Treasury secretary says economy fundamentally sound, defends travels
WASHINGTON (AP) – Touting an improved economy, Treasury Secretary Paul O’Neill is pushing Congress to pass President Bush’s economic agenda to counter the stock market’s troubles and business scandals that have shaken consumer confidence. “Out there in our economy, out there in Main Street, the real growth in our economy is moving just as we thought it would,” said O’Neill, who made the rounds of the Sunday television talk shows following criticism he was on trips abroad during the recent economic volatility.
The administration is trying to ward off potential political damage in the midterm elections this fall by talking up signs the economy is well positioned for growth despite the increasing reports of companies’ accounting problems, which have caused market jitters.
Citing reports on productivity growth and second-quarter earnings, O’Neill said on NBC’s “Meet the Press” that “there is good news out there” drowned out by “the steady amplification of the negative stuff.”
He said Americans should look at investments over the long term and have faith in the market.
“People who are invested in the American economy over time are going to win,” O’Neill said. “There has never been an extended period of time in our history where investments in the U.S. economy didn’t win.”
Over the past 10 weeks, investors drove down the Dow Jones Industrial Average to a five-year low, although Wall Street rebounded some last week.
“I think we’re reaching for a bottom, if we’re not there now,” said John Bogle, founder and former chairman of The Vanguard Group of mutual funds, which manages $590 billion in assets for 17 million clients.
Bush will convene a splashy White House ceremony on Tuesday to sign legislation that makes sweeping changes in accounting practices and imposes new penalties for corporate fraud.
As the president described the soon-to-be law in a speech Monday in South Carolina, it “says as clearly as we can possibly say out of Washington, D.C., that if you’re a CEO and you think you can fudge the books in order to make yourself look better, we’re going to find you, we’re going to arrest you, and we’re going to hold you to account.”
But Bogle said he doubted that the bill’s passage was a big factor in changing investors’ opinions about the future.
“I think investors’ confidence has been shattered, and it’s going to take a lot more than some congressional action to rebuild it,” Bogle said on “Fox News Sunday.”
O’Neill said the administration is working with Congress on several bills – trade powers for the president, pension protections, terrorism risk insurance, for example – intended to “assure that our economy will continue to be the envy of the world.”
Bush wants the Democratic-controlled Senate to finish those bills by week’s end before its monthlong vacation.
The trade bill, passed Saturday by the House after Bush visited Capitol Hill to seek support, is the most likely of those to be considered this week.
The Senate came under criticism from White House economic adviser Larry Lindsey for what he called excessive spending that could undermine the economy. Lindsey said senators want to spend at least $14 billion more than the president supports for the budget year beginning Oct. 1.
“We do have to monitor the deficit. We have to spend money on defense. We have to spend money on Social Security. We have to make sure that our economy is sound. But we cannot afford to have wasteful spending here,” Lindsey said on CNN’s “Late Edition.”
While O’Neill tried to focus on the economy’s strong points, he spent considerable time in his TV appearances answering questions about his recent world travels at a time critics said he should be at home reassuring worried Americans.
O’Neill went to four former Soviet republics to gather information on how to bolster their economic growth, private investment and living standards, as well as to discuss terrorists’ financing. He had planned to go to South America this week but postponed the trip.
“I think it is important, in my role of secretary of the treasury, that I don’t make the mistake that I think many people do, who think the sun only sets and rises in Washington and New York,” O’Neill said.