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HARDtalk. The American economy is in trouble. | :00:02. | :00:04. | |
Stubbornly high unemployment, sinking consumer confidence and | :00:04. | :00:07. | |
faltering growth all point to the real possibility of a double-dip | :00:07. | :00:13. | |
recession. Perhaps most alarming of all is the American public's loss | :00:13. | :00:23. | |
:00:23. | :00:25. | ||
of faith in the political class to come up with an effective response. | :00:25. | :00:28. | |
My guest today is Steve Forbes, multi-millionaire publisher, | :00:28. | :00:30. | |
conservative activist and former republican presidential candidate. | :00:30. | :00:32. | |
Is all-out ideological war over economic policy really what America | :00:32. | :00:42. | |
:00:42. | :01:14. | ||
Steve Forbes, Welcome to HARDtalk. Thank you. How deep a hole do you | :01:14. | :01:20. | |
believe the US economy is in? think it will be doing better at in | :01:20. | :01:25. | |
the second half of this year than it did in the first half. It is the | :01:25. | :01:31. | |
equivalent of an automobile that was stalled ywo years ago. We are | :01:31. | :01:40. | |
now doing 25mph. On an open highway, we should be doing 75mph. It is | :01:40. | :01:45. | |
sub-standard performance but we will not stall again. I am | :01:45. | :01:52. | |
surprised that your confident tone. I am looking at the economic | :01:52. | :01:56. | |
analysis. Both Europe and the United States and dangerously close | :01:56. | :02:02. | |
to recession. Why do you believe that is wrong? First of all, large | :02:02. | :02:11. | |
companies in America have plenty of liquidity. Jobs are being added | :02:11. | :02:21. | |
:02:21. | :02:21. | ||
although not at the place we would like -- pace. It is not stalling. | :02:21. | :02:27. | |
The pessimism right now comes from the banking crisis in Europe and | :02:27. | :02:31. | |
the flailing markets around the world. Confidence is low but | :02:31. | :02:39. | |
activity is still taking place. The system has the capacity for some | :02:39. | :02:43. | |
growth. It is interesting that you refer to the sovereign debt crisis | :02:43. | :02:51. | |
in Europe. The collective wisdom has been that the US is the world's | :02:51. | :02:58. | |
leading economy. Are you suggesting that the fundamental problems in | :02:58. | :03:01. | |
the Eurozone are having a real impact on American economic well- | :03:01. | :03:08. | |
being? The debt crisis obviously keeps the banking system. Hardly a | :03:08. | :03:14. | |
day goes by where there is not a remark of the European Bank getting | :03:14. | :03:20. | |
in trouble. Banks are still loaded up on sovereign debt. That is why | :03:20. | :03:25. | |
the Federal Reserve was questioning banks in this country, foreign | :03:25. | :03:30. | |
banks, about their sources of financing. There is a feeling that | :03:30. | :03:40. | |
:03:40. | :03:44. | ||
if Europe gets another banking crisis, it will ricochet here. | :03:44. | :03:48. | |
seem to see Dad the intersection of politics and economics in the US. | :03:48. | :03:52. | |
Do you except that there is a fundamental problem in economic | :03:52. | :04:00. | |
policy-making in your country? It is said there is an increasingly | :04:00. | :04:04. | |
polarised, dysfunctional American political debate about the economy. | :04:04. | :04:09. | |
I do not accept that. I think the American political system, although | :04:09. | :04:14. | |
it is messy, is in process of bringing about fundamental change. | :04:14. | :04:21. | |
We saw in the election and last November -- in the elections last | :04:21. | :04:25. | |
November. One part of the Government is in the hands of | :04:25. | :04:30. | |
Republicans so it is obvious it will be hard to get agreement. But | :04:30. | :04:34. | |
spending is now being taken seriously. Cuts have been minimal | :04:34. | :04:43. | |
but they are going in the right direction. At the state level, New | :04:43. | :04:52. | |
York is run by a liberal governor ends a budget that would have been | :04:53. | :04:57. | |
inconceivable a couple of years ago was turned in. The system is | :04:57. | :05:07. | |
:05:07. | :05:09. | ||
beginning to move forward on reform. When you have a Republican | :05:09. | :05:19. | |
:05:19. | :05:28. | ||
presidential candidate, will be almost treasonous for Ben Bernanke | :05:28. | :05:35. | |
to act, surely you're talking about polarisation? You cannot use such | :05:35. | :05:38. | |
