Posted on 10/17/2002 5:57:31 AM PDT by Oldeconomybuyer
Speeches on the economy by Congress' two top Democrats on Tuesday got limited publicity and failed to deal with the economy's two most urgent problems - a scary stock market and falling capital investment.
House Republicans were planning to push through measures to encourage investment, and President Bush probably will use the Senate's failure to pass them as part of his election-year economic defense.
Bush also may make a speech on the economy next week, but White House aides were tight-lipped about what new proposals it might contain.
House Minority Leader Richard Gephardt's (D-Mo.) stimulus plan involves $200 billion of deficit spending, including anti-terrorism aid to states and money for school construction.
Bush is sure to ask why Senate Democrats are blocking some $15 billion in construction projects by refusing to pass a terrorism insurance bill to protect their trial-lawyer contributors.
The good news for Democrats was contained in two polls last week - by the Pew Research Center and CBS/New York Times - showing that voters favor Democrats over Republicans to deal with the economy. The margin was narrow, however, 3 points and 4 points, respectively.
Bush's performