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Laura Laura.
Wall Street Week With Louis Rukeyser is made possible by the Corporation for Public Broadcasting and by the financial support of viewers like you by the travellers nearly 40 million Americans benefit from our insurance investment services and managed health care. The travellers by MF s and FS helping you to will fund an institutional investors achieve their financial goals since 1924 and vibrant ensure security is rock solid market wise Prudential Securities celebrating 10 years on television with Wall Street Week With loser of geysers. Friday October 30. Our panelists are Harvey Eisen Carter Randall Julius Westheimer. Tonight's special guest he's Lynne Embarq Secretary Department of Labor. Good evening I'm Louis Rukeyser This is Wall Street Week. Welcome back.
Well this was the week when we found out that there may be hope for the American economy yet. No I'm not talking about next week's election. Anybody who still thinks our prosperity comes from politicians of any party has really not been paying attention. I'm talking about the truly important news of the week and it came not from the counting room but from the nursery. For it turns out that once again mothers were right and doctors were wrong. Babies actually do sometimes shoot up overnight. Contrary to the conventional medical view and all the neat charts and pediatricians offices that have been worrying parents of nonconforming infants for generations. A new study found that babies in fact grow in fits and starts. With such long intervals in between. That about 90 percent of the time they are not growing at all. Now honestly folks doesn't that put your mind at ease about the American economy. It's not ready for the emergency ward. It's just been taking an extended nap.
For a year and a half now with the recession technically behind us the not so you'd notice economists of all persuasions have been poring over their discredited charts trying to figure out what strange malady was afoot. Clearly we have been consulting the wrong experts. We didn't need an economist. We just need a good pediatrician. The final prove lest you doubt me comes in the observation of the physician an anthropologist who conducted the study Dr. Michele Lampa. Just before a growth spurt finally occurred. The baby often got unusually fussy. If that's the test the U.S. economy may be on the verge of the biggest boom in history. Obj. Lee though the baby appears to be still fussing in its crib. It will briefly appear to be sitting up as in this week's news of improved income and spending and huskier than expected third quarter output. And then rolling over again as home sales falter durable goods orders slide and Christmas spending plans remain
subdued. And what could be more irritable than the mood of the American electorate on the weekend before November 3rd. At this rate of maximum fuzziness the economy could be on the verge of a spurt that could have it staring down at Wilt Chamberlain by next July. First of course we have to get through this election. And who knows it might even make a difference who wins. In the ever respectful belief that it might indeed. We will complete Tonight the exercise we've been going through on this program for six straight presidential elections. Last week's guest was Governor Clinton's designated economic spokesperson. Tonight it's the Bush team's turn on the griddle. Incidentally when we were scheduling these programs Ross Perot had withdrawn from the race. We did give him a chance to be interviewed about his economic program on our election special but he declined. We certainly have nothing against third party candidates at least not any more than we do against first and second party candidates. And for example once devoted a possibly memorable half hour to the economic
program of John Anderson. Wall Street for its part seemed as confused as the rest of the country about what this election may really mean and whether it is in fact just the traditional period of crankiness before the baby's growth rate provides a happy surprise to the Hold on family. Get some clean diapers ready in any event. But first let's see who was cleaning up in Wall Street in the week just passed. And as the Dow Jones Industrial Average indicated stocks continued their grudging three week ninety point comeback from their recent lows it's faltering along with the bond market at week's end but still achieving a net gain of more than 18 points at thirty to twenty six point two eight. With the Dow way down by ongoing turmoil in giants like General Motors the broader market indexes continue to outperform the big blue chips. None of which change the mind of a single elf. As the consensus of our ten leading technicians on the Dow's next six months remained barely positive plus