vivid language on the national level. The criticism that Rick | :05:39. | :05:44. | |
Parry makes of the Federal Reserve will come more to do fall and it is | :05:44. | :05:54. | |
:05:54. | :05:54. | ||
absolutely legitimate. -- Perry. It has trashed the US dollar. It has | :05:54. | :06:01. | |
made possible the disaster in housing. Criticism and discussion | :06:01. | :06:10. | |
about the Federal Reserve even if the language is too colourful is | :06:10. | :06:14. | |
needed. What was he thinking? He must have | :06:15. | :06:19. | |
thought they use in that language would appeal to a significant | :06:19. | :06:29. | |
:06:29. | :06:30. | ||
portion of Conservative voters. -- that using. No, he was speaking off | :06:30. | :06:35. | |
the cuff. He said it in Texas and people did not take it too | :06:35. | :06:39. | |
seriously. When you are on the national stage, you are appealing | :06:39. | :06:44. | |
to a wide and diverse audience and you must think twice about the | :06:44. | :06:48. | |
language you use. It is part of the process of getting used to a | :06:48. | :06:56. | |
national stage. The other candidates will go through the same | :06:56. | :07:01. | |
thing. They learn that it is a very different form to that which they | :07:01. | :07:08. | |
have been accustomed to one of the state level. Let us think about | :07:08. | :07:13. | |
actions and the ones that Republicans took during the heated | :07:13. | :07:17. | |
discussion about raising the debt ceiling for the federal government | :07:17. | :07:22. | |
to allow it to build up warned national debt on top of the 14 | :07:22. | :07:32. | |
:07:32. | :07:37. | ||
trillion dollars it already has. -- more. Some Republicans seem to | :07:37. | :07:41. | |
believe they would not countenance any further rise in the national | :07:41. | :07:48. | |
debt. Is that wise? That is part of the dense you go through in these | :07:48. | :07:57. | |
negotiations. No-one could seriously the idea of default -- | :07:57. | :08:04. | |
no-one put. You negotiate and use fire and brimstone and then come to | :08:04. | :08:13. | |
an agreement. There was frustration on the part of Republicans. The | :08:13. | :08:18. | |
goalposts kept moving. What they came up with under the | :08:18. | :08:24. | |
circumstances of a divided government was actually pretty good. | :08:24. | :08:30. | |
The deal was based on President Obama agreeing that future fiscal | :08:30. | :08:35. | |
moves would be all about spending cuts, not tax rises. You say that | :08:35. | :08:39. | |
was pretty good but when all of those Republican candidates were | :08:39. | :08:46. | |
lined up and asked, most of them said they are still opposed it. I | :08:46. | :08:53. | |
have returned to the point that the Republican Party seems to be on the | :08:53. | :09:01. | |
extreme of the economic argument. No, not at all. They what dramatic | :09:01. | :09:11. | |
:09:11. | :09:14. | ||
spending cuts -- they want. They are putting up the pressure to get | :09:14. | :09:21. | |
a mandate in the 2012 elections. The mandate will be to | :09:21. | :09:25. | |
fundamentally restructure at the fiscal system in the United States. | :09:25. | :09:29. | |
The deal was pretty good but in terms of what needs to be done it | :09:29. | :09:35. | |
is a small step. As are growing number of Democrats recognise that. | :09:35. | :09:44. | |
It is about signals. You are on the board of Freedom Works, a political | :09:44. | :09:50. | |
lobbying organisation closely allied to the tea party movement. | :09:50. | :10:00. | |
:10:00. | :10:01. | ||
This is what John McCain said about the Te Party leaders objection. He | :10:01. | :10:08. | |
said it was foolish and would see the re-election of Barbara bummer. | :10:08. | :10:12. | |
I love Senator McCain but he is still a senator and not President | :10:12. | :10:20. | |
of the United States. He ran two years ago and ten years ago. It was | :10:20. | :10:24. | |
a pretty good deal under the circumstances. The tea party | :10:24. | :10:29. | |
movement in the United States is so strong because there is no | :10:29. | :10:37. | |
leadership board. It is active citizens. No-one organisation | :10:37. | :10:44. | |
speaks for the thing. People got involved because they were worried | :10:44. | :10:48. | |
about the ball out in government spending - it was something we had | :10:48. | :10:52. | |
not seen since World War II. There was a feeling it was doing more | :10:52. | :11:02. | |
:11:02. | :11:03. | ||
harm than good. The pressure on politicians if not for the tea | :11:03. | :11:07. | |
