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CNBC Exclusive: Steve Liesman Speaks with President Bush's Economic Team For "The CNBC White House Economic Summit" on Thursday, December 20th on "Closing Bell" (Transcript Included)

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WHEN: Today, Thursday, December 20th at 3:00PM ET
WHERE: "Closing Bell"

The following is the unofficial transcript of a CNBC exclusive interview with Bush's economic team on CNBC's "Closing Bell" today. All references must be sourced to CNBC.

In a CNBC exclusive interview, live from Washington D.C., CNBC's Senior Economics Reporter Steve Liesman speaks with Bush's economic team for "The CNBC White House Summit." Liesman speaks with Ed Lazear, Council of Economic Advisors Chairman, Jim Nussle, OMB Director and Carlos Guitierrez, Commerce Secretary on a broad range of topics including whether the economy is headed for recession, the subprime mess, whether the government will have to bail out homeowners and Wall Street, fair trade and whether more tax cuts are on the way, among other topics.

LIESMAN: THERE'S AN AWFUL LOT TO TALK ABOUT.I HAVE KEY PLAYERS TO HELP TALK ABOUT IT HERE AT THE CNBC WHITE HOUSE ECONOMIC SUMMIT. ON MY RIGHT JIM NUSSLE, OMB DIRECTOR, ED LAZEER.CHAIRMAN OF HOUSE ECONOMIC ADVISERS AND CARLOS GUTIERREZ, THE COMMERCE SECRETARY. ED LET'S START WITH YOU.

LAZEAR: ALL RIGHT.

LIESMAN: LOTS OF TALK ABOUT A RECESSION.ALAN GREENSPAN SAYS CHANCES ARE 50/50. WHERE DO YOU PUT THE CHANCES? WHAT'S THE OUTLOOK FOR THE WHITE HOUSE?

LAZEAR: WE THINK THE NEXT YEAR LOOKS GOOD. OBVIOUSLY THIS QUARTER IS LESS STRONG THAN THE PREVIOUS QUARTER. WOULDN'T BE EASY TO BE AS STRONG AS THE PREVIOUS QUART PERCENT SINCE THAT'S 5% GROWTH QUARTER. WE DON'T EXPECT THAT THIS QUARTER.

FIRST QUARTER OF '08 MAY BE A LITTLE WEAKER THAN LAST QUARTER WAS. MOST PEOPLE ARE EXPECTING THAT THINGS WILL TURN UP AFTER THAT. HOPEFULLY THE HOUSING MARKET WILL BOTTOM OUT. AND THAT WILL GIVE US A BOOST.

LIESMAN: MR. SECRETARY, THE PRESIDENT,WE JUST HAD THEM ON THE AIR SAYING THE ECONOMIC FUNDAMENTALSARE SOUND. WALL STREET DID A POLL, 56% OF AMERICAN PUBLIC THINKS WE'RE HEADED INTO A RECESSION.WHY THE DISCONNECT. WHY DO SO MANY AMERICANS THINK WE'RE HEADED INTO RECESSION?

GUITIERREZ: I THINK THE PRESIDENT LOOK AT NUMBERS LIKE WE DO. LOOK AT THE GDP STATEMENT FOR THE LAST QUARTER.EVERY PART OF THE GROUP WITH THE EXCEPTION OF RESIDENTIAL CONSTRUCTION. WHAT WE'RE SEEING, EVERYWHERE YOU LOOK IN THE ECONOMY, RETAIL SALES, UNEMPLOYMENT, GROWTH IN DIFFERENT SECTORS ARE GROWING WITH THE EXCEPTION OF THE HOUSING MARKET.FUNDAMENTALS ARE THERE AS THEY HAVE BEEN FOR QUITE A WHILE NOW.

LIESMAN: WE'RE HERE AT UNION STATION WHERE THERE'S A LOT OF SHOPS. IS THAT THE EXPECTATION THAT CONSUMPTION IS GOING TO GO ON.ARE THERE CONCERNS ABOUT CHRISTMAS SPENDING THIS YEAR?

LAZEAR: RETAIL NUMBERS WERE OBVIOUSLY VERY GOOD.

LIESMAN: THAT'S THE REARVIEW MIRROR.

LAZEAR: NOVEMBER WAS UP.NOVEMBER WAS VERY GOOD. NOVEMBER WAS VERY HIGH. AND THAT'S THE BEGINNING OF THE CHRISTMAS SEASON.

YOU KNOW, RIGHT NOW, OF COURSE, YOU DON'T HAVE HARD NUMBERS. YOU DON'T HAVE REAL NUMBERS. YOU HAVE GOSSIP NUMBERS.

THE GOSSIP NUMBERS SEEM PRETTY DECENT. WE'LL HAVE TO SEE WHAT HAPPENS. THE SENSE THAT I'M GETTING FROM TALKING TO BUSINESSES IS THAT BUSINESS ACTIVITY IS STILL QUITESTRONG.PROFITS ARE COMING IN.REVENUES ARE COMING IN.IF YOU LOOK AT THE LABOR MARKET THAT'S THE BEST WAY TO SEE IT. YOU GET YOUR EARLY KATHSS FROM THE LABOR MARKET AND JOBS ARE STILL GROWING.