1. The bond market was held in check by the widespread conviction that Governor Clinton is going to be elected and thus that even weak economic news which the bond ghouls normally adore is bad news because it will tempt him to inflate. I need hardly add that these guys have been wrong before. And if inflation is about to explode on the American scene you couldn't prove it by the precious metals market. Gold drop which lowers weekly closing more than two months. Or by the generally sleepy nature of the economy. But you know what they say about babies. I don't I want to be going to be able to say oh baby about the stock market in about a month in about a month I think thirty five hundred is true value in the Dow and it will probably get there because it always does get value displaying true value to us because other than my hardware shopping honestly that means well I'm estimating earnings of the Dow at about two hundred fifty dollars next year and I put a price
earnings ratio one of 14 times which is about what bonds are capitalized and 14 times 250 is thirty five hundred. It's simple. The market just been marking time here. Why do we waste time training every day. It's a simple. Let me just go to a value Well you have a little bit of fun and you've got to be emotional and you've got to worry about elections in the life you don't think about is that when it's just intense you know this as a matter of fact I really do not I think the market might react emotionally but. But economics wild and earnings will out and interest rates will out regardless of who's present. I'll be very happy to be talking about the president's policies Susan who the president is. Tell us about interest rates what you think they can do. I think interest rates have just about finished their downward move short term rates at least and I think the next major move is up and I do think there's a great possibility of inflation maybe a year out from now. I think interest rates will stay low but inflation may come back to start in 1904 and
therefore interest rates on the upside at that time just west on it would I be taking a wild guess if I surmise you were not as sanguine as Carter. No I don't think that would be a very wild guess I'm not as optimistic as Carter the market has been moving up over the last many years because interest rates have been moving down. But no matter who is elected president I think we're going to see a stimulus to the economy. More demand for money interest rates moving up. I'll tell you Lou a lot of people who have been so dissatisfied with their CDs and their savings accounts have been pouring that money into the stock market maybe not realizing that they could take a loss there which they cannot take in their CDs and their savings account. And when this interest rate curve ends and rates start to move up again you might see this whole movie played backwards. The market's going to take a real tumble. What's your advice to those people. But other than not buy stocks which is kind of put it over your doorway at home. Not really I wouldn't be doing any business. Lou I think people who are not in the market ought to get in it cautiously because long term stocks are the place to be. People who have too
much or in any given category then they should cut back. I think the categories to be in are the utilities the food and beverage food beverages and some of the drugs and cosmetics have been knocked down pretty hard. Those look like good areas for part of your money. All right and I realize what do you make of it. While the averages have not done very much this year but we've been in a vicious bear market if you look underneath it 58 percent of all stocks are down 20 percent or more from their highs this year. Over a third of the stocks are down 30 percent or more from their highs this been a tough year when you go stock by stock. But I tend to agree with Carter I mean I'm I'm positive. Interest rates are down. Sentiment is incredibly bearish. The economy is groping for a bottom and once this election uncertainty is out of the way I think things could get better. You say you are positive is that you optimistic or just certain. No I'm never certain I'm optimistic. Do you agree with Carter's judgment that it doesn't really matter who wins to go short of course in terms of the stock market it does not matter. That's been widely discounted. And if you look at history the
market has followed its normal pattern it goes down in the first half of the election year. It rallies in the second half if it looks like the incumbent is going to lose it goes down before the election and up afterwards and vice versa so because Mr. Clinton is ahead in the polls the market has begun to rally a little bit and it looks like the election is factored in. Some people think the market rallied because President Bush was gaining a little bit this week. Well that's what makes markets. Already this is the point in the program when we normally pause for a round of your questions and I think we'll be using that time to ask President Bush's representatives some extra questions that may affect all our futures. We'll soon be back to answering your most personal money questions so keep them coming to us here at Wall Street Week Owings Mills Maryland 2 1 1 1 7. That's Wall Street Week Owings Mills Maryland. 2 1 1 1 7. Now before we meet tonight's special guest who was designated by President Bush as his official economic spokes person especially for this program. Let's examine some of what is actually contained in the Republican candidate's proposals for a second term of Bush a nomics. What the president's lips and