party would have caused a blow-out. The system is working out in a | :11:07. | :11:13. | |
messy way. The political fall-out of all the | :11:13. | :11:18. | |
arguing over the debt ceiling is perhaps best captured in a CBS poll | :11:18. | :11:23. | |
from a couple of weeks ago. 72% of the American public disapproved of | :11:23. | :11:33. | |
:11:33. | :11:34. | ||
the Republicans haggling on the issue. The Republicans took the rap. | :11:34. | :11:44. | |
:11:44. | :11:49. | ||
Opinion was split on Barack Obama. In terms of disapproval on handling | :11:49. | :11:57. | |
the economy, even his own party is starting to turn on him. He has not | :11:57. | :12:01. | |
done anything about the blow-out in spending. He has not put reforms on | :12:01. | :12:06. | |
the table. He is making speeches on specific proposals but has not put | :12:06. | :12:12. | |
anything specific on the table and people are waking up to it. | :12:12. | :12:22. | |
:12:22. | :12:22. | ||
Americans care about jobs right now, more than cutting the deficit. Do | :12:22. | :12:27. | |
you think that your message which is about a preoccupation with | :12:27. | :12:34. | |
cutting the deficit and government spending, does that fit with the | :12:34. | :12:43. | |
American demand for a bus to job growth? Blowing out government | :12:43. | :12:50. | |
spending is manifestly not working. It did not work in Japan, in the UK | :12:50. | :12:59. | |
or here. The proposals we have been discussing to get the economy | :12:59. | :13:07. | |
moving include reducing spending and that is part of that. We are | :13:07. | :13:11. | |
looking at reform of healthcare and the financial system instead of | :13:11. | :13:17. | |
massive new regulations that are coming in. Small businesses are | :13:17. | :13:21. | |
being crushed by all of the new rules coming from Washington. Those | :13:21. | :13:25. | |
things are tied together. Remove the barriers and the economy will | :13:25. | :13:33. | |
come back quickly. And to throw something Beckett you, Vettori | :13:33. | :13:37. | |
coalition in the UK is making a huge mistake in not reducing their | :13:38. | :13:47. | |
:13:48. | :13:49. | ||
tax rates -- back at you. Taxes are too high. They should be reducing | :13:49. | :13:57. | |
them. We have to do the same thing. I will not take it personally! I | :13:57. | :14:07. | |
:14:07. | :14:12. | ||
recall that you were Mr Flat Tax.. You wanted 17% across the board, | :14:12. | :14:17. | |
everybody paying the same rate. You lost two presidential runs on the | :14:17. | :14:21. | |
campaign trail arguing that. I do not think the American public will | :14:21. | :14:26. | |
listen to your message on tax right now when what they want to see is a | :14:26. | :14:30. | |
reduction in deficit but also a stimulus to the economy which is in | :14:30. | :14:34. | |
deep trouble. Is this really the time to argue for lower taxes for | :14:34. | :14:44. | |
:14:44. | :14:55. | ||
I have spoken about lower taxes across the board. In the early | :14:55. | :15:01. | |
1980s, Ronald Reagan reduced domestic spending, slowed that down, | :15:02. | :15:06. | |
putting interest rate cuts across the board. The United States | :15:07. | :15:14. | |
economy came roaring back. Since my campaigns, 25 countries have put in | :15:14. | :15:20. | |
a flat tax and it has walked everywhere. The President's own | :15:20. | :15:30. | |
deficit reduction Commission came out in favour of simple fine record. | :15:30. | :15:37. | |
-- in favour of simplifying the system. You have got Democrat | :15:37. | :15:42. | |
signing on as well as Republicans. Here is what war and of that said. | :15:42. | :15:51. | |
He said that de mega rich have been helped by a politicians for too | :15:51. | :15:56. | |
long. He said that those earning over �10 million should pay an | :15:56. | :16:02. | |
additional tax. -- $10 million. He said the rich were by and large | :16:02. | :16:08. | |
very decent and did not mind paying more in tax than so many of their | :16:08. | :16:13. | |
fellow citizens were struggling. Can you quarrel with that? You can | :16:13. | :16:18. | |
quarrel with several parts of that full stops if he feels he is not | :16:18. | :16:22. | |
being enough tax, he can send and money as gifts to the US government | :16:22. | :16:26. | |
if he feels he is not spending enough. Why have not seen him or | :16:26. | :16:32. | |
any other Bulgaria's doing that jet. In terms of getting the economy | :16:32. | :16:38. | |
