September 24, 2002
NASHVILLE, Tenn.– U.S. Secretary of the Treasury Paul O’Neill encouraged Vanderbilt students yesterday to challenge economic conventions when appropriate in what he described as a “challenging time.”
“If the ideas don’t fit anymore, then it is time to change the ideas,” he said, citing his relative lack of concern over the U.S. account deficit as an example. “I’d rather have a stronger relative level of economic activity in the United States.”
The Owen Graduate School of Management hosted the invitation-only event held at Langford Auditorium.
O’Neill said he believes current economic indicators such as record-high new home sales, record-low interest rates and strong automobile sales point to an economy that is rebounding after three huge blows sustained during the past 18 months: The Sept. 11 terrorist attacks, highly publicized corporate fraud and the bursting of the dot-com bubble. He credited President Bush’s initiative that returned billions of dollars to taxpayers last year with helping move the economy forward.
“We have had a lot to endure over the past 18 months,” he said. “With that, I think we’re doing pretty well.”
O’Neill said the collapse of much of the technology industry should not have come as a surprise.
“If a company doesn’t have any earnings — some didn’t even have any sales — then there’s something wrong,” said O’Neill, describing “fantasy money” as driving much of the cyber-boom that began in 1993 and ended abruptly last year. “It was never believable that dot-coms were sustainable.”
O’Neill, who served as chairman and CEO of Alcoa from 1987 to 1999, said he was surprised by the lack of integrity of many of today’s business leaders.
“Frankly, it never occurred to me that CEOs would do what some of them obviously did,” he said.
He credited President Bush with discouraging future unethical behavior from business leaders by quickly enacting stronger laws to penalize executives who file fraudulent papers.
O’Neill said the country will never be the same after the Sept. 11 attacks, and encouraged Congress to pass the Homeland Security Act heavily promoted by President Bush prior to adjourning later this year.
“We need Congress to pass the Homeland Security Act because we don’t think terrorism is going to go away,” he said.
He encouraged lawmakers to give Americans more control over their retirement accounts — such as 401k and 403b funds — as a means to help move the economy forward. He also described the 9,600-page tax code as a “forest of abomination” and in need of simplification.
Speaking without notes or a teleprompter, O’Neill was optimistic and upbeat when discussing the future of the U.S. economy.
“We will return to a time of great growth,” he said. “I have no doubt about that.”
He answered several questions from audience members prior to the conclusion of his address.
Contact: Susanne Loftis, 615-322-NEWS, susanne.loftis@vanderbilt.edu