his veto power are saying now is no more new taxes. He has in fact proposed cutting rates across the board and slashing the capital gains tax to 15 percent on all investments. He's also proposing considerable tax relief for middle income Americans including a $500 increase in the personal exemption per child. What he calls family savings accounts that would allow penalty free withdrawals for home purchase education or medical costs and a $5000 tax credit for first time homebuyers. Bush promises that his second terms target would be to reduce government spending. He has proposed what he says is one hundred thirty two billion dollars in specific cuts in mandatory programs. He wants to put a cap on the growth of spending on so-called entitlements except for Social Security and he wants Congress to pass a balanced budget amendment and give them a line item veto. As for fighting unemployment Bush says his program would do so by continuing to lower
trade barriers in the belief that exports are the engine of economic growth by providing what he terms a flexible worker retraining program to be financed by cuts in other government spending and by creating so-called enterprise zones within which the capital gains rate would be zero in areas of hard core unemployment. How much of this is really wanted to happen. And what would be a real effect on the economy if it did. For a view from the top of the Bush camp let's go over now and meet tonight's special guest Lynette Martin. Then Welcome back so it was a pleasure to see you. Nice to see you know this place. George Bush may not always follow in Morton's advice but he certainly likes to have a speak for him. A former 10 year Illinois congresswoman who has been Bush's secretary of labor since February of last year as Martin was designated by him as his spokesperson on social issues on the Louis Rukeyser election guide specials both this year and in 1988 and he picked her
tonight to represent him on economic questions. Lynn many likes watching your program. Well I'm sure that you brighten it and beautiful. There's no question about that. But many people would not envy you your test tonight. Many people say that the hardest thing about the Bush economic program is finding it. The president tells us now that he. If reelected would give us lower taxes lower spending less regulation. If that's the case why did they go in the opposite direction all three of those in the first term. First of all I think we've got to put everything into what was the commitment of the first term and I think for every president which is peace and prosperity we really wouldn't be able to be talking as we're talking if a lot of the foreign policy objectives and peace objectives haven't been met. Now in his second term he can concentrate on what I really think can be an American century because I think we're looking forward to the 21st century. And now as we look and we've the market is I think finally made the adjustments to everything from the 80 to changes in Social Security. It is
time to limit any taxation. Governor Clinton has been at least above board about that he's talked about higher taxes than either do Pakis. Combined with Mondale but from my point of view as labor secretary the worst combination that I have seen is a new increase in payroll taxes I have. I've talked with a lot of there and there are some very bright folks around Governor Clinton. But I'll be Dugan if I understand how you create jobs by payroll taxes. More than that the president long before the election started said let's really look at rule and regulation. There's been a Reagan Bush presidency for 12 years now you can get caught in ruts but before the election he said that that let's look at I think that was very important. But it is also true although no one wants to say much that this last year and a half the Congress Republican and Democrat even though it's a Democratic Congress they've been looking at redistricting. They've been looking at scandals they've been looking at being devastated personally really. It's been
impossible to have that action. We should have some of those specific tax relief areas that would spur growth. Whether I'm I'm not sure we should call it capital gains tax although that's fine on Wall Street Week. It seems to have almost gotten a bad reputation we should be talking about it as investment credits as new job proposals because that's indeed what it is. And that first time new homebuyers isn't just for the two hundred twenty eight thousand new jobs it would produce. It's also because it would give 25 to 35 year olds that first bite at homeownership which I think the economy desperately needs. Well you're so eloquent almost but not quite forgot my question. You speak of the Reagan Bush presidency. Yes. Many people don't believe that a 12 year presidency. Milton Friedman for one says that George Bush has practiced what he calls reverse Reaganomics. If this is a cohesive policy why did he raise taxes why did he allow domestic spending to accelerate at this level. Why did you preside over this