moving, creating jobs, that does not work. -- him or any other | :16:38. | :16:47. | |
billionaires doing that yet. The personal tax rate in this country | :16:47. | :16:53. | |
is over 35 %. If you it -- and in state and local taxes, it is higher. | :16:53. | :16:58. | |
People earning salaries of more than $250,000 the year do not feel | :16:58. | :17:05. | |
rich. There are getting hit by tax on all sides. I think when but that | :17:05. | :17:10. | |
is aware of the realities but his point is, for the mega rich, let's | :17:10. | :17:15. | |
face it, you're one of them, I tried to find out how much you are | :17:15. | :17:23. | |
worth, it is more than $400 million, were people like you, a lot of the | :17:23. | :17:27. | |
money you pay is and capital gains tax of whatever you choose to call | :17:27. | :17:34. | |
it. He said that in actual terms, he pays about 17 % on his income | :17:34. | :17:40. | |
that is less than his secretary. That cannot be right. Capital gains | :17:40. | :17:46. | |
is not given. There have been tens of billions of dollars off or | :17:46. | :17:52. | |
losses in this market. If you punish capital gains and risk- | :17:52. | :18:00. | |
taking, you get less job creation. In the 1970s, it was set at 45-50 % | :18:00. | :18:09. | |
in a struggling economy. We created more jobs in western Europe -- than | :18:09. | :18:16. | |
Western Europe and Japan that together often be cut it. You can | :18:16. | :18:22. | |
argue history, and recent history, in different ways. Led to do look | :18:22. | :18:28. | |
at George W Bush he cut tax rates. -- let us take a look. They reckon | :18:28. | :18:32. | |
that cost both for one trillion dollars to the US budget, the fact | :18:32. | :18:36. | |
that he delivered tax cuts, tax cuts which predominantly favoured | :18:36. | :18:42. | |
the rich. You suggesting to me that the way he handled the economy was | :18:43. | :18:52. | |
:18:53. | :18:56. | ||
a success? In terms of his tax cuts, they were across the board. Almost | :18:56. | :19:00. | |
half of income tax payers in this country do not pay federal income | :19:00. | :19:08. | |
tax. The top 3% income earners in this country pay 97 % of the | :19:08. | :19:12. | |
federal income tax. In terms of who is being, it is a high income | :19:12. | :19:18. | |
people who are paying more than ever before. Where George Bush went | :19:18. | :19:26. | |
wrong was his weak dollar policy. That was a disaster. In the 1970s, | :19:26. | :19:31. | |
we learned that if a major country undermines its own economy, it not | :19:31. | :19:35. | |
only holds its own economy but it has a devastating effect around the | :19:35. | :19:43. | |
world. It sent up oil prices, gold prices, housing prices, we are | :19:43. | :19:50. | |
feeling the heard of that today. Barack Obama has continued that | :19:50. | :19:57. | |
policy. Ronald Reagan's strong dollar policy work, so did John F | :19:57. | :20:03. | |
Kennedy's policy. You should not undermine your currency, if you do, | :20:03. | :20:13. | |
:20:13. | :20:14. | ||
you are going to get big, big problems. Where people may be | :20:14. | :20:20. | |
sceptical is that they can remember George Bush back in 1998, 1999, | :20:20. | :20:25. | |
2000, he said he was a small government man and would pay back | :20:25. | :20:30. | |
government spending. The truth is, he did not. Why should we believe | :20:30. | :20:35. | |
that this new generation, may be even more right wing Republicans | :20:35. | :20:39. | |
that we see today, but they will be serious when they get into office. | :20:39. | :20:46. | |
George W Bush did not deliver. saw what happened to George W Bush. | :20:46. | :20:53. | |
His party lost power totally in 2008. This is when The Tea Party | :20:53. | :20:59. | |
rose up and said that they had betrayed principles, made the rise | :20:59. | :21:05. | |
of Barack Obama possible, we are going to punish you for doing that. | :21:05. | :21:09. | |
That is why a lot of the big- spending Republicans got beaten in | :21:09. | :21:19. | |
:21:19. | :21:20. | ||
primaries to your face by Conservatives. -- got beat in the | :21:20. | :21:27. | |
primaries to Conservatives. There was massive repudiation. I think | :21:27. | :21:31. | |
that trend will continue in the elections next year. When you look | :21:31. | :21:35. | |
at the nine or so candidates fighting for the Republican | :21:35. | :21:40. | |
nomination, some of them have close links to The Tea Party, which you | :21:40. | :21:46. | |
have close links to, I wonder who you believe will be the one to | :21:46. | :21:51. | |