I WOULD SAY AS LONG AS JOBS ARE GROWING, WAGES ARE GROWING, PEOPLE WILL SPEND MONEY.

LIESMAN: WE HAVE A DIRECT DATA FROM THIS GENTLEMAN OVER HERE.WHAT ARE THE TAX RECEIPTS TELLING US ABOUT THE STRENGTH OFTHE ECONOMY. YOU SEE THIS COMING IN, COMPARE IT TO LAST YEAR. WHAT'S IT LOOK LIKE?

NUSSLE: THE REVENUE IS STILL STRONG. THERE'S GOING TO BE ALL SORTS OF PREDICTIONS, AND PROGNOSTICATIONS. WE HAVE TO UNDERSTAND WHAT WE'LL DO ABOUT IT. THAT'S WHY THE PRESIDENT PUT OUT A PRO GROWTH AGENDA ON LOWERING TAXES ON MAKING SURE WE HAVE FORWARD LEANING TRADE POLICY, MAKING SURE THAT WE'RE DEALING WITH THE HOUSING CHALLENGES AND ENERGY BILL. ALL OF THOSE ARE PART OF WHAT WE NEED TO DO. WE SAID LOWERING TAXES.

LIESMAN: I KNOW YOU'RE MEETING WITH THE PRESIDENT THIS AFTERNOON. THERE'S TALK FROM LARRY SUMMERS HE'S A DEMOCRAT SAYING YOU GOT TO CUT TAXES. IS THAT SOMETHING ON THE PRESIDENT'S AGENDA?

NUSSLE: IT'S BEEN ON THE PRESIDENT'S AGENDA EVERYBODY SINCE HE CAME TO WASHINGTON.NOT ONLY THE AGENDA BUT INACTIVE.IT'S PART OF WHAT HE LEANS ON THIS YEAR.IT'S ALSO ENERGY, HOUSING, TRADE. THESE ARE ALL THINGS THAT I THINK DEMONSTRATE THAT THE PRESIDENT IS NOT TAKING THIS FOR GRANTED, IS NOT TAKING GROWTH FOR GRANTED.WE DON'T TAKE GROWTH FOR GRANTED. WE WANT TO BE AGGRESSIVE IN MAKING SURE THAT WE DEAL WITH THIS.

LIESMAN: ED, ARE THERE ADDITIONAL TAX CUT PROPOSALS COMING FROM THE BUSH ADMINISTRATION SAY WITHIN THE BUDGET THAT MR. NUSSLE IS PUTTING TOGETHER HERE?

LAZEAR: AS THE PRESIDENT SAID EARLIER, WE ALWAYS KEEP OUR OPTIONS OPEN. WE'RE ALWAYS CONSIDERING THESE THINGS.IT'S MY JOB TO BRIEF THE PRESIDENT PERIODICALLY ON HOW THE ECONOMY IS DOING.WE THINK ABOUT OUR OPTIONS.I'VE BEEN DOING THAT FOR A COUPLE YEARS NOW.SO THERE'S NOTHING NEW NOW.OBVIOUSLY AS DATA CHANGED. WE UPDATE OUR EXPECTATIONS AND THINK ABOUT NEW POLICIES.

GUITIERREZ: WE'RE WORKING HARD TO MAKE SURE NOBODY RAISES TAXES.

LIESMAN: I UNDERSTAND THAT.I HEAR YOU'RE NOT GIVING UP BY TAXES. MR. SECRETARY, IS THERE ENOUGH BEING DONE TO ADDRESS THE MORTGAGE PROBLEMS AND CREDIT PROBLEMS.SO INITIATIVES FROM THE TREASURY AND FEDERAL RESERVE. DOES IT AMOUNT TO ENOUGH?

GUITIERREZ: WE BELIEVE IT'S THE RIGHT SPOT FROM THE STANDPOINT OF NOT EVERYTHING A BAILOUT, EVERYTHING A VOLUNTARY PROGRAM WHICH IS WHAT TREASURY SECRETARY AND ALFONSO JACKSON DID. WE WANT ADDITIONAL FHA AUTHORIZATION. THAT WILL HELP AS WELL. SO, YES, WE BELIEVE -- AND OF COURSE, AS I SAID, WE'RE ALWAYS LOOKING AT OPTIONS. WE STAYED VERY CLOSE TO THESE NUMBERS AND LITERALLY LOOK AT IT EVERY DAY.

LIESMAN: IS IT NOT ACCURATE TO SAY THE OFFICIAL REACTION TO THIS CREDIT CRUNCH HAS BEEN A STEP BEHIND THE CURVE IN THE SENSE THAT EVERYBODY WAS SAYING IT WOULDN'T SPILL OVER INTO THE BROADER ECONOMY.EVEN THE FED WAS SAYING THAT.IS THAT ENOUGH? IS IT TIME FOR OFFICIALS TO GET AHEAD OF THIS?