terrific increase in regulation. You know last time I was with Dr. Friedman it's always such an honor to be with him he also doesn't think there's any difference really between today's problems and post World War Two problems and changing defense. But the fact is even for a Nobel economist there really are differences in the workforce and there are differences. George Bush working with the Democratic Congress made an agreement to try to cap the very spending you're talking about. And part of the agreement involved taxes he has said it was a mistake not just because of the effect the taxes sad but because the Caps haven't worked as well as they should have with that Congress. And so therefore working with the new Congress 150 new members of the house it's still so extraordinary. It takes me aback regardless of party. I hope we can move forward. The choice really isn't between George Bush and Bill Clinton in some ways the Clinton economic policy is changing so rapidly but it doesn't involve more
taxes more regulation. And what a word I hope you can all explained when I just just came up where you know that they keep talking about managed. Entrepreneurship How do you manage I mean that's exactly the most axeman ironic phrase for any military to tell about you know yes I do I think they're close. You say that the president spent four years cleaning up the world. Now he's going to turn his attention to the country he didn't ignore the country by the way let's you know. But I am saying that understandably the Democrats may not wish to talk about foreign policy. You started off talking about babies and girls sports as a mother I'll tell you the most important domestic policy is peace. And this president has brought it. Lynn you too to speak of a change of emphasis and certainly the president talked about that in the campaign but for all the talk about change he's got the same bunch of advisers around him. Dick Darman who counseled him to raise taxes in 1990 is going around now saying that the president was wrong to call it a mistake. Dorman help prepare him for the key debate Dormans mentor Jim
Baker is supposed to run domestic policy in the next term. Why should anyone believe that there's suddenly a fervor for tax cutting there. Well I think it's not just. For text it's a it is almost an historic time to rebuild America and to do it in ways that make sure the private sector and that's what we've learned if we've learned anything not just from the Reagan Bush presidency but by what's happened throughout the world. There are going to be changes the president rightfully is asking for everyone's letter of resignation I love that old fashioned phrase. What is it the pleasure you serve at the pleasure of the president. There will be not just a new economic team for for newness sake not just change for change sake but a focussed directed team to making sure this economy gives the kind of opportunity that this country has been really the beacon for AROUND THE WORLD. And there is a new people. You're not going to have to dislike any more. Let me let me turn to stop beating up on us a minute.
Well I think that again one of the few economic success stories on the very few economic success stories of the 1990s about American exports. But that's a controversial area Ross Perot gets wide support when he denounces the North American Free Trade Agreement and says this is a program free trade that will just hurt American workers could he be right. He could be right on some things he's absolutely wrong on that one. I think that it's also says something about a presidency that. You can't just sort of say. Maybe I'll be for it if everyone suddenly says I'm for exports our future. We as Americans are sort of we're so used to these sports analogies we're used to somebody winning and somebody's losing. Now after is just as or agreement with the Canadians is actually a new kind of trade agreement. Both sides win. Unlike some of our friends in South Korea or Taiwan or Japan or occasionally not so friendly folks. Mexico buys from us 70 cents out of every economic dollar a cleaner environment comes with the wealthier countries so
we we learn from that. The difference here and this is what's the hardest to explain is we don't compete and don't want to compete. And 65 cents an hour jobs. We're not aiming for lowering the standard of living and we're looking for the kind of high tech high standard high training jobs. That's why too. And it may be Wall Street Week but all of us here know it. But the 50 percent of our young people who don't go on to school past high school. That percentage the dropout The Those can be failed careers for people and that's why we have to make changes there. You said at the beginning I I covered social issues. I'm think that one of the mistakes we make is trying to separate them. When are when we don't have a workforce that's well trained it surely does affect the economy when the economy doesn't respond people can get frightened but now after in free trade are actually going to be the jobs of the future of the trade the might not of the panel's thought it was going to ratify. Minister Clinton has implied that we need a massive public works program
