Wall Street Week with Louis Rukeyser; 2319; Top Journalists on the News

We are. Wall Street Week With Louis real geyser is made possible by the Corporation for Public Broadcasting. And by the annual financial support from viewers like you by the travelers over 30 million Americans benefit from our insurance investment services and managed health care. The travelers America's umbrella by M F S and FS helping mutual fund and institutional investors that achieve their financial goals since 1924 and by provincial securities we believe the most important thing we earn is your

trust. Prudential Securities. Produced Friday November 5 and tonight special guests are Malcolm S. Forbes Jr. President CEO and editor in chief Forbes Paul Asiago columnist for The Wall Street Journal. Earl Graves publisher Black Enterprise and Mortimer B Zuckerman chairman and editor in chief of U.S. News and World Report. Good even on the issue of geysers of all three week. Welcome back. Well it was for house cleaning week in America. The favorites of seasons past from politicians to Treasury bonds and up unceremoniously and the track from Wall Street to Main Street there was a whole lot of raking going on. Off year election returns are chronically subject to over analysis dominated as they have actually are by local issues local personalities and random feelings of protest

and discontent. But the attempt to make nothing of this year's results may be equally off the mark. Those who believe that the 1992 election results signaled a significant long term shift to the left in American politics. A face today with the reality that all six major election since then have been won by Republicans who now will sit in such once improbable places as the mayor's office. In both our largest cities. This certainly doesn't prove a massive permanent revolution of the right. But just imagine what conclusions our dominant media commentators would now be drawing if those six major elections had all gone the other way. Three conclusions do seem fair and helpful in planning for the future fans financially and politically. First is that whatever we may have been told earlier this year Americans memory span can be longer than politicians like to believe when it comes to remembering who raise their taxes. The Republicans best issue by far as winning candidates like New Jersey governor elect Christie Whitman discovered in the

nick of time was stressing the impediments to economic growth caused by the so called responsible act of endlessly raising taxes. The reverberations of that discovery are likely to be felt in 1994 on both sides of the aisle. The second lesson of Tuesday's voting was that while the American people's precise ideology may be as hard to detect as a sneeze in the Sahara. Their mood is not. It is restless and dissatisfied suggesting that the extreme volatility that threw out Republican incumbents in 1992 and Democratic incumbents in 1993 may shift again a hundred times between now and the next visit to the polls. And so only a charlatan would dare to say now that any result is guaranteed in 1994 or 1996. But the third lesson is far more tangible for it turns out once again that the most powerful authentic political movement of the 1990s is term limitations on the career spendthrifts in the

nation's legislatures and that could turn out to be the most significant threat to the status quo of all. Wall Street status quo was shaken up Meanwhile by the apparently awful realisation on the part of the bond market that the economy was not plunging into another Great Depression after all. Indeed the overwhelming majority of the evidence this week confirms what we've been telling you that the economy is clearly picking up strength again. The manufacturing sector expanded for the first time in five months. New construction spending has risen in real terms for five months straight and achievement it hadn't managed since the start of 1987. New home sales hit their highest level in seven years. The government's index of so-called leading economic indicators turned in a solid gain factory orders were up new claims for unemployment insurance were down. And while the overall unemployment rate was up a notch the big news there was that total employment not only gained but did so by more than expected. In short while Job growth is still disappointing and the economy remains a long way from another

boom earnings both corporate and personal are showing signs of life and those who earlier this year raced to buy bonds on downbeat economic news have begun to sell them with a vengeance at each sign of a pick up. The result was another near record selloff in the bond market precisely matching that of two weeks ago and the yield on the long term Treasury bond which was flirting with five in three quarters percent earlier this fall is now crowding in six and a quarter percent. Veteran bond watchers figure it won't challenge the lower figure again unless and until the bond market rules get some of the bad news they relish in the economy and or the stock market. And the stock market as we will soon see in detail was of two minds as to whether to oblige with its first significant correction in three years. With all this action being reported to you in the nation's media it seems timely to turn our focus tonight on to four highly diverse personally and politically media titans to see what's going through their heads as they help decide what should be put into yours.

