CNN NOVAK, HUNT & SHIELDS
Interview With Commerce Secretary Donald Evans
Aired July 27, 2002 - 17:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
AL HUNT, CO-HOST: I'm Al Hunt. Robert Novak and I will question one of the Bush administration's lead economic officials.
ROBERT NOVAK, CO-HOST: He is Secretary of Commerce Donald L. Evans.
(voice-over): Stock prices continued their precipitous fall the first two days of the week to new four-year lows as President Bush put his faith in the corporate accounting bill making its way through Congress.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe Congress is going to get a bill that will help take some of the uncertainty out of the market, and that bill is going to put some meaningful reforms in place.
NOVAK: As a Senate-House conference committee agreed on the final version of the bill, the market rallied sharply on Wednesday.
REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: You know, what happened today is that we finally got action, not just words on the issue of corporate accountability. The Sarbanes bill, which passed the Senate 97 to nothing was finally accepted by House Republicans after dragging their feet for weeks and weeks, months and months.
NOVAK: Don Evans rose from a roughneck with Tom Brown Incorporated Oil Company to its CEO. A friend and neighbor of George W. Bush in Midland, Texas, he was chairman of the Bush 2000 presidential campaign, and then became the nation's 34th secretary of commerce, his first full-time public office.
NOVAK: Secretary Evans, do you really believe that this bill providing for more regulation of accounting industry will turn around the equity markets which had been slumping by itself?
DON EVANS, COMMERCE SECRETARY: Well, Bob, I think what this -- what this bill will do is help restore confidence and trust in our financial markets and in our free enterprise system. It's just one step. It's an important step, I think. Conduct that's been revealed will last a year and a half or so that took place across corporate America has shed some light on some necessary reforms, but as the president said a long, long, long time ago what we really need to make sure is that leaders across this country are leading with integrity and honesty, and individuals that you can trust, and by far, by far that is true of American leaders across this land.
NOVAK: Mr. Secretary, there are some of the business people that I have tried to talk to this week who really think this bill is a terrible bill; it's a dog. They think that it's going to be very difficult for them to function. They can't even talk to their lawyers on a confidential basis. They think it hurts start-up companies. As the representative of American business in the Cabinet, don't you hear that kind of complaint?
EVANS: You know, Bob, I really don't. I've heard a few concerns, but let me tell you that I've spent 26 years of my life in the private sector, spent 16 years of my life as a CEO of a large corporation, and during the course of this I've talked to corporate attorneys, corporate lawyers that I relied on for sound counsel and advice while I was in the private sector, and in talking to them I'm very comfortable with the bill that is being sent to the president, very comfortable with the kind of reforms that are needed reforms to make sure that the investors have the kind of information that they need, that the accounting system in our country, accounting industry in our country takes a hard look at the way they're conducting their business.
NOVAK: Sir, another group of people I talked to who are very worried are Republicans, who are seeking office reelection from Congress from the House and Senate this year, and they really want the president to do something more and do it fast by Labor Day. What can the president do to increase their confidence, help the Republican Party, help the economy?
EVANS: Well, you know, Bob, the economy is doing well. The economy, quite frankly, is doing surprisingly well when you think about the blows to the economy over the last year and a half. When the president entered office, the economy was in a decline. September 11, we all know the attack on this country, we are at war now, we know the equity markets have declined, we know that business investment spending has declined pretty dramatically over the last couple of years, and so when you consider...
EVANS: ... all of those things, the economy is really doing well. The economy is growing. Even in the first quarter, it grew at 6 percent. Chairman Greenspan came out the other day and he thought the growth for the year would be 3.25 to 3.75 percent.
What people are looking at, of course, is decline in equity prices and the decline in the stock market. And you know, what the president is doing is leading on restoring confidence in our markets and trust in our financial systems. And that's what he can do.
Now, what Congress can do is make tax cuts permanent. They can send the president a passed terrorist insurance bill. They can pass trade promotion authority and send that to the president, and so there are a number of steps that Congress can take to continue to improve the conditions for a growing economy and make sure that we are putting every American to work.
