:00:02. > :00:04.HARDtalk. The American economy is in trouble.
:00:04. > :00:07.Stubbornly high unemployment, sinking consumer confidence and
:00:07. > :00:13.faltering growth all point to the real possibility of a double-dip
:00:13. > :00:23.recession. Perhaps most alarming of all is the American public's loss
:00:23. > :00:25.
:00:25. > :00:28.of faith in the political class to come up with an effective response.
:00:28. > :00:30.My guest today is Steve Forbes, multi-millionaire publisher,
:00:30. > :00:32.conservative activist and former republican presidential candidate.
:00:32. > :00:42.Is all-out ideological war over economic policy really what America
:00:42. > :01:14.
:01:14. > :01:20.Steve Forbes, Welcome to HARDtalk. Thank you. How deep a hole do you
:01:20. > :01:25.believe the US economy is in? think it will be doing better at in
:01:25. > :01:31.the second half of this year than it did in the first half. It is the
:01:31. > :01:40.equivalent of an automobile that was stalled ywo years ago. We are
:01:40. > :01:45.now doing 25mph. On an open highway, we should be doing 75mph. It is
:01:45. > :01:52.sub-standard performance but we will not stall again. I am
:01:52. > :01:56.surprised that your confident tone. I am looking at the economic
:01:56. > :02:02.analysis. Both Europe and the United States and dangerously close
:02:02. > :02:11.to recession. Why do you believe that is wrong? First of all, large
:02:11. > :02:21.companies in America have plenty of liquidity. Jobs are being added
:02:21. > :02:21.
:02:21. > :02:27.although not at the place we would like -- pace. It is not stalling.
:02:27. > :02:31.The pessimism right now comes from the banking crisis in Europe and
:02:31. > :02:39.the flailing markets around the world. Confidence is low but
:02:39. > :02:43.activity is still taking place. The system has the capacity for some
:02:43. > :02:51.growth. It is interesting that you refer to the sovereign debt crisis
:02:51. > :02:58.in Europe. The collective wisdom has been that the US is the world's
:02:58. > :03:01.leading economy. Are you suggesting that the fundamental problems in
:03:01. > :03:08.the Eurozone are having a real impact on American economic well-
:03:08. > :03:14.being? The debt crisis obviously keeps the banking system. Hardly a
:03:14. > :03:20.day goes by where there is not a remark of the European Bank getting
:03:20. > :03:25.in trouble. Banks are still loaded up on sovereign debt. That is why
:03:25. > :03:30.the Federal Reserve was questioning banks in this country, foreign
:03:30. > :03:40.banks, about their sources of financing. There is a feeling that
:03:40. > :03:44.
:03:44. > :03:48.if Europe gets another banking crisis, it will ricochet here.
:03:48. > :03:52.seem to see Dad the intersection of politics and economics in the US.
:03:52. > :04:00.Do you except that there is a fundamental problem in economic
:04:00. > :04:04.policy-making in your country? It is said there is an increasingly
:04:04. > :04:09.polarised, dysfunctional American political debate about the economy.
:04:09. > :04:14.I do not accept that. I think the American political system, although
:04:14. > :04:21.it is messy, is in process of bringing about fundamental change.
:04:21. > :04:25.We saw in the election and last November -- in the elections last
:04:25. > :04:30.November. One part of the Government is in the hands of
:04:30. > :04:34.Republicans so it is obvious it will be hard to get agreement. But
:04:34. > :04:43.spending is now being taken seriously. Cuts have been minimal
:04:43. > :04:52.but they are going in the right direction. At the state level, New
:04:53. > :04:57.York is run by a liberal governor ends a budget that would have been
:04:57. > :05:07.inconceivable a couple of years ago was turned in. The system is
:05:07. > :05:09.
:05:09. > :05:19.beginning to move forward on reform. When you have a Republican
:05:19. > :05:28.
:05:28. > :05:35.presidential candidate, will be almost treasonous for Ben Bernanke
:05:35. > :05:38.to act, surely you're talking about polarisation? You cannot use such
:05:39. > :05:44.vivid language on the national level. The criticism that Rick
:05:44. > :05:54.Parry makes of the Federal Reserve will come more to do fall and it is
:05:54. > :05:54.
