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President-Elect Bush Holds Summit to Discuss Slowing Economy

Aired January 3, 2001 - 2:06 p.m. ET

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

LOU WATERS, CNN ANCHOR: George W. Bush assembled about three dozen corporate executives in Austin today to talk about the slowing economy.

CNN's Major Garrett is keeping watch over all of that now from Austin. Major, what's new?

MAJOR GARRETT, CNN CORRESPONDENT: Well, what's new, Lou, is we expect the president-elect to talk about this dramatic development from the Fed in just a few minutes; about 2:20 Eastern time, we have just been informed. We do have one early reaction, though, from a top Bush economic adviser. Larry Lindsay, when informed about the Fed action by reporters here, said great. The Fed is always right.

He then informed the president-elect of the decision. We'll get the president-elect's very own words in reaction to it here very shortly. But clearly, the Fed move vindicates or will at least be seen by the Bush team as vindication of what they've been saying about the economy for the past two or three weeks.

They've said that there are softening consumer sales, that is to say, consumers not buying as much. The holiday sales figures clearly reflect that. They said there's been a tightening of the manufacturing sector. The Fed said exactly that. They also said higher energy prices posed a concern for future economic growth. The Fed said exactly that as well.

However, this is not unvarnished good news for the Bush team because as some of our analysts have already pointed out, a cut in interest rates could reduce some of the political support for a tax cut. Clearly, the Bush team has tried to increase that support on Capitol Hill by saying if the economy is heading either for a hard landing or a recession, we better cut tax rates to stimulate economic growth. Perhaps that argument will not be as persuasive. It's still very early. We'll see -- Lou.

WATERS: Major Garrett in Austin, Texas.

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