But first let's move to the institution that often seems to be operating with no head at all and see what actually did happen this past week in Wall Street. The Dow Jones Industrial Average started the week with two straight records its 24th and 25th of the year before tanking as the bonds collapsed and after a mild bounce back on Friday winding up with a loss of thirty seven points. The Dow's first setback in six weeks during which time it had gained one hundred thirty seven points. But all the broader indexes suffered heavier damage than the Dow and market breadth as measured by the number of stocks advancing and declining each day was the worst in 13 months. Indeed it was finally bad enough to shake an elf Lutes chief elf Mark Leibovich shifted from bullish to neutral on the next six months. The first time any of our technicians had changed position in twenty four weeks leave it to change lowers the net reading two plus two cited factors including what he called noticeable volume deterioration in recent sessions. A

major loser of the week was utility stocks a group traditionally sensitive to changes in interest rates. A major winner was gold which seized all the talk about possibly greater inflation ahead to rise to its highest level in more than three months. And speaking of rising to a higher level starting this week we're going to give you a more technologically advanced way to send us your questions about money some of which will be answering again next week. It's not that we have anything against the postal service. Well nothing new anyhow. And we'll still be open even appreciating your mail. But if you prefer you can now fax us as well. The advice as always is Wall Street Week Owings Mills Maryland 2 1 1 1 7. And for those whose motto is just the facts ma'am the number here is 4 1 0 5 8 1 0 9 8 0. That's 4 1 0 5 8 1 0 9 8 0. Here with me tonight are four eminent journalists whose annual fax bills would probably support the government of a mid-sized Asian republic. A mess for a junior whom we all know is Steve is

president and editor in chief of Forbes magazine. Liz Raines he took following the death of his father in 1990. What Moby's recommend as a publishing triple threat chairman and editor in chief of U.S. News and World Report chairman of the Atlantic. And since last January owner of the battered and then bankrupt New York tabloid the Daily News which he has since turned into a profitable business. L.G. Graves went from being an administrative assistant to Robert Kennedy to becoming the publisher of Black Enterprise magazine which he founded more than 23 years ago. He also runs the nation's largest Pepsi Cola franchise owned by a minority. He and former basketball superstar Magic Johnson acquired the Washington D.C. territory in 1990. Paul Asiago has worked the other side of the political fence a White House fellow for a year in the Reagan administration. He writes the Washington column called Potomac watch in the Wall Street Journal. Gentlemen let me start by asking each of you what lessons if any do you draw from this week's election results. It's good news for the future of the economy because if a candidate sincerely puts forth the

program for tax cuts the voters will believe it. Despite widespread criticism and ridicule Mrs. Whitman's campaign in New Jersey has given up for dead. She did not retreat when the criticism came and even though everyone said she was a sure loser. The voters decided at the end to take a chance with her because they realize she believed what she was saying and they knew they had to get that tax poison out of the system. So it's good to have politicos who listen to results that the people want economic growth that hard times are not a necessity or an inevitability. Not so good when I was a wild. If you don't agree with it. Well I think to some extent I do I do think this was very bad news for incumbents. I think anybody who is an incumbent in political office today I bet every word and less he or she really delivers during their term. Because the voters are very impatient for performance and performance counts and if they get it through tax cuts or through other programs they really want performance and without that they're going to throw people out of the office one way or another through term limits or