:05:54. > :06:01.absolutely legitimate. -- Perry. It has trashed the US dollar. It has
:06:01. > :06:10.made possible the disaster in housing. Criticism and discussion
:06:10. > :06:14.about the Federal Reserve even if the language is too colourful is
:06:15. > :06:19.needed. What was he thinking? He must have
:06:19. > :06:29.thought they use in that language would appeal to a significant
:06:29. > :06:30.
:06:30. > :06:35.portion of Conservative voters. -- that using. No, he was speaking off
:06:35. > :06:39.the cuff. He said it in Texas and people did not take it too
:06:39. > :06:44.seriously. When you are on the national stage, you are appealing
:06:44. > :06:48.to a wide and diverse audience and you must think twice about the
:06:48. > :06:56.language you use. It is part of the process of getting used to a
:06:56. > :07:01.national stage. The other candidates will go through the same
:07:01. > :07:08.thing. They learn that it is a very different form to that which they
:07:08. > :07:13.have been accustomed to one of the state level. Let us think about
:07:13. > :07:17.actions and the ones that Republicans took during the heated
:07:17. > :07:22.discussion about raising the debt ceiling for the federal government
:07:22. > :07:32.to allow it to build up warned national debt on top of the 14
:07:32. > :07:37.
:07:37. > :07:41.trillion dollars it already has. -- more. Some Republicans seem to
:07:41. > :07:48.believe they would not countenance any further rise in the national
:07:48. > :07:57.debt. Is that wise? That is part of the dense you go through in these
:07:57. > :08:04.negotiations. No-one could seriously the idea of default --
:08:04. > :08:13.no-one put. You negotiate and use fire and brimstone and then come to
:08:13. > :08:18.an agreement. There was frustration on the part of Republicans. The
:08:18. > :08:24.goalposts kept moving. What they came up with under the
:08:24. > :08:30.circumstances of a divided government was actually pretty good.
:08:30. > :08:35.The deal was based on President Obama agreeing that future fiscal
:08:35. > :08:39.moves would be all about spending cuts, not tax rises. You say that
:08:39. > :08:46.was pretty good but when all of those Republican candidates were
:08:46. > :08:53.lined up and asked, most of them said they are still opposed it. I
:08:53. > :09:01.have returned to the point that the Republican Party seems to be on the
:09:01. > :09:11.extreme of the economic argument. No, not at all. They what dramatic
:09:11. > :09:14.
:09:14. > :09:21.spending cuts -- they want. They are putting up the pressure to get
:09:21. > :09:25.a mandate in the 2012 elections. The mandate will be to
:09:25. > :09:29.fundamentally restructure at the fiscal system in the United States.
:09:29. > :09:35.The deal was pretty good but in terms of what needs to be done it
:09:35. > :09:44.is a small step. As are growing number of Democrats recognise that.
:09:44. > :09:50.It is about signals. You are on the board of Freedom Works, a political
:09:50. > :10:00.lobbying organisation closely allied to the tea party movement.
:10:00. > :10:01.
:10:01. > :10:08.This is what John McCain said about the Te Party leaders objection. He
:10:08. > :10:12.said it was foolish and would see the re-election of Barbara bummer.
:10:12. > :10:20.I love Senator McCain but he is still a senator and not President
:10:20. > :10:24.of the United States. He ran two years ago and ten years ago. It was
:10:24. > :10:29.a pretty good deal under the circumstances. The tea party
:10:29. > :10:37.movement in the United States is so strong because there is no
:10:37. > :10:44.leadership board. It is active citizens. No-one organisation
:10:44. > :10:48.speaks for the thing. People got involved because they were worried
:10:48. > :10:52.about the ball out in government spending - it was something we had
:10:52. > :11:02.not seen since World War II. There was a feeling it was doing more
:11:02. > :11:03.