HUNT: Mr. Secretary, on the war there's no doubt that Don Rumsfeld speaks for the president. On diplomacy, Colin Powell speaks for the president. Who is the president's chief spokesman on economic and market matters?
EVANS: The president. The president speaks...
HUNT: There is no Donald Rumsfeld on the -- like Rumsfeld on the war and Colin Powell in State, there is no chief spokesman on economics?
EVANS: When it comes to the economic security of this country, the domestic security of this country, national security of this country, the president speaks. But he's got a strong team of economic advisers around him that he counts on and relies on.
HUNT: Realize that during the Clinton years, of course, Bob Rubin for most of the time was the chief spokesman. Have you decided that that was a bad policy, to have a chief economic spokesman, that you don't really need one?
EVANS: Let me tell you what the president is focused on, Al, and that's results. See, he's very focused on making sure we're creating the kind of conditions in this economy, this country, that will this economy to continue to grow, and that's what this president is delivering to this country, a result.
HUNT: So there is no chief economic spokesman?
EVANS: We have got an economic team that continues to advise the president.
HUNT: For the last few weeks, as the markets have been roiled, there has been a silence from a seasoned veteran, the vice president of the United States, Dick Cheney. Why has Dick Cheney not spoken on this issue in the last two weeks?
EVANS: Well, Dick Cheney has spoken on this issue in the last two weeks, to the president.
HUNT: Has he spoken to the public?
EVANS: Well, you know, I don't know every public statement he has made or has not made, but the vice president continues to give sound advice to the president.
NOVAK: Mr. Secretary, in contrast to your optimistic assessment of the economy, a Gallup poll was out around the country asking questions this week, and let me just give you a couple of answers they have. Investing in the stock market, good idea, 31 percent, bad idea, 63 percent. Personal finance situation compared to a year ago, better off, 32 percent, worse off, 45 percent. The American people, as far as investing in their own self appreciation, are they a good deal less optimistic than the administration, would you say?
EVANS: Well, I think in terms of investing in equities right now, they probably are, Bob. I mean, we know what's happened in the stock market over the last couple of years. But you need to put it in perspective and you need to be mindful of what's happened over the last 50 years or so, and understand that the equity markets have grown at about the same pace as our economy has for the last 50 years.
And then in the mid- to late- '90s, the stock market grew at five times the pace of our economy, and many wise economists, many wise investment advisers said that there will likely be a correction, and that is indeed what's happening right now.
But listen, I am optimistic about the future of America. I'm going to bet on America. I think people that consider long-term investments in America will be making wise decisions.
HUNT: Mr. Secretary, the aforementioned Bob Rubin for eight years set a policy in the Clinton administration that we talk about the economy, but we do not talk about the market. This administration has changed that policy. Paul O'Neill has touted the market saying it's a good time to buy. The president this week talked about the market bottoming out.
Why have you abandoned that Rubin policy, and do you believe that you can talk up the market?
EVANS: Well, I don't think that anybody is necessarily talking up the market, Al. I think that, you know, I know the president in my conversations with him is very focused on the economy and very focused on people that are out of work, and very focused on creating jobs in this country. And we are going to continue to focus on the kinds of policies that allow this economy to grow and be healthy.
HUNT: Mr. Secretary, we are going to take a break right now. But when we come back, we will ask Commerce Secretary Don Evans if he thinks SEC Chairman Harvey Pitt is back in trouble.
NOVAK: Secretary Evans, I know it's your job as secretary of commerce to have an optimistic position toward the economy. But, frankly, aren't you just a bit worried about the fact that the spread between what the high-grade companies pay for their loans and what the start-up companies have to pay has widened so much and it is so hard for start-up companies to borrow money, isn't that a worrisome thing for the secretary of commerce?
