'The Deficits Are Quite Manageable': The Stimulus Is Paying off, Says Stephen Friedman, Bush's Chief Economic Adviser
Wolffe, Richard, Newsweek
Byline: Richard Wolffe
They may be polar opposites when it comes to the Bush tax cuts. But there was a time when Stephen Friedman and Robert Rubin shared an economic outlook and even the same job. Friedman and Rubin were co-chairmen of the investment bank Goldman Sachs a decade ago, and like Rubin, Friedman was once a deficit hawk. Friedman now heads the National Economic Council inside the White House (a job that was first created for Rubin). NEWSWEEK's Richard Wolffe spoke to Friedman after he returned from a tour of the West Coast last week, where he was talking to businesses about tax cuts, investment and regulatory reforms.
WOLFFE: Robert Rubin says the Bush administration "dismissed mainstream views" about the harm caused by big deficits. What's your response?
FRIEDMAN: We believe the deficits are quite manageable. No one is pleased by the deficits. The president has laid out a strong plan to cut the deficits in half within the next five years. We think the way to do it is by pro-growth policies and by spending discipline in Washington. The deficits that we face now are because of the recession we inherited and giving the military what it needs to fight the war and protect us.
Republicans in Congress say you're planning a big tax cut every year. Is that right?
What the president has said is that he wants to make permanent the tax cuts. That is the only policy that has been enunciated.
The job statistics seem to be moving in the right direction, but that still leaves more than 2 million jobs lost since 2001. There's some way to go, isn't there?
We're obviously pleased with the announcements that came out this week. The numbers exceeded what economists were speculating about. But I would characterize our mood as cautious optimism, guarded optimism. We want to see sustainability. The president has an intense focus on job creation, making sure there is a job available for every American who wants that. The expectation is that we will have robust job growth, but we want to watch and see the expectation being realized. In that context, the president places a great deal of emphasis on what economists call the microeconomic aspects. …