Interview:
U.S. House of Representatives---Bachus, Spencer---Politician / Govt Official
US. House of Representatives---Sherman, Brad---Politician / Govt Official
congressmen, welcome. let me begin with, as we said, the ranking member, mr. bachus, what specifically will you ask mr. greenspan tomorrow and why?
>> well, the future of the economy, we’ve got the best manufacturing growth that we’ve had in 20 years. we’ve had new orders that are at a 30-year high. we’ve got an economy that seems to be hitting on all cylinders. ask him if he sees that continuing, what the threats of that are, and then how we can create more jobs.
>> mr. sherman?
>> yes?
>> same question to you, sir. what specifically will you ask mr. greenspan and why?
>> well, i want to ask him about the trade deficit of a half trillion dollars and the effects that his policies and the fed have on the value of the dollar, which is in part driving that trade deficit. i also want to ask him about the president’s report, his council of economic advisors claiming that this year we’re going to have a quarter million dollar per month increase in the number of jobs. of course, that didn’t happen last month, and i wonder whether it’s likely to happen. i also want to know whether he agrees with that bush administration report that outsourcing is a good thing, because there are so many people in my district affected, not only with their manufacturing jobs being sent overseas, but now the white-collar jobs being sent overseas as well.
>> you brought up the trade deficit, but i think most people in washington now are focusing on the overall fiscal budget deficit, forecast to be a record $520 billion next year. will you ask chairman greenspan anything about the federal budget deficit? do you expect him to answer it?
>> well, i asked him that last time he came before our committee, because he has been a fiscal conservative and yet he supported the bush tax cut. his response was that he would prefer to envision a world in which every tax cut was offset with a spending cut, and therefore, the tax cuts didn’t drive up the deficit. i told him that i would prefer to live in a world in which julia roberts was calling me, but i didn’t think either one of those two things was going happen.
>> congressman bachus, in the past mr. greenspan has―well, he’s praised tax cuts in general, but he’s also warned congress that they should -- that they show a lack of discipline in the budgeting process. are you comfortable with the deficit levels as they’re at, and will you press the chairman of the federal reserve to make some sort of a stance in terms of an opinion on the size of the federal budget deficit?
>> man, i don’t think anyone’s comfortable with the debt, half behalf it is in germany or france, and it’s a third of what it is in japan. however, you’ve got, first of all, what’s created the deficit. and it is the entitlement programs that basically are on automatic. and those that seem the criticize the president the most are the biggest spenders of all. you know, if we’re to address federal spending and the amount and growth of federal spending, who can best do that? and answer has been the republican congress.
>> are you comfortable, sir, with the level of interest rates as they stand today?
>> i’m not uncomfortable with them. if they’re stable, which is they need to be stable and low -- in fact, if they were any lower, we could have disinflationary pressures. so basically, when you take the inflation rate, it’s low, so i don’t see how they could get any lower. will they go higher? traditionally in a growing economy, they probably should ment most economists are predicting they will increase by one percentage point. now, you know, that’s not great news, but it does show that the economy’s expanding and more people are working, more people chasing that dollar.
>> mr. sherman, some people would say the low interest rates have essentially subsidized an interest rate bubble, if you will, a credit bubble. we’re seeing, of course, homeownership rise, not a bad thing, but some say it’s an artificial rise. do you think rates are appropriate at these levels?
>> i think short term rates are appropriate, may go up a little bit. what i’m concerned about is long-term rates since they influence the level of expansion it a far greater degree. and with the huge budget deficit with the president seeking to make these tax cuts for the very wealthy permanent, and thereby lock in a much larger deficit, i think that we’re going to continue to see the ratio we do now, which is that those investing long term are demanding four times the interest rates of those who are investing short term. i think that very steep curve reflects the fact that a lot of people here in water if people can be responsible. frankly, with the president pushing for those permanent tax cuts, i have to wonder about that myself.
>> and i think we’re going to have to leave it there, gentlemen, but i certainly appreciate you both joining us here today. and, of course, i will remind our viewers that we will be covering, as we always do, the procedures live tomorrow. our thanks to representative brad sherman from california, and his honorable colleague, spencer bachus, republican from alabama. those hearings are scheduled to get underway at 10:00 a.m. tomorrow morning in washington. well, testimony today in the case against martha stewart points to changes that she made in her phone log after she received the message about imclone. the details are next.
