- The Washington Times - Monday, July 29, 2002

Treasury Secretary Paul O'Neill said yesterday that the economy is fundamentally sound despite the stock market's troubles and the business scandals that have shaken consumer confidence.
"I'm a deep believer in the potential and the reality of the greatest economy ever conceived," said Mr. O'Neill, making high-profile appearances on talk shows after criticism of his travels abroad during the recent economic volatility.
"Out there in our economy, out there in Main Street, the real growth in our economy is moving just as we thought it would," Mr. O'Neill said on NBC's "Meet the Press."
Citing reports on productivity growth and second-quarter earnings, he said "there is good news out there" drowned out by "the steady amplification of the negative stuff."
He said Americans should look at investments during the long term and have faith in the market.
"People who are invested in the American economy over time are going to win," Mr. O'Neill said. "There has never been an extended period of time in our history where investments in the U.S. economy didn't win."
During the past 10 weeks, investors drove down Dow prices to five-year lows, although Wall Street last week posted its biggest weekly gain since May.
"I think we're reaching for a bottom, if we're not there now," said John Bogle, founder and former chairman of the Vanguard Group of mutual funds, which manages $590 billion in assets for 17 million clients.
He said he did not think investors' opinions about the future were affected significantly by a bill President Bush is expected to sign this week that makes sweeping changes in accounting practices and imposes new penalties for corporate fraud.
"I think investors' confidence has been shattered, and it's going to take a lot more than some congressional action to rebuild it," he said on "Fox News Sunday."
The Senate came under criticism from the White House economic adviser for what he called excessive spending that could undermine the economy. Lawrence Lindsey said senators want to spend at least $14 billion more than Mr. Bush supports for the budget year beginning Oct. 1.
"We do have to monitor the deficit. We have to spend money on defense. We have to spend money on Social Security. We have to make sure that our economy is sound. But we cannot afford to have wasteful spending here," he said on CNN's "Late Edition."
While Mr. O'Neill tried to focus on the economy's strong points, he spent considerable time answering questions about his recent travels around the world at a time critics said he should be at home reassuring worried Americans.
Mr. O'Neill went to four former Soviet republics to gather information on how to bolster their economic growth, private investment and living standards, as well as to discuss terrorists' financing. He planned to go to South America this week but postponed the trip.
"I think it is important, in my role of secretary of the Treasury, that I don't make the mistake that I think many people do, who think the sun only sets and rises in Washington and New York," Mr. O'Neill said.
He added that he was never out of instant communication but added that he did not think one person "can say words that will cause the market to go one direction or another for any sustained period of time."
That view was supported by Chairman Pete Peterson of the Blackstone Group, a privately held investment group.
The president and the Treasury secretary, "and I don't care who they are, really cannot have a huge influence on the stock market, in my opinion," Mr. Peterson said.

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