For Immediate Release
Office of the Press Secretary
August 13, 2002
Press Briefing by Secretary of Treasury Paul O'Neill and Secretary of Commerce Don Evans
Student Life Center
Baylor University
Waco, Texas
2:35 P.M. CDT
MS. BUCHAN: Hello again. We're ready to begin our next
off-camera, on-the-record briefing with Secretary of the Treasury Paul
O'Neill, and Secretary of Commerce Don Evans.
SECRETARY O'NEILL: I understand no cameras, but we're very happy
to take any questions you might have.
I'd just do one piece of characterization. I thought this was a
really high-energy meeting. The session that I chaired was full of
people who obviously had spent a lot of time thinking about how to
express themselves succinctly and directly. They were respectful of
each other's time. And I think the reporter for our session, Phyllis
Hill Slater, I hope you all got to see her. She did a great job of
representing what went on in our panel. And then I thought the
President's engagement with the people was first rate.
And let me have Secretary Evans say a few words and then we'll do
your questions.
SECRETARY EVANS: I would just echo what Secretary O'Neill said. I
thought it was an extraordinary morning. I was in the corporate
responsibility section. The President did stop by. There was a lot of
engagement.
There was, again, as Secretary O'Neill said, I think the people
that were here obviously spent a lot of time thinking about what it is
they would say and how they would say it and what was on their heart.
And I think it was a very constructive session that we will continue to
build on, just like we've been trying to build on the strong foundation
of this economy for the last 18 months. This is another step, this is
another part of the process of how you continue to strengthen the
economy. This isn't a one -- you know, this was a very important day.
It's not the only day. But we will gain a lot from this.
We will review all of the comments that were made during the course
of the morning. I know the President is looking very much forward to
doing that, since he was not able to attend every session. But he will
look at the reports from every session and we will no doubt learn a lot
and gain a lot from this very constructive day.
Questions?
Q Secretary O'Neill, I don't know if you saw, but the stock
market and the dollar both declined after the Fed's announcement this
afternoon, which suggests that people aren't as optimistic as you seem
to be about the -- about the outlook for the economy.
I wonder, do you think -- why do you think there's such a gap in
the administration's view and the administration's forecast, and what
we're seeing from the central bank and investors?
SECRETARY O'NEILL: I haven't seen what the Fed said this
afternoon. And I think that, as I understand, they issued one of their
usual reports, which indicates whether they're neutral or leaning on
the positive or minus sign side of the equation. I didn't see anything
indicating that they had knocked down what I believe was their forecast
of the economy, running someplace in the 3 percent to 3.5 percent
range. I think that's the last official testimony of Chairman
Greenspan, which is consistent with what we've been seeing and what we
continue to say.
In our session this morning, we heard some differences of opinion
about growth. But we heard some very positive things from small
businesspeople, including people who sell automobiles for a living to
the chairman of International Paper, who talked about seeing
improvement in his worldwide market the last couple of months, to
hearing a fellow from -- the CEO from Albertsons saying that he was
talking to his customers on a regular basis and that they were
concerned and they were talking to him about corporate responsibility
and the uncertainty that all of that created for them. So we did hear
a variety of views.
But if I were to cast a net over it, I would say it was generally
-- the tone of what we were told today is consistent with a
continuation of real growth, which we've now had for three quarters in
a row. If you look at the second quarter of growth statistics, you see
that about 1.8 percent of GDP was taken away by the level of imports
that we have in the second quarter. Most of us expect that the
relationship between imports and exports will rebalance in the third
quarter and that we will see a higher rate of real growth in the third
quarter. So I think that we're moving along in a way that we expect.
It's kind of a sawtooth fashion, but not unexampled in recovery
periods.
Q Could you please talk about the impact of the American
Airlines layoffs announced today?
SECRETARY EVANS: Any time -- as the President says, any time
there's one person that wants a job, needs a job and does not have a
job, we're not going to rest, we're not going to relax until we grow
this economy to -- so that that person will be employed, that person
will have a job.
The airline industry is going through a very difficult period right
now. It was going through a somewhat tough period before September
11th. And September 11th obviously dealt a very serious blow to that
industry, which -- and in some part, it has recovered from, but they
have costs that have gone up rather dramatically because of not only
the increased security that now must be dealt with -- some of those
costs in indirect ways are borne by the airline industry -- but also in
a very direct way, just terrorism insurance that they now have to carry
has gone up some 12- or 14-fold.