deliver the Government you want to see. Who are you backing? I am not | :21:51. | :21:58. | |
backing anyone yet. There is a few possible candidates who might enter | :21:58. | :22:02. | |
the race, I am looking over the field and will make a decision in | :22:02. | :22:09. | |
the next few weeks. I want to see who the players are first. Paul | :22:09. | :22:13. | |
Ryan, maybe even Sarah Palin heat you have described as a smart woman | :22:13. | :22:19. | |
in the past. Do you want to see her in the race and would you back? | :22:19. | :22:26. | |
does not matter what I want, I think she will get in the race. The | :22:26. | :22:33. | |
Governor of my state, Kris Christie, he is an contention to get in the | :22:33. | :22:37. | |
race. The point because, if you look at | :22:37. | :22:46. | |
the polls, if you look at the fader ability of the Tea Party, that has | :22:46. | :22:51. | |
gone down the toilet in the last couple of weeks. Very low approval | :22:51. | :22:57. | |
ratings. Do you think being involved with The Tea Party will | :22:57. | :23:07. | |
:23:07. | :23:08. | ||
help or hinder the next Republican Party candidate. You will not win | :23:08. | :23:16. | |
the nomination unless you are in favour of awful lot of The Tea | :23:16. | :23:21. | |
Party's policies. They have been trashed in the media but they are | :23:21. | :23:26. | |
concerned citizens who got involved and have made life uncomfortable | :23:26. | :23:31. | |
for the political establishment. They may reflect an ideological | :23:31. | :23:35. | |
purity that you agree with when it comes to fiscal policy but, of what | :23:36. | :23:41. | |
it that is right now, given the economy, plain and popular? It is | :23:41. | :23:51. | |
:23:51. | :23:52. | ||
not. -- unpopular. They tried to recall people who went along with | :23:52. | :24:01. | |
Governor Walker's reforms. The Republicans have maintained control, | :24:01. | :24:08. | |
they took control of the state courts, to. This is why you are | :24:08. | :24:14. | |
seeing the results that you are. People are getting involved in the | :24:14. | :24:17. | |
political process. They are making a change. They don't always get | :24:17. | :24:22. | |
what they want but you do come up with some reforms. They might not | :24:22. | :24:29. | |
be pure but the country is moving in the right direction. Steve | :24:29. | :24:33. | |
Forbes, we have to head towards the exit. We are running out of time. | :24:33. | :24:43. | |
:24:43. | :24:51. | ||
Hello there. I have few concerns about Tuesday's weather across | :24:51. | :24:55. | |
northern and western parts but what a contrast we will see to start of | :24:55. | :25:01. | |
Tuesday across the Midlands and southern England. It will be a very | :25:01. | :25:09. | |
wet start to the day. Look at this beast, it has already produced a | :25:09. | :25:19. | |
:25:19. | :25:19. | ||
lot of rain. Overnight, into Tuesday, the rain will push its way | :25:20. | :25:23. | |
across and you can see the extent of it, very widely spread heavy | :25:23. | :25:33. | |
:25:33. | :25:40. | ||
downpours. 50 metres in a very -- 50 mm in a short space of time. | :25:40. | :25:43. | |
Localised flooding is distinctly possible. Lighter rain for the most | :25:43. | :25:49. | |
part for the North. Disappointing for August. All lot of like showers | :25:49. | :25:53. | |
around. There will be some sunshine around. Coming into the body of | :25:53. | :25:57. | |
Wales and into the south-west, you can see that the further north and | :25:57. | :26:04. | |
west you are, the more likely it is to stay dry. The weather is nowhere | :26:04. | :26:07. | |
near as intense as it will be in the south-eastern quarter. Lighter | :26:07. | :26:11. | |
rain will be left behind. The damage will have been done by this | :26:11. | :26:21. | |
:26:21. | :26:24. | ||
stage. The rain will have pushed into the North Sea over night. It | :26:24. | :26:28. | |
will still be quite wet out there. Quite heavy rain in its own right | :26:28. | :26:31. | |
pushing towards the west side of Scotland and affecting Northern | :26:31. | :26:41. | |
:26:41. | :26:48. | ||
Ireland. On Wednesday, this band will chug its way, and I do mean | :26:48. | :26:56. | |
chug its way, into the heart of Scotland. It will never be a bother | :26:56. | :27:01. | |
for East Anglia or the South East. Running towards the bank holiday | :27:01. | :27:08. | |
weekend, not the sort of weather you will want to see. That is the | :27:08. | :27:13. |