:11:03. > :11:07.harm than good. The pressure on politicians if not for the tea
:11:07. > :11:13.party would have caused a blow-out. The system is working out in a
:11:13. > :11:18.messy way. The political fall-out of all the
:11:18. > :11:23.arguing over the debt ceiling is perhaps best captured in a CBS poll
:11:23. > :11:33.from a couple of weeks ago. 72% of the American public disapproved of
:11:33. > :11:34.
:11:34. > :11:44.the Republicans haggling on the issue. The Republicans took the rap.
:11:44. > :11:49.
:11:49. > :11:57.Opinion was split on Barack Obama. In terms of disapproval on handling
:11:57. > :12:01.the economy, even his own party is starting to turn on him. He has not
:12:01. > :12:06.done anything about the blow-out in spending. He has not put reforms on
:12:06. > :12:12.the table. He is making speeches on specific proposals but has not put
:12:12. > :12:22.anything specific on the table and people are waking up to it.
:12:22. > :12:22.
:12:22. > :12:27.Americans care about jobs right now, more than cutting the deficit. Do
:12:27. > :12:34.you think that your message which is about a preoccupation with
:12:34. > :12:43.cutting the deficit and government spending, does that fit with the
:12:43. > :12:50.American demand for a bus to job growth? Blowing out government
:12:50. > :12:59.spending is manifestly not working. It did not work in Japan, in the UK
:12:59. > :13:07.or here. The proposals we have been discussing to get the economy
:13:07. > :13:11.moving include reducing spending and that is part of that. We are
:13:11. > :13:17.looking at reform of healthcare and the financial system instead of
:13:17. > :13:21.massive new regulations that are coming in. Small businesses are
:13:21. > :13:25.being crushed by all of the new rules coming from Washington. Those
:13:25. > :13:33.things are tied together. Remove the barriers and the economy will
:13:33. > :13:37.come back quickly. And to throw something Beckett you, Vettori
:13:38. > :13:47.coalition in the UK is making a huge mistake in not reducing their
:13:48. > :13:49.
:13:49. > :13:57.tax rates -- back at you. Taxes are too high. They should be reducing
:13:57. > :14:07.them. We have to do the same thing. I will not take it personally! I
:14:07. > :14:12.
:14:12. > :14:17.recall that you were Mr Flat Tax.. You wanted 17% across the board,
:14:17. > :14:21.everybody paying the same rate. You lost two presidential runs on the
:14:21. > :14:26.campaign trail arguing that. I do not think the American public will
:14:26. > :14:30.listen to your message on tax right now when what they want to see is a
:14:30. > :14:34.reduction in deficit but also a stimulus to the economy which is in
:14:34. > :14:44.deep trouble. Is this really the time to argue for lower taxes for
:14:44. > :14:55.
:14:55. > :15:01.I have spoken about lower taxes across the board. In the early
:15:02. > :15:06.1980s, Ronald Reagan reduced domestic spending, slowed that down,
:15:07. > :15:14.putting interest rate cuts across the board. The United States
:15:14. > :15:20.economy came roaring back. Since my campaigns, 25 countries have put in
:15:20. > :15:30.a flat tax and it has walked everywhere. The President's own
:15:30. > :15:37.deficit reduction Commission came out in favour of simple fine record.
:15:37. > :15:42.-- in favour of simplifying the system. You have got Democrat
:15:42. > :15:51.signing on as well as Republicans. Here is what war and of that said.
:15:51. > :15:56.He said that de mega rich have been helped by a politicians for too
:15:56. > :16:02.long. He said that those earning over �10 million should pay an
:16:02. > :16:08.additional tax. -- $10 million. He said the rich were by and large
:16:08. > :16:13.very decent and did not mind paying more in tax than so many of their
:16:13. > :16:18.fellow citizens were struggling. Can you quarrel with that? You can
:16:18. > :16:22.quarrel with several parts of that full stops if he feels he is not
:16:22. > :16:26.being enough tax, he can send and money as gifts to the US government
:16:26. > :16:32.if he feels he is not spending enough. Why have not seen him or
:16:32. > :16:38.any other Bulgaria's doing that jet. In terms of getting the economy
:16:38. > :16:47.moving, creating jobs, that does not work. -- him or any other
:16:47. > :16:53.billionaires doing that yet. The personal tax rate in this country
:16:53. > :16:58.is over 35 %. If you it -- and in state and local taxes, it is higher.