EVANS: Well, I would say this, Bob, you certainly point on something that's very important, which is the entrepreneurs of this country that are starting new companies and building companies, I mean, the real economic engine of this great free-enterprise system are the small-business owners all across this land. And, you know, right now, we happen to be in an environment where interest rates are at record lows. And so, it does provide good conditions for these small companies to borrow money and build their companies. I mean, you know, I think the market has to work, though, and you've got to let the credit markets work, and they have to assess risk and charge according to the risk.
But let me tell you that I don't see any real strong hindrance for the entrepreneurial spirit in America and small businesses growing in America. I mean, they're doing well across this land right now.
NOVAK: On another point, with so many people on the left haranguing corporate executives for making too much money and having excessive salaries, do you think it helps when the president of the United States talks about greed and the chairman of the Federal Reserve Board talks about infectious greed? Isn't that playing into the hands of the opponents of a capitalist system?
EVANS: Well, I don't know, Bob. I'll tell you what, though. It is very important, I think, for CEOs all across the land to focus on this important issue. Because the CEOs send a signal to their employees and to their owners and to anyone out there that's watching how they govern their company or run their company based on their compensation package. That's the one strong, tangible indicator a CEO can use to layout what that CEO's core beliefs are and what's important.
And so, I'm one that says, look, you've got to be very, very careful when you set your compensation package and understand the kind of signal it sends to people as to what your values are and what your core believes are, because that's what creates the whole tone and the whole environment and the values for the entire corporation.
HUNT: Mr. Secretary, you are a big champion of Harvey Pitt, the Bush appointee as head of the SEC. Mr. Pitt has now proposed that he, Mr. Pitt, be given Cabinet status and a praise. Do you support Mr. Pitt in that endeavor?
EVANS: Well, look, I read something about that in the newspapers. I know it never made it through to the president.
I know Harvey Pitt's got a very important job to do. I know Harvey Pitt's doing an excellent job in what he's doing. He needs more resources to enforce the laws that he has.
HUNT: But you don't support him to be a Cabinet member?
EVANS: Listen, that's a decision that would only be made by the president, that's certain.
What I do is, I support Harvey Pitt. He's doing a good job. He's going after officers and directors that have abused their office. He's going after CEOs that have abused their office in disgorging funds from them. He needs more resources.
But it's not just Harvey Pitt. It's the whole SEC and all the people there. They need to enforce the laws.
HUNT: Let's stick with the SEC just for a moment.
HUNT: This week the president said that the SEC would find no wrongdoing in the investigation of Dick Cheney and his accounting controversies when he headed Halliburton. Surely, the president hasn't had time to familiarize himself with the particulars of those complexities. So why is it appropriate to prejudge an inquiry barely started by a supposedly independent agency?
EVANS: You know, all he's saying is that Dick Cheney is an honorable man, a man of total, complete integrity, a man that has served this country with distinction for many, many, many years. And he has total confidence in this vice president, as do I. And that's all the president was saying.
NOVAK: Mr. Secretary, you were a CEO of Tom Brown, Inc., Energy Company. And there were reports out of a Democratic-controlled Senate committee this week about prepaid deals with the JP Morgan Chase Bank involving your company -- your former company.
Were you a CEO at that time, and did you have understanding and foreknowledge of that deal?
EVANS: I did. I did, Bob. These prepaid kind of agreements are made all the time across America -- corporate America, particularly companies that have commodities; it may be gas, it may be oil, it may be cotton, it may be something else. But these are standard kind of agreements that are made. It's to assure the buyer that they will have an available supply of, in our case, gas.
NOVAK: There was no problem?
EVANS: No. The question is, do you disclose it or not? Do you disclose it to the investors and the owners of your company? And we disclosed it clearly on our financial statements. That's the issue, is do people make these kind of deals and then hide them or put them off balance sheets someplace? And we clearly disclosed them.
NOVAK: We have less than a minute before we take another break.
Democrats are after President Bush on a sale of stock from the Harken Energy Company many years ago, and they want him to release all the SEC -- to ask the SEC to release all the material. Mr. Pitt has said he would release it if the president asked him to.
Why doesn't the president just get that off his back and release it?