through voting them out. What do you make of it. That is why I think you don't believe polls as they are given to you prior to the election that was proven so you think people are deliberately lying to posters. I think the undecided. I think that any York City people have really made up their minds in what they were going to do and just weren't saying what they knew what the outcome would be. Secondly I think the issue of crime is one which is clearly very much still in the forefront of what this country is concerned about. I think it will be an issue in the 94 congressional elections. Beyond that obviously the bums out mentality and that's not to say that those who lost were and then the third issue just being taxes that the T-word is one which concerns people in general and it's one which was used quite effectively in terms of this election and I think it's going to be continues as we look towards the 94 congressional campaign. Well if you go what's your view. Well the two dominant issues a selection cycle where crime and taxes and those tend to work best for Republicans and that was borne out this time but it's interesting it wasn't just an anti-incumbent sentiment because some incumbents won. Particularly reform

mayors in Cleveland in Houston. It was a certain kind of incumbent who lost somebody from the kind of old democratic model of the one that interesting to be interesting me Bill Clinton ran against. If you're a tax and spand welfare state Liberal leader right now you have to be thinking I'm in trouble. But before I ask you to disagree with each other again perhaps the four of you can enlighten me on something that's baffled me that's been part of the consensus analysis this week. It is that since. Candidates oriented toward free markets tended to win in the recent elections. Therefore naphtha is in trouble. Would you please explain to me why it's true if it is true Steve. It's a very superficial argument. And after lowering passing NAFTA's lowering taxes and if Mr. Gore does well in his debate against Mr. Perot and I think he will despite his poor performance against the vice president last year I think that the bill will have more popular support and if the president's willing to sincerely want to make the deals necessary it

is going to come to pass. It's just because Clinton is weak heir go nap is weak and they have to can stand on its own merits its a tax cut and the voters said they want lower taxes. Are you suggesting that Ross Perot is an easier debater to beat than Dan Quayle. Ross Perot was tough but he doesn't have the facts on his side in this debate as Dan Quayle did in the last debate. So I think Mr. Gore if he doesn't let himself be bullied around will end up winning despite people not thinking you can win more if you were for Bill Clinton. You're with him on this issue. I'm certainly with him on the naphtha issue I think that is one of those issues that is really important for the future of America not that it's going to have that big an effect on the American economy. But it's really a statement of where we're going as an economy we're moving from a manufacturing and industrial economy into a knowledge and service economy so naphtha really because two thirds of what it's going to deal with is going to involve services that really is a statement about our future and not a relic of our past so I'm absolutely with him on this issue. Oh what's your view of this man I think we need after the issue regarding after that

the issue is jobs and we're losing those jobs or have we already lost the jobs my sense is the real issue in terms of what all the congressmen and Congress people are hiding behind is whether or not. The jobs we lose will be actually jobs were already lost because we're talking about broom manufacturing. What we really need to look to as we look at now if there is the idea of improving job skills and training people for those jobs is I think will come our way when we look at the fact that last year General Motors only shipped three cars to Mexico. We obviously can do better. We're told by those polls you just advise us to ignore that there is a lot of minority opposition to the view of black businessmen different from blacks and when I was a matter of fact the minority auto dealers are polling and campaigning with the Black Caucus as we talk and terms of being in favor of an afternoon issue which I think we all have to look at to take a mid-sized businesses not just minority businesses. Is to ensure that we are not in fact losing jobs

which are good jobs and I don't think we will. My sense is if you have additional business and you create productivity you're going to have more jobs and those jobs will be in the high end jobs we have you know we're not talking about Japan but talk about Mexico which has a long way to go to catch up with Japan. I want your view and also since you're covering these things all the time what do you think going to happen. Well as we all know members of Congress are not profiles in courage and they're we're looking for the present United States to provide some cover when its prestige is damaged as it was with these election results they worry and they start heading for the tall grass. So I think the president's going to have to win this debate on the merits. The White House polls show that the more people know about naphtha the more comfortable they are. They're not worried as much by the fears of job loss and so on that Errol talked about. And so I think that the debate idea with with Vice President Gore and Ross Perot was a good one because he's going to address that on the merits. Is he going to pass. I think it's going to be a close call but I think the president can still pull it out.