LAZEAR: WE THINK WE'VE BEEN AHEAD OF IT, ACTUALLY.I GONZALES T WAY I THINK ABOUT IT, THE WAY THE PRESIDENT PUTS IT. IF YOU LOOK AT THINGS LIKE THE HOUSING SITUATION. WE DON'T WANT TO BAILOUT THE LENDERS. WE DON'T WANT TO CREATE MORAL HAZARD FOR THE FUTURE. THAT'S EXTREMELY IMPORTANT AND YOU HAVE TO BE CAREFUL THAT SHORT-RUN POLICIES DON'T SET UP LONG RUN PROBLEMS. WHAT THE PRESIDENT IS FOCUSED ON MAKING SURE WE FOCUS ON BORROWERS AND NOT ON INDIVIDUALS THAT BEHAVED IN INAPPROPRIATE POLICY. I THINK WE'VE BEEN SOUND ON THATPOLICY.

LIESMAN: IF YOU HAVE TO GUESS. WILL THERE BE A TAXPAYER BAILOUT AS THERE WAS WITH THE RTC?

LAZEAR: A YEAR OR TWO FROM NOW MEANS A NEW ADMINISTRATION.I WOULDN'T WANT TO SPECULATE ON WHAT HAPPENS IN THE NEW ADMINISTRATION. I KNOW HOW THIS PRESIDENT THINKSABOUT THE SITUATION. HE CERTAINLY DOES NOT WANT TO DO A BAIL-OUT. HE CERTAINLY DOESN'T WANT TO RAISE TAXES AND THOSE ARE FUNDAMENTALS.

LIESMAN: MR. SECRETARY, WE'VE HAD THE HOUSING DOWNTURN. WHAT ARE THE STRENGTHS OF THE U.S. ECONOMY THAT WILL HELP OFFSET THAT PARTICULAR WEAKNESS?

GUITIERREZ: THE FIRST IS, YOU KNOW, CONSUMER SPENDING.THAT'S 70% EVER THE ECONOMY. THAT CONTINUES TO GROW. WE EXPECT, YOU KNOW, THIS QUARTER TO CONTINUE TO SEE GROWTH. BUT WHAT WE'VE SEEN IN THE LAST SEVERAL QUARTERS IS VERY STRONG EXPORT GROWTH. EXPORTS -- NET EXPORTS ADDED ABOUT 1.4 POINTS TO THAT 4.9% GROWTH. THAT'S HUGE. INCREDIBLE AMOUNT OF GROWTH. WE SEE THAT CONTINUING. THAT'S THE WAY WE WANT CONGRESS TO APPROVE THESE FREE TRADE AGREEMENTS. WE HAVE PERU THROUGH.

LIESMAN: WE HAVE PERU THROUGH AND THREE OTHERS ON THE TABLE.

GUITIERREZ: WE THINK THE CHANCES SHOULD BE VERY GOOD. WE HAVE MOMENTUM.OUR FARMERS ARE SMALL BUSINESSES, EXPORTING.WHY NOT GIVE THEM ADDITIONAL MOMENTUM, WHY NOT GIVE THEM ADD IS AT SUPPORT ESPECIALLY NOW THAT EXPORTS HELPING US OFFSET HOUSING.

LIESMAN: I AGREE. BUT ARE THEY REALLY STRONG? DO YOU THINK YOU'LL GET --

GUITIERREZ: WE BELIEVE SO. TAKE THE EXAMPLE OF COLUMBIA, THEY HAVE PREFERENCE TO THE U.S. MARKETS. CONGRESS IS GIVING THEM PREFERENCE. WHY NOT GIVE MANUFACTURERS AND FORMERS PREFERENCE TO THEIR MARKET. THAT'S WHAT WE'RE TALKING ABOUT.

LIESMAN: YOU'RE PROBABLY PRETTY BUSY LOOKING AT YOUR WATCH.YOU GOT TO PUT A BUDGET TOGETHER. THE PROJECTIONS RIGHT NOW CALL FOR AFTER SEVERAL YEARS OF PROGRESS AND SHRINKING THE DEFICIT TO EXPAND IN 2009. IS THAT A WORRISOME DEVELOPMENT?

NUSSLE: IT'S SOMETHING THAT'S BEEN ON THE BOOKS FOR A WHILE. WE KNEW IT WAS COMING. CERTAINLY THE SLOWING OF GROWTH.

POTENTIAL OF SLOWER REVENUE GROWTH COULD MAKE THAT MORE COMPLICATED. THAT'S WHY WE FOUGHT SO HARD ON SPENDING.

WE DON'T NEED MORE SPENDING THAN WHAT THE PRESIDENT HAS ASKED FOR IN ORDER TO MEET ALL OF THE PRIORITIES. ALL THAT WILL DO IS RUN UP THE DEFICIT AND PUT MORE PRESSURE ON TAX INCREASES WHICH IS WHAT WE'RE SAYING WE DON'T WANT. WE DON'T NEED MORE PRESSURE ON TAX INCREASES THAT'S WHY WE'LL HOLD THE LINE ON SPENDING THIS YEAR.

LIESMAN: THANK YOU, MR. NUSSEL AND ED LAZEAR AND CARLOS GUTIERREZ. THAT'S THE CNBC WHITE HOUSE ECONOMIC SUMMIT.




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