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|  | JANUARY 17, 2006
"This Is a Remarkable Economy"But President Bush isn't getting much credit for it, says Allan B. Hubbard, director of the National Economic CouncilAllan B. Hubbard, the director of President Bush's National Economic Council, was formerly president of Indiana-based E&A Industries and one of Bush's classmates at Harvard Business School. He sat down to discuss Administration economic policies and public relations strategies with BusinessWeek correspondents Richard S. Dunham and Howard Gleckman on Jan. 11. Here are excerpts of their conversation: Why is there a disconnect between public perceptions of the economy and generally positive economic statistics? The erratic fuel prices that we've had create angst on the part of the American people. The Iraq war has a huge impact on the President's approval rating. And his rating has a direct impact on views of his role with the economy. The good news is there may be somewhat of a disconnect, but it's not affecting people's behavior. They're still spending like people do when the economy is expanding. How well has the White House communicated the situation to the public? We have not done a very good job of getting our message out. Obviously, we are trying to change that. We have to keep reminding people that this is a remarkable economy. It's just remarkable. How important is it to have the President involved in spreading the word? It's very important. For some reason, the media seem to cover him better than other people [in the Administration]. He's also a great spokesman, because he's so passionate about the economy....You will see him talk about the economy on a regular basis. A lot of middle-class people feel a financial squeeze. How can the Administration deal with that? That's definitely a concern. Health care has been gnawing away at people's wage increases for the last 20 years, and has become a much bigger problem in the last five. Health-care costs are a crisis in America, and the President is very concerned about that. What can he do about it? He's looking at a number of very important things. The source of the whole problem is third-party pay. The result has been overutilization [of medical services] and no pressure on pricing. We've got to get the individual who is consuming to know what the prices are and [to] have some skin in the game. Is there a role for government? I would hate to see requirements, but I certainly think we should insist on it. Employers should start insisting on it. They're paying for the health care. Employers should insist that their insurance companies provide information so people are much better consumers. It's the only part of the economy where we don't know prices. And they're way behind in the information-technology revolution. Remarkable. I must admit it's because it's not a normal market. There's no other industry subject to market forces that doesn't have IT out the wazoo. How good do you think the economy is compared with the booms of the late '90s or '80s? I'd much rather be in our economy today than the '90s or the '80s. The problem with the '90s was there was excess. We knew it, but we just thought it was going to continue. It wasn't sustainable. What's wonderful about this economy is that it's broad-based and very sustainable. It's strong growth but not too strong, so it's not going to be a boom-and-bust situation. Are there policy or political implications to the President turning around perceptions of the economy? It certainly would be helpful. It's helpful to the President politically for the public to realize how successful the economy is. It's a lot more important to him how the economy is actually doing. He is most concerned about protecting the pocketbooks of taxpayers by not allowing Democrats to raise taxes. Tax reform seems to have fallen off the end of the earth. Should we expect to see a tax-reform initiative in 2006? I don't know what the timeline is going to be. The President is still very committed to tax reform. Our current tax system is indecipherable and opaque and impossible to do on your own. He's very much a believer that reform is necessary. But isn't making the 2001 and 2003 tax cuts permanent a higher priority? I'm not going to suggest that we're taking tax reform off the table, because we're not. We're not taking Social Security off the table. But he's also totally committed to preventing Democrats from raising taxes. Are we going to see a serious push from the White House to get Retirement Savings Accounts and Lifetime Savings Accounts done in '06? It would definitely be in everyone's benefit to rationalize all our retirement vehicles. In terms of the priority, I'm going to leave that up to the President. There are all sorts of problems with pensions. Is there anything the Administration can do? We've had a bill up there [on Capitol Hill] since last January. We're not happy with either house's bill. We've been very clear about recommending a veto if it's not improved. The President is really disgusted with the entire situation. The whole idea that companies make promises [to workers] and then break those promises is indefensible. And it's doubly indefensible when they break their promise and then tell the taxpayer to pick up the tab. That is the current system, and it's outrageous.  Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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