:16:58. > :17:05.People earning salaries of more than $250,000 the year do not feel
:17:05. > :17:10.rich. There are getting hit by tax on all sides. I think when but that
:17:10. > :17:15.is aware of the realities but his point is, for the mega rich, let's
:17:15. > :17:23.face it, you're one of them, I tried to find out how much you are
:17:23. > :17:27.worth, it is more than $400 million, were people like you, a lot of the
:17:27. > :17:34.money you pay is and capital gains tax of whatever you choose to call
:17:34. > :17:40.it. He said that in actual terms, he pays about 17 % on his income
:17:40. > :17:46.that is less than his secretary. That cannot be right. Capital gains
:17:46. > :17:52.is not given. There have been tens of billions of dollars off or
:17:52. > :18:00.losses in this market. If you punish capital gains and risk-
:18:00. > :18:09.taking, you get less job creation. In the 1970s, it was set at 45-50 %
:18:09. > :18:16.in a struggling economy. We created more jobs in western Europe -- than
:18:16. > :18:22.Western Europe and Japan that together often be cut it. You can
:18:22. > :18:28.argue history, and recent history, in different ways. Led to do look
:18:28. > :18:32.at George W Bush he cut tax rates. -- let us take a look. They reckon
:18:32. > :18:36.that cost both for one trillion dollars to the US budget, the fact
:18:36. > :18:42.that he delivered tax cuts, tax cuts which predominantly favoured
:18:43. > :18:52.the rich. You suggesting to me that the way he handled the economy was
:18:53. > :18:56.
:18:56. > :19:00.a success? In terms of his tax cuts, they were across the board. Almost
:19:00. > :19:08.half of income tax payers in this country do not pay federal income
:19:08. > :19:12.tax. The top 3% income earners in this country pay 97 % of the
:19:12. > :19:18.federal income tax. In terms of who is being, it is a high income
:19:18. > :19:26.people who are paying more than ever before. Where George Bush went
:19:26. > :19:31.wrong was his weak dollar policy. That was a disaster. In the 1970s,
:19:31. > :19:35.we learned that if a major country undermines its own economy, it not
:19:35. > :19:43.only holds its own economy but it has a devastating effect around the
:19:43. > :19:50.world. It sent up oil prices, gold prices, housing prices, we are
:19:50. > :19:57.feeling the heard of that today. Barack Obama has continued that
:19:57. > :20:03.policy. Ronald Reagan's strong dollar policy work, so did John F
:20:03. > :20:13.Kennedy's policy. You should not undermine your currency, if you do,
:20:13. > :20:14.
:20:14. > :20:20.you are going to get big, big problems. Where people may be
:20:20. > :20:25.sceptical is that they can remember George Bush back in 1998, 1999,
:20:25. > :20:30.2000, he said he was a small government man and would pay back
:20:30. > :20:35.government spending. The truth is, he did not. Why should we believe
:20:35. > :20:39.that this new generation, may be even more right wing Republicans
:20:39. > :20:46.that we see today, but they will be serious when they get into office.
:20:46. > :20:53.George W Bush did not deliver. saw what happened to George W Bush.
:20:53. > :20:59.His party lost power totally in 2008. This is when The Tea Party
:20:59. > :21:05.rose up and said that they had betrayed principles, made the rise
:21:05. > :21:09.of Barack Obama possible, we are going to punish you for doing that.
:21:09. > :21:19.That is why a lot of the big- spending Republicans got beaten in
:21:19. > :21:20.
