tough decisions. Many of them, like the Mexican support program, the 1993 deficit reduction program, NAFTA, GATT, many of the issues around the Asian financial crisis, were politically unpopular, but he made the decisions, he fought his heart out to implement those decisions. I have a great deal of respect how he handled himself during the Monica Lewinsky impeachment problems. Those problems would have crushed a lot of people, and he came in... I was there. I was with him. He came in every day, he worked at the issues that were so terribly important to this country... and remember, a lot of the Asian financial crisis went on during that time. We would have hour- or two-hour meetings on these issues and he was focused on what he needed to be focus on to be an effective president. So I have tremendous regard for him. JIM LEHRER: You had no problem separating that dark side, that personal thing, as you said, he admitted he made some mistakes, from what he was doing as president of the United States in his relationship with you?
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| Issues for the new millennium. | ||||||||||||||||||||
| JIM LEHRER: Now, Mr. Secretary, he is going to be replaced
here in about 18 months with a new president. We're about to go into a
presidential campaign. What do you think this next election should be
about?
ROBERT RUBIN: Oh, I think that it should be about the enormous challenges and issues that we face as a country if we're going to continue to be successful economically, and if we're going to be secure in terms of our national security, and if we're going to have the kind of society we want to have. And just a few of those issues are in front of us right now. What do we do with this enormous surplus, which is an historic opportunity to promote national savings, but is also an opportunity that we could squander? What do we do in a post-cold war world with respect to an effective foreign policy to promote our values and our national security? What do we do to have a public school system that will produce the workforce that we're going to need if we're going to be competitive ten, 15, 20 years down the road? JIM LEHRER: How do we, the rest of us, make sure that those kinds of issues are discussed in this election? ROBERT RUBIN: Oh, I think there are probably a lot of answers to that, but I think maybe the single most important answer really lies in the hands of people like you, Jim. If the media focuses on those issues and insists that the candidates address those issues, then those are the issues that they're going to address, because in the final analysis, they are going to be very much affected by what gets covered and how it gets covered.
ROBERT RUBIN: I think it's important for that reason, but I think it's also important for another reason, Jim. I think there are some very big and very controversial issues out there that need to be debated in the public domain, and I think on your just prior question, if the media covers these large issues, it really can be an opportunity for the American people to try to think through what kind of international economic policy they believe in. What do they believe about trade policies? Should we leave our markets open, which I think is enormously in our economic interest, or should we have more restrictive trade policy? What should we do in a post-cold war world in terms of our foreign policy? What should we do about having a better society, better schools? What should do we do about inner cities? It's a point in our nation's history where it seems to me there are a lot of very large, very controversial issues out there, and an opportunity for a real public debate that could be very meaningful and very important. JIM LEHRER: Now, Mr. Secretary, you clearly just demonstrated you care deeply about these kinds of issues. You just devoted seven years of your life to many of them. Are you hanging it up in terms of public life now? ROBERT RUBIN: Well, it's been a remarkable six and a half years, Jim. I'm going to spend the next two or three months trying to figure out what I do, and I do have... begun to have... I have begun to have some framing ideas. But whatever I may do-- and I'm not sure what the specifics will be-- I certainly would expect to remain very involved in these kinds of issues in one way or another. But not as a public official, and most certainly not in elective office. JIM LEHRER: Yeah. Most certainly not in elective office? That's just not your thing? ROBERT RUBIN: That's right, Jim. I just don't think that I am suited for it as an individual. I have great respect for people that can... it's a very difficult and very challenging profession in many ways that I think it's hard to realize until you work with these people on a day-in, day-out basis. It's just not me. |
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| A record of accomplishments. | ||||||||||||||||||||
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JIM LEHRER: When you leave here now, what are you going to be the most proud of?
JIM LEHRER: Rewarding experience for you personally? ROBERT RUBIN: It has been an enormously rewarding experience, Jim, both in terms of being part of or contributing to what I think is an enormous record of accomplishment, but also all that I've learned about how government works and about the government... the processes of government and about the issues that... really the vast number of issues that I've been involved with and have seen those issues in a different way, seeing them from the perspective of the broad range of views that exist in this country that I really was far from fully cognizant of before I got here. JIM LEHRER: Political service with a noble calling, Mr. Secretary?
JIM LEHRER: All right. Well, Mr. Secretary, good luck and thank you, sir. ROBERT RUBIN: Thank you very much, Jim. |
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JIM
LEHRER: Mr. Secretary, welcome. 
ROBERT
RUBIN: Well, as you know, Jim, we never comment on the Fed, and that's
part of our more general policy of respecting the independence of the
Fed. But if you're asking me more generally what I think's going on
in the economy, I think that it looks to me, at least, as if inflation
is likely to remain low, and growth solid. But that's subject to normal
ups and downs, and subject to risks of one sort or another. 
JIM
LEHRER: Now, how do you explain that relationship? Alan Greenspan, a
lifelong Republican, worked in prior Republican administrations. You're
a lifelong Democrat. You've been a key person in a Democratic administration.
So what's the deal? 
ROBERT
RUBIN: No, I don't agree. I think that you have to look back over the
history of not only this country, but other countries, Jim, and what
you find is that it is very difficult very often for political systems
to deal effectively with the problems of inflation. And I think what
an independent Fed does is to give you a capability independent of the
political system for dealing with inflation. I think that that's extremely
important, and I have enormous regard for the importance of the independence
of the Fed to our economic system, and to most effectively dealing with
economic issues this country faces. 
JIM
LEHRER: On more general grounds on the economy, the economy has been
going great guns here the last few years, and the economists on our
program and elsewhere say, "Oh, wait a minute, you've got to get
ready for it to drop, there's a cycle," and they predict based
on prior history. Is it possible we're in a whole new world of economic
cycles where this thing could go on good like this for a long time?
ROBERT
RUBIN: The answer is, Jim, that nobody knows. But the fact that nobody
knows, nevertheless still leaves you in the position of asking the question,
"What can we do best," or, "What can we do to best promote
strong economic conditions?" and that's the issue that I just addressed.
ROBERT
RUBIN: Jim, I think we're all highly imperfect, and I guess I tend to
relate to other people from the context of that kind of a view. But
it didn't affect my respect for him. I fully share his views that he
made some terrible mistakes, but I actually think it's a tremendous
testament to his character that with all of the enormous pressures on
him, he continued to persevere as president of the United States in
dealing with the issues that were in front of us, and they were very
important issues with enormous potential impact on our economic well-being
and our well-being in other respects. So, no, it did not affect the
bottom line of my respect for him as President of the United States
and as a person, fully acknowledging the mistakes that he made. 
JIM
LEHRER: A lot of people have said on this program-- because we've been
talking about this over the last several weeks-- that this could be
a very important election, because there is a relatively clean slate
in many ways in terms of the economy and our national security. Do you
agree this is an important election? 
ROBERT
RUBIN: I think public service is an essential calling for the well-being
of the American people. And I think that one thing, Jim, that we have
got to do, we have got to do is to make sure that public service receives
the support and respect that it deserves so that we continue to attract
strong people at all levels of government. One of the things that is
most surprising about my time in government is how many strong... how
many capable, dedicated, effective people I've met. But if we're going
to continue to get those kind of people, we have to respect them, and
we have to support them, whatever our views may be, as to the appropriate
scope of government. 