There was much talk as you know of the Republicans in Congress who have been critical of Bill Clinton for lacking principle in their view lacking considerable principle themselves but not helping them or not to even though they believe that it is going to be a factor. It could be a factor right now if it's in the house principally where this will be won or lost. And Newt Gingrich the Republican whip number two in command is saying that he thinks he can deliver about one hundred twenty votes on his side of the aisle. That's out of 175 So that's at least most of the Republicans. So that means the president has delivered about 100. I want to ask each of you what you think of the job Bill Clinton's been doing on the economy and also how important you think the president's role is in these matters. Well the president's role is not so much the positive they can do but the negative they can do in getting the way of the economic growth. We saw it with the tax bill which hurt the economy and it's going to hurt early next year. We see it with health insurance which is putting a great dampener on job creation. People hiring jobs creating jobs.

So he's done a poor job. The only area of the economy other than after that he's been right on is leaving the Federal Reserve alone. And the question there is how long will that last of the economy doesn't perform soon. They'll scapegoat the Federal Reserve just as they've done the pharmaceuticals and the insurance companies and anyone else they can lay their hands on the blame for their own shortcomings. If he would reduce the capital gains tax you would start a boom in this country of historic proportions and he would save his presidency. But I'm not sure he realizes that yet has ever been a president of either party who did not eventually scapegoat the Federal Reserve. They they they all do it. And it's to it's credit that he hasn't that's because he's been too busy making a mess of other things. What do you do that for you. You know I don't I think the economy in 1903 has been weak but being on a steady improvement. And I think it will continue to improve fairly steadily and I expect it will get very strong in 1995 and 1996 as the benefits of low interest rates which in part were made possible

by the very fiscal program that all my conservative friends seem to want to overcome. I think that you will have the benefits of monetary policy really hitting the economy and benefiting the economy in 95 and 96 so he should have a pretty strong economic wind that is back when he goes into an election in 1996. And by and large I happen to have been I'm a real fiscal hawk and I think anything that reduces that budget deficit is something I'm going to favor and he killed a lot of courage for him to do that at a time of a fairly weak economy. In terms of balancing the budget while there have been reductions in projected spending increases I see no spending reductions do you detect any that I've missed. Well I think there have been some reductions some reductions in agricultural subsidies they certainly have been reductions in military expenditures but obviously there is a great deal room of room in the in this federal budget for much more in the way of budget cuts. It's very difficult to do politically but I think that if he had been smarter I think he would

have attacked that side of the equation with a lot more vigor but in a curious way once he opened the door the country showed that they were way beyond the insiders in Washington and were much more concerned to have more budget cuts so I think you're going to see that. I think Kerry and John Danforth today were set up in a special commission to try and see what they can do and look at entitlements for example and I think this is the kind of thing that we're all going to have to face in the relator to bring our fiscal balance into being. What you have you good jobs you've done how important is the dog. But I try to write a president how I see what is before me and I think I would give him at least a B minus in terms of where he is I think that he made an effort in terms of obviously the tax bill my sense is we haven't talked about it yet that the health care bill is a terribly important thing which I think is going to be a win for the country. I was going to do it next but you go ahead and listen to it what it will talk talk talk about I mean we have the only national health care we have in the present time and I States's emergency room treatments for the 37 million people who don't have health care benefits.

So we certainly as we look at it in terms of a co-pay mention if you will the cost payments that are being passed along. To persons who let's say at one business do not have. One business does not have in fact health insurance in expenses does. And so the question is how do you level the playing field. My sense is this bill will do that. Our country has to have a national health insurance bill that seems to me that when we look at health in this country and we look at the cost of health we're tracking at almost a trillion dollars worth of expense in 1993 in terms of our costs. That's double what any of the Western nations face. I think it took vision I think it took courage and terms of health if we also speak to the issue of minority business and midsize businesses and small businesses. I think that he's taken a more forthright position in terms of support of those businesses than any recent administration. Those are the very businesses over there protesting that health care will add to their costs and deter their growth. Well first of all there will be additional costs in some instances but there will also be subsidies to