And so their cost structure has changed quite significantly. And
because of the somewhat lower passenger miles, or somewhat lower
traffic, they have been unable to pass on these additional costs to
their passengers.
So look, you've just got an industry that's going through a very
tough period right now. And as you know, USAir had applied for a loan,
and the government indicated that that might be available if they met
certain conditions, which have not been met yet. But they obviously
were going through some negotiations with their unions and getting some
concessions. And that's what you do when you go through difficult
periods. Everybody has to sit down and see where there's opportunity
to have some give and take and cut costs and figure out a way to
survive this tough period and being to regrow again.
And that's what this -- the airline industry will be going
through. My heart goes out to those 7,000 employees that were laid off
at American Airlines. As part of this stimulus bill late last fall, we
did increase unemployment insurance, and so there are a few other
safety net benefits out there today that weren't out there nine months
ago or a year ago. But still, that's not what that person wants. That
person wants a job, and that's what this President says, we're going to
keep fighting to grow this economy until that individual that wants a
job has a job.
Q Sir, to what extent will these layoffs have an impact on the
rest of the economy and the recovery?
SECRETARY EVANS: Well, the economy -- we continue to -- we
continue to add jobs to this economy, not in large numbers, but we're
adding jobs. And so, no, I think as Secretary O'Neill said, I think
most, including the Federal Reserve are talking about growth this year
in the 3.25 to 3.5 percent kind of range. That should translate into
adding jobs. And we're confident it will translate into adding jobs --
adding net jobs.
Q What do you all think of Charles Schwab's idea about
investment losses? It was in your session, right, Secretary Evans?
SECRETARY EVANS: No, it was not in my session. Are you talking
about Charles Schwab, Chuck Schawb?
Q Yes.
SECRETARY EVANS: I think you may be -- where he may be on capital
losses, he's saying write those off at a higher level or all --
Q 3,000 to 20,000.
SECRETARY EVANS: It's one of the many ideas that we'll take home
and think about and discuss and make a decision.
SECRETARY O'NEILL: In that same vein, we heard lots of really
challenging, interesting ideas today. We had several people in my
session tell us that not only should we make the tax cuts permanent,
but we ought to accelerate the ones that are delayed. One thing I
never heard from a single person today was that we ought to raise
taxes.
Q One quick question. Today I heard several of the sessions,
and I heard the President got to hear a lot of the participants say, I
agree with you on that, I think you've got a great idea, and they sort
of launched into a thing, why don't you repeal the death tax or some of
the other policy priorities for the Bush administration. But I didn't
hear anybody really say anything where the President or you came out
and said, no, you're wrong. Is that a coincidence?
SECRETARY O'NEILL: Well, you know, I think people were polite,
which is nice. But I heard people have differences of opinion about
what ought to be done. They were just polite about it. So it's not to
give a broad-banded everything-is-perfect endorsement from the
participants. I certainly didn't get that sense from the people that
were in my session, that they have strong ideas, they have strong
concerns. I think they share the concern of the President that they
would like to see a more rapid growth because, you know, we heard in my
session from employers who are concerned about being able to sustain
their employment.
I heard from -- over lunch from the woman who represents small and
medium-sized women -- businesses headed by women, a concern that she
has about how they sustain themselves. And she told me a story about
one of her members having to go to part work weeks. And she had some
ideas she shared with me about things that she thought we ought to
consider.
And so I think, you know, we got a variety of expressions of views
and a sense of what we ought to be doing. But again, I would say to
you because I thought it was kind of striking, and no one said we
should raise taxes, in my hearing at least. And no one said we should
-- we should cut back on spending for military purposes or for homeland
security.
You know so, frankly, it's not a surprise to me, because I think
this group was very representative of people in the American society.
One of the two speakers that I asked to kick off my session was the
head of the Carpenters and Joiners Union, and I was really interested
in hearing his views, because building homes and remodeling homes is an
important part of our economy. And he went out of his way to say how
important it was to him and to people who are carpenters and joiners to
get the Congress to pass the terrorist risk insurance. We heard it
over and over today from people who labor for a living or represent
people who labor for a living. The Congress needs to act so we can
build projects that have been waiting. The President said $8 billion
worth of construction is going begging because we haven't been able to
get the Congress to act on terrorist risk insurance.
So I thought we had a pretty fulsome discussion, and again think
people were clear in what they said, they were polite about it.
END 2:50 P.M. CDT
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