EVANS: Look, Bob, I mean, this is something that's been there -- I mean, we've been through six election cycles since this was first looked at. And it's been brought up in five of the election cycles, three of them during the Clinton administration, when the Clinton administration was responsible for the SEC. I mean, it's nothing but political garbage is all it is. It's been looked at time and time and time again, and there's not anything there.
HUNT: Let me ask you one final question, Mr. Secretary. There was a poll by the Wall Street Journal and NBC News this week, which we can put up on the screen for our viewers, asking how the public feels about CEOs. Ten percent had a positive view of corporate CEOs, 64 percent a negative view. That's even lower than the news media.
This administration came in touting the fact that you had a lot of CEOs: president, vice president, defense, treasury chief, you. Hasn't that now become a liability?
EVANS: Oh, I don't think so, Al. I mean, listen, as I've said before, our system has worked so well through the years because the people of America are basically honest, decent people -- people of integrity. That includes CEOs across this land.
And, you know, look, there have been some very disgusting scandals that have been revealed in the last several months that have hurt the character of America and the focus of which goes to the CEO because he is the one responsible for that organization. And so, there are a few that have really hurt the character of America and hurt and tainted the reputation of thousands of good CEOs all across this land.
HUNT: Mr. Secretary, we're going to take a break right now.
But when we come back, we will have the Big Question for Don Evans.
HUNT: And now the Big Question for Secretary Evans:
You were the chairman of the Bush 2000 campaign, and a constant criticism of the Clinton administration was that that president governed too much by polls, always testing public opinion rather than worried about what was right.
I'd like to ask you, in the year and a half that George Bush has been president, if you can name me an action or two or a proposal or two that the president has made that is contrary to popular opinion?
EVANS: Well, Al, I would say that the tough measures he took on steel tariffs, and that was a tough call for him to make. But he believes in the principle of a level playing field for all American workers. And when he sees that the workers of this country are not playing on the same level playing field that they deserve, he's going to take action. And that's exactly what he did in that tough steel tariff decision.
NOVAK: Mr. Secretary, have you considered at this time whether it would be a shot in the arm for investors, for entrepreneurs, for businessmen to have not just permanent tax cuts, but hurry -- accelerating those tax cuts, putting them in right now and also cutting the capital gains rate? Do you consider that possibility?
EVANS: Well, look, I mean, you consider all kinds of options from time to time, Bob.
But, you know, what we're focused on right now, obviously, is urging Congress to make the tax cut they've already passed permanent so there's some certainty in the way people are able to plan into the future. It's very difficult to plan when you don't know for sure what the rules are going to be. And so, we want some certainty on these tax cuts that have already been imposed so that the small-business owner and people all across America can plan.
NOVAK: Secretary of Commerce Evans, thank you very much.
EVANS: Thank you.
NOVAK: Al Hunt and I will be back with a comment after these messages.
HUNT: Bob, I tried every which way to get the commerce secretary to say who was the president's chief spokesman on economic and market matters. It used to be Treasury Chief Paul O'Neill. Paul O'Neill, I'm afraid, has become an embarrassment to this administration.
NOVAK: Mr. Evans is a firm spokesman for the business class, and he says there's only a few bad apples. But I was really interested when he said there should be some restraint on CEO pay. That's a little unusual coming from a secretary of commerce, and it's a sign of the times.
HUNT: You know, Don Evans artfully ducked the Harvey Pitt question. But my favorite answer was, when asked what unpopular positions George Bush has taken, he said, he was willing to stand up for steel workers.
NOVAK: The secretary of commerce is very optimistic, and he says the interest rates are low, but there is a fact that a lot of small- business men are having trouble getting bank loans. In many ways, that's a problem that's more worrisome than low equity prices.
Coming up at 7 p.m. Eastern on Capital Gang, Republican Congressman Rob Portman joins the gang to talk about stock market gyrations, stopping corporate corruption and the congressional battle over homeland security. Plus, our newsmaker of the week, baseball legend Hank Aaron.
HUNT: Thanks for joining us.
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