in order to create jobs. Do we need one. Do you agree. And would it create jobs. Well we've had one we've really had the biggest public works trainer program with the road bill I mean billions and billions of dollars I talk to the secretary of transportation yesterday not knowing about your question but I said what if there were even more money the states and localities can't even spend it any faster than they are now. So are their need for some infrastructure repairs of course that's on a continual basis. But the idea that full public works I mean I think people forget that when they talk about what about Roosevelt. The federal government didn't even build highways that the federal government wasn't involved at all. Today we are. So any increase you're talking about is already on top of something else and somebody has to pay for it. It's very difficult with Bill Clinton to know where the money comes from except from all of us. We're pretty sure that unlike in other recessions this is a white collar
recession. There are hundreds of thousands of middle management men and women out of jobs and companies have learned to downsize and restructure and maybe won't hire them back if the Bush administration is re-elected. What provisions will you all make to bring that valuable sector of men and women back into the workforce Westie you're right it's a it is a slightly different kind of reception reception and recession not just because of that. You know in in the other 15 from post-World War to about 16 percent of those who lost jobs were white collar. Now it's about 20 percent. But the people who are blue collar or pink collar also lose jobs too and they're equally worried so we're talking about training and retraining. I think you have to look along a spectrum. But what the biggest thing that the administration has come to grips with that that Governor Clinton still doesn't understand is it isn't going to be General Motors hiring 2000 people. It's going to be 200 firms hiring 10 people. That's why you have to be so careful of payroll taxes that's why you have to
open it up for business. One of the biggest things that people talk about in this campaign is the government deficit. When I talk to voters they talk to me about their personal deficit. George Bush has not been able to control these lunatics and Congress and spending. What's going to be different this time. I first of all I don't think you can expect the president to control the Congress but I'm hoping a new one. I mean really the thought of in fact a Democratic House Senate and Democratic president should send us all into a kind of sharers. I don't necessarily genuflect at the Shrine of the balanced budget. But I do still make the sign of the cross I think we have to get to that balanced budget I think we do need the amendment. And I think we have to begin looking at the deficit or his new grandchild and mine aren't going to have are yours and all of ours I mean you know we really do we must we have to step this and consumer debt. If I may add has you know consumers our rovers are saying hey we're being careful of what we're spending too. I
know that I should be. I know I should be saying get out there and spend but I think Americans are asking from their government what they're beginning and willing to do for themselves. And the president understands that. Limb with that kind note about our respective grandchildren we have to run and wind things up. It's always a pleasure talking with you and we'll see you again in your next incarnation. Whoever wins next Tuesday thanks to the panel I hope you'll all be back with us again next week when this election is finally over then we will have a special report on what the final returns actually will mean to the nation's finances and indeed to your own finances. Three top experts non-politicians all will give us their insights on how the vote count will affect the money count at your house. And here's one election lever at last that has your name on it. Meanwhile this has been Wall Street Week. I'm Louis Rukeyser. Good night. Wall Street Week With Louis Rukeyser has been made possible by the Corporation for Public Broadcasting. And by the financial support of viewers like you by the travelers providing American business
with insurance investment services and managed health care the travelers buy him at Fast and the FS helping you to a fund that institutional investors achieve their financial goals. Since 1924 and vibrant ensure security is rock solid market wise Prudential Securities celebrating CAN years on television with Wall Street Week With Louis real geysers for Corporate a transcript of this program sending $5 to transcripts. Last week in Week With Louis Rukeyser Owings Mills Maryland 2 1 1 1 7. Transcripts are also available to subscribers of the Dow Jones news retrieval service. For. The Wall Street Week With Louis real geyser is produced by Maryland Public Television which is soley responsible for its content.
Wall Street Week with Louis Rukeyser
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Speaking for Bush
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Maryland Public Television
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Maryland Public Television (Owings Mills, Maryland)
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To speak for President Bush's economic policies, his Secretary of Labor. Lynn Martin, Department of Labor - Guest; Carter Randall, Harvey Eisen, Julius Westheimer - Panelists
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"Wall Street Week is an educational talk show hosted by Louis Rukeyser, who provides viewers with information on finances and the economy and conducts discussions with experts. "
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