Market Call - Transcript

SHOW: MARKET CALL 09:00 AM Eastern Standard Time

HEADLINE: Enzi on the Economy, CNNfn

GUESTS: Michael Enzi

BYLINE: Rhonda Schaffler, Jim Ellis

BODY:
RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: Congress preparing to wrap up its session before Representatives and Senators head home for summer break. The Senate just passed, on Friday, a defense-spending bill, which includes a 4 percent pay raise for military personnel. This morning, the Senate's only certified public accountant, Wyoming's Michael Enzi opened the Nasdaq for trading. Enzi's been very vocal about corporate responsibility as chairman of the House Subcommittee on Securities & Investment. Senator Enzi joins us now from the Nasdaq.

Morning, senator. Good to have you on the program.

SENATOR MICHAEL ENZI (R-WY): Good morning. Good to be here.

SCHAFFLER: We're going to cover a couple of topics here. But let's talk first about that corporate responsibility issue, since that's one close to your heart. Do you think, by and large, America's companies have stepped up to the plate, the numbers are clean and investors can feel more confident?

ENZI: We've been very pleased with the reaction that the companies in the United States have had. They even started before Sarbanes-Oxley passed but the deal itself gave them some confidence that the right thing was going to be done and corporate America has really responded. Our committee has the oversight over that and we continue to monitor it and make sure it's going in the right direction.

JIM ELLIS, CNNfn GUEST HOST, MARKET CALL: Senator, do you think that investors and that the general public now feels that perhaps some of the inequities that sort of became apparent in the late '90s in the markets have been sort of taken care of, and do you think that smaller investors especially are going to want to come back into the markets now?

ENZI: Yes. As the war ended and as we get more control of - and I wish the media would give a little bit more response but I understand that government progressing is not a news topic but the government is progressing in Iraq. The transition is being made. They're making huge strides and improvement there.

So Iraq is disappearing as a problem, and Greenspan has been telling us, and I believe him, that the economy is beginning an up-tick, and should respond well in the third and fourth quarter, and as people get a little faith in that, they'll come back into the market in droves. It's really the only place they can get any money for their investments. Interest rates are so low that that's not a big help.

SCHAFFLER: Senator, another issue that I know that you're interested in is what's going on in the energy markets, chairman Alan Greenspan has been talking a lot about the rising costs of natural gas. What should the U.S. do as far as the energy situation goes?

ENZI: I hope that the United States as a Congress passes the energy bill that's before us. It's been kind of stalled out with a lot of peripheral amendments. It's time for to us to really buckle down and get a national energy policy for the first time since the crisis in 1973.

We have an opportunity to focus on responsible production, renewable resources, and to encourage the use of some of the alternative fuels and to utilize some of the clean coal in place of some of the natural gas that we've responded with so readily. The natural gas plants were easy and quick to build, but the coal which is clean coal can replace the natural gas energy and allow the natural gas to be used for homes which should help to keep the price of natural gas down for home heating.

Of course, having a policy that allows us to develop our energy and have some assurance there will be stability in the market will encourage a lot more natural gas development as well. In fact, there are a lot of places out there, that if the permitting process could just continue, there would be a lot more natural gas that would be discovered and put into pipelines and shipped to where it's needed around the nation.

ELLIS: Senator, I wanted to go back to another question about the economy. The administration is now saying that the deficit projections are much larger than, you know, they were a year ago, and that we're now looking at the possibility of, you know, deficits of over $400 million - excuse me, $400 billion.

A lot of people think that given that we had such a dramatic turn in such a short period of time, we know a lot of that is because of the recession. A lot of that is also because of the war costs. But still, are you worried about you know, the level of deficits that we're starting to build up now and how do you think that's going to play with the public, since we battled in the '90s to try to get out of deficit?

ENZI: It's real important for us to get back to a balanced budget. That helps to stimulate the economy more than anything, but we have to find a way to do that. It was very important. The last round that people referred to as tax cuts were really an investment in the economy.

They were designed to stimulate the economy, to get business moving again, and one of the big efforts in that was to make sure that there was a reduction in the tax on cash dividends, cash dividends show that a company is actually making money and give people insurance on it but not only that, it allows the companies that have big cash buildups to get that cash back out to investors who can put it into other companies which will stimulate the economy.

The lack of the deficit has never been the fault of Congress spending less. It's been growing the economy considerably faster with us having some restraint on our increases and that's what we need to have right now and I'm encouraged that we're at a point where that is going to happen. We've made some moves by Congress that I think will boost the confidence and get that spending going so that we can have the kind of economy we're used to and build it like we did during the '90s.

SCHAFFLER: Senator Mike Enzi, good to have you on MARKET CALL. Thanks for spending time with us and touching on a number of issues. We appreciate it.

ENZI: Thank you.