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CNN Today

What Will Bush's Cabinet Appointments Mean for the Economy and the Average American?

Aired December 20, 2000 - 4:11 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOIE CHEN, CNN ANCHOR: Let's turn now to CNN's Major Garrett, who is standing by in Austin, as the president-elect named his latest players in his Cabinet-to-be.

Major, talk to us a little bit first, though, about Paul O'Neill and the role he plays.

MAJOR GARRETT, CNN CORRESPONDENT: Well, it's interesting, in that sound bite that we just ran, Joie, Paul O'Neill talked about making sure that fiscal policy and monetary policy do not, in his words, get out of kilter. Well, what that really means to the average American is he wants to make sure that the Bush administration-to-be does not create budget deficits that would take fiscal policy out of kilter.

Because if that were to happen, in all likelihood, the Federal Reserve would react with higher interest rates. What he wants to do is march in lock step -- if not in lock step, at least in cooperation with the Federal Reserve chairman, Alan Greenspan. And one of the underlying themes today of the announcement of Paul O'Neill was that Mr. O'Neill and Mr. Greenspan are very, very good friends, have known each other for more than 30 years, relationship dating back to 1969.

And, at times, Mr. Greenspan, while serving as chairman of the Federal Reserve, has even sought Mr. O'Neill's advice on economic matters, domestic and international. Here's what he had to say about their relationship.

(BEGIN VIDEO CLIP)

PAUL O'NEILL, TREASURY SECRETARY NOMINEE: I've known and worked with Alan Greenspan since 1969. When I was rising through the ranks to become deputy director of the Office of Management and Budget, Alan was there for part of the time as the chairman of the Council of Economic Advisers. And we became not just professional associates, but close friends.

I've made it my business, at his request, to come by on a fairly regular basis, and tell him what I thought he was doing wrong, and what I thought he was doing right, which I felt I had the privilege to do, being longtime friends and associates.

(END VIDEO CLIP) GARRETT: The centrality of Federal Reserve Chairman Alan Greenspan to any presidency could really hardly be overstated. Mr. Greenspan will be called upon by Congress to comment on the Bush budget and the Bush tax proposal. While this doesn't guarantee that Mr. Greenspan will endorse or in any way embrace what Mr. Bush sends up to Congress, the relationship with Mr. O'Neill and Mr. Greenspan will at least keep a very open channel of communications-- Joie.

CHEN: CNN's Major Garrett for us in Austin, Texas.

With the president-elect announcing his picks for Commerce and Treasury, his economic team, as we see, is slowly taking shape. The question for many consumers -- all of us -- is: What can either Paul O'Neill or Don Evans do to help us?

Joining us now from Washington is Kathleen McNally. She is vice president for National Financial Literacy -- we all need some education in that -- at the National Foundation for Credit Counseling.

Thanks for being with us, Kathleen. Let's talk about that, just straight to it. A treasury secretary, a commerce secretary: What does that mean to me? How am I going to hear their names brought up and what is it going to have to do with what I pay in taxes or prices or anything else?

KATHLEEN V. MCNALLY, NATIONAL FINANCIAL LITERACY: A treasury secretary is responsible for fiscal policy. And that involves both taxation and government spending. And all of that affects our very own wallet, mine included. So it hits home to all of us

And we at the National Foundation for Credit Counseling see those people who are in credit turmoil and who come to us for help. We are there monitoring the economy to a certain extent, helping the economy stay in good shape, making sure that people pay off their debt and avoid bankruptcy.

CHEN: So looking at these particular choices -- Mr. O'Neill, Mr. Evans as well -- what sort of signal does that send to us about what we should expect in our economy in the future or what the president- elect expects about the economy in the months to come?

MCNALLY: Well, we are seeing signs of a possible recession. President-elect Bush referred to that himself. And that we need to be wary. We need to be aware of the fact that the good times may not continue as they have. And we find a lot of this is contingent on how people feel. The wealth effect is often discussed with relevance to the stock market.

But if we're talking about changes in taxes, perhaps a tax cut, I think what is most important is: Will this make people feel that they have more money to spend? And that's...

CHEN: And somebody like Mr. O'Neill, what role will he play in tax policy?

MCNALLY: Well, he plays a very key role. He's a very, very important appointment. He will shepherd president-elect Bush's tax policies through the Congress. He will be the liaison with the Federal Reserve Board. It's very welcoming that he and Greenspan go back a long way. But he is the key person on Capitol Hill to see any Bush tax policy through.

CHEN: Let's just talk for a moment about history, the role of Mr. Rubin in Mr. Clinton's presidency. How much difference can a treasury secretary make?

MCNALLY: I think a treasury secretary wields a great deal of power. There are many parts of it that sometimes we forget. Secret Service, for example, is under the rubric of Treasury Department -- Social Security, Medicare. They're -- I think alcohol, tobacco, and firearms. This is a wide-ranging responsibility here that hits all of us in many ways that we are not thinking about in terms of the Treasury.

CHEN: I guess we need more National Financial Literacy. Thanks very much -- Kathleen McNally, joining us from Washington.

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