:21:20. > :21:27.primaries to your face by Conservatives. -- got beat in the
:21:27. > :21:31.primaries to Conservatives. There was massive repudiation. I think
:21:31. > :21:35.that trend will continue in the elections next year. When you look
:21:35. > :21:40.at the nine or so candidates fighting for the Republican
:21:40. > :21:46.nomination, some of them have close links to The Tea Party, which you
:21:46. > :21:51.have close links to, I wonder who you believe will be the one to
:21:51. > :21:58.deliver the Government you want to see. Who are you backing? I am not
:21:58. > :22:02.backing anyone yet. There is a few possible candidates who might enter
:22:02. > :22:09.the race, I am looking over the field and will make a decision in
:22:09. > :22:13.the next few weeks. I want to see who the players are first. Paul
:22:13. > :22:19.Ryan, maybe even Sarah Palin heat you have described as a smart woman
:22:19. > :22:26.in the past. Do you want to see her in the race and would you back?
:22:26. > :22:33.does not matter what I want, I think she will get in the race. The
:22:33. > :22:37.Governor of my state, Kris Christie, he is an contention to get in the
:22:37. > :22:46.race. The point because, if you look at
:22:46. > :22:51.the polls, if you look at the fader ability of the Tea Party, that has
:22:51. > :22:57.gone down the toilet in the last couple of weeks. Very low approval
:22:57. > :23:07.ratings. Do you think being involved with The Tea Party will
:23:07. > :23:08.
:23:08. > :23:16.help or hinder the next Republican Party candidate. You will not win
:23:16. > :23:21.the nomination unless you are in favour of awful lot of The Tea
:23:21. > :23:26.Party's policies. They have been trashed in the media but they are
:23:26. > :23:31.concerned citizens who got involved and have made life uncomfortable
:23:31. > :23:35.for the political establishment. They may reflect an ideological
:23:36. > :23:41.purity that you agree with when it comes to fiscal policy but, of what
:23:41. > :23:51.it that is right now, given the economy, plain and popular? It is
:23:51. > :23:52.
:23:52. > :24:01.not. -- unpopular. They tried to recall people who went along with
:24:01. > :24:08.Governor Walker's reforms. The Republicans have maintained control,
:24:08. > :24:14.they took control of the state courts, to. This is why you are
:24:14. > :24:17.seeing the results that you are. People are getting involved in the
:24:17. > :24:22.political process. They are making a change. They don't always get
:24:22. > :24:29.what they want but you do come up with some reforms. They might not
:24:29. > :24:33.be pure but the country is moving in the right direction. Steve
:24:33. > :24:43.Forbes, we have to head towards the exit. We are running out of time.
:24:43. > :24:51.
:24:51. > :24:55.Hello there. I have few concerns about Tuesday's weather across
:24:55. > :25:01.northern and western parts but what a contrast we will see to start of
:25:01. > :25:09.Tuesday across the Midlands and southern England. It will be a very
:25:09. > :25:19.wet start to the day. Look at this beast, it has already produced a
:25:19. > :25:19.
:25:20. > :25:23.lot of rain. Overnight, into Tuesday, the rain will push its way
:25:23. > :25:33.across and you can see the extent of it, very widely spread heavy
:25:33. > :25:40.
:25:40. > :25:43.downpours. 50 metres in a very -- 50 mm in a short space of time.
:25:43. > :25:49.Localised flooding is distinctly possible. Lighter rain for the most
:25:49. > :25:53.part for the North. Disappointing for August. All lot of like showers
:25:53. > :25:57.around. There will be some sunshine around. Coming into the body of
:25:57. > :26:04.Wales and into the south-west, you can see that the further north and
:26:04. > :26:07.west you are, the more likely it is to stay dry. The weather is nowhere
:26:07. > :26:11.near as intense as it will be in the south-eastern quarter. Lighter
:26:11. > :26:21.rain will be left behind. The damage will have been done by this
:26:21. > :26:24.
:26:24. > :26:28.stage. The rain will have pushed into the North Sea over night. It
:26:28. > :26:31.will still be quite wet out there. Quite heavy rain in its own right
:26:31. > :26:41.pushing towards the west side of Scotland and affecting Northern
:26:41. > :26:48.
:26:48. > :26:56.Ireland. On Wednesday, this band will chug its way, and I do mean
:26:56. > :27:01.chug its way, into the heart of Scotland. It will never be a bother
:27:01. > :27:08.for East Anglia or the South East. Running towards the bank holiday
:27:08. > :27:13.weekend, not the sort of weather you will want to see. That is the