offset those costs. There will be businesses that won't make it because they won't be able to afford the difference in terms of health care costs they might not have happened the reality of it is when you look at my business if in the last five years I've had a 15 percent increase each year because of health care costs we've got to do something about that and the reason we're doing that is because I have a young workforce in our company obviously myself in that we have a healthy workforce and we have people have low claims and yet Wairau costs continually going up in the answers we because we are paying additional costs for other people who don't have those benefits and we have to do something about it. Still look like a kid to me. What do you think I'm going to do. How important. Well I agree with with with Errol that we need health care reform but I think if you look at the health care reform in some ways as a model for his problems I mean he this this president has the ambitions of Lyndon Johnson with the political clout of Jimmy Carter. He has faith in government that seems to be boundless. He doesn't there is nothing that the government can't do in his view and he has proposed a health care plan which instead of being an insurance reform of the sort that

even his sector his treasury secretary former Senator Lloyd Benson introduced last year on modest reforms he's put in he's proposed this gargantuan virtual government takeover of health care and he doesn't have the political clout to deliver it. The country is too skeptical of government to buy it and it isn't going to pass. You think there will be no change no change at all in health care. No I think that what might come out at the end is is a useful insurance reform that will deliver to some of the people who aren't covered now but it is not going to be anywhere close to the reform that the president is wife of proposed. How much influence does Lloyd Benson have on economic policy. Zero on health care unfortunately he's been simply out of the loop on monetary policy I give him credit as Steve did for understanding that inflation did in the last Democratic president and going along with the Federal Reserve and he's been influential on taxes and fiscal side but

health care nothing. Stephen doesn't do many other Damon too darn good economic forecaster Moore gave us his forecast what do you see coming next year. I think the first half is going to be very slow because of the taxes and the health uncertainty. The second half is going to be a little better but we're still going to have the economic equivalent of walking pneumonia. And I think that's going to lead to political changes where we finally get the leadership that loosens up the constraints on the economy particularly on the tax side and then we're going to really take off. So either 94 96 run for boom times. I hope the president will make his U-turn after next year's elections if he has doesn't do it after this past week's elections. Has the bond market panicked too soon. I think so. The Federal Reserve I don't think has really changed its policies. I think it is a hick up Mr. Greenspan is still in charge and the White House is still leaving him alone for the most part. You want to riposte more. You know I think I do think that we will have some weakness in the economy in the first half

of next year but as I say I still see the economy improving improving steadily improving slowly but still improving steadily but as the lag effect of the low interest rates begins to be fully absorbed into the economy which will take the better part of next year I think we are going to be looking at to enter some very strong years in 1995 and 1996 so this is the first time in seven years that I have been moderately bullish and I'm really looking forward to having a couple of very good years in 95 and 96. It's morning in America. It's something that unfortunately we do have to stop there. I want to thank my distinguished guests I wish we had four hours with each of them. Steve Forbes more Jokerman Earl Graves and Paul. So you go and I hope you'll be back with us again next week. I guess that will be the man the great John Templeton picked to pick stocks for his funds all over the globe. Mark how the West go. We'll find out where in the world he's finding his best bargains now. You won't even need your passport in most of them or three weeks. I'm Louis Rukeyser.

Good night. Street Week With Louis Rukeyser is a production of. And public television made possible by the Corporation for Public Broadcasting and by the annual financial support from viewers like you by the travelers providing American business with insurance investment services and managed health care the travelers America's umbrella by M F S and FS helping neutral fund and institutional investors achieve their financial goals since 1924 and vie for eventual securities. We believe the most important thing we earn is your trust. Prudential Securities for a printed transcript of this program send $5 to transcripts Wall Street Week With Louis Rukeyser Owings Mills Maryland 2 1 1 0 1 7. Transcripts are also available to subscribers of the Dow Jones news retrieval service. For.

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