Sununu Speaks: Business Is Partly To Blame
Disarray in Administration economic policy? What disarray? Despite several dizzying weeks of White House zigzags, Chief of Staff John H. Sununu says that business -- not the President's beleaguered economic team -- is partly to blame for confusion about the right response to the sagging recovery. In a spirited Nov. 20 interview with Washington Bureau Chief Lee Walczak and White House Correspondent Douglas Harbrecht, Sununu complained that Bush has received conflicting policy advice from corporate leaders. He blasted congressional Democrats for sabotaging Bush's economic strategy and exploiting the recession. He also insisted that the President will stand by his decision to hold off on a stimulus package until 1992.
Q President Bush seemed to tiptoe up to an anti-recession tax cut, only to tiptoe back again. What happened?
A We never tiptoed toward it, because we saw immediately the reaction of the markets. What we were looking at was an overall growth package based on what the President had already proposed. . . . You do not get legislation passed merely by saying you want it. . . . And it became clear that the Senate Democratic leadership did not want a growth package passed.
Q What about the confusion over capping credit-card interest? First the President urged such a move, then he opposed legislation that would do what he wanted. . . .
A There is a very important difference between the President saying we should have a market response to a reduction in interest rates and having someone foolishly file a piece of legislation. That constrains the markets. The President jawbones the Fed at times. Nobody passes a law that says interest rates should be such and such.
Q So there is no Administration disarray over economic policy?
A The internal advice has been fairly consistent. Where Bush gets conflicting inputs is when he goes and talks to businessmen in different parts of the country. He talks to large business vs. small business, and the advice quite often has self-conflicting components.. . . Here's what the problem is: We have to do a much better job of communicating. . . . We had a similar problem one year ago when people were saying that the President has to tell the American people why he wants to send troops to Saudi Arabia. . . . Since the economy softened in August, you've seen in September and October a steady drumbeat of the message of what has to be done. It takes time to sink in. Last time, we only had to convince the rest of the world. This time, we have to convince a Democratic Congress that frankly appears to be enjoying the fact that the country is in a slowdown.
Q What do you say to executives who say they're disturbed by your apparent indecision on the economy?
A I think they're mistaken. We have tried to deal with the things that we could handle. And you have seen us propose fast-track negotiating authority for the U. S.-Mexico Free-Trade Agreement, banking reform legislation, the capital-gains tax cut, the R&D tax credit, and the family savings package of individual retirement accounts.
Q Can the President just repackage these initiatives in his January State of the Union message and call that a new growth strategy?
A That serves as the kernel of what has to be done to get this country moving. But to say that we need a totally new package just because Congress won't pass these things is wrong. We need to create a national climate where Congress feels it's imperative to pass a growth package. . . . What would have been worse would have been to have a Bush package proposed and have it fail -- that would have been a confidence-buster.
Q A new BUSINESS WEEK poll finds that most Americans do not agree with the President's call for a capital-gains tax cut. And business reaction seems to be mixed. Why not go back to the drawing board?
A Big business is not enthusiastic about capital gains. If that's not what they want as incentives for investment, they ought to make alternative proposals. And when you ask them about it, you don't get very much except a narrow industry-by-industry response -- like a credit for machine tools. Capital gains is business' second choice. The first is usually a narrow credit.
Q At times, it seems as though Housing Secretary Jack F. Kemp is carrying on a running debate with President Bush's team of economic advisers. Who's in charge here?
A Jack Kemp is not an economic spokesman for the Administration.
Q Has George Bush just bet his political future on a fateful decision to forgo economic stimulus now?
A It's not a riverboat gamble. If you talk to 100 economists, virtually all of them would say this is the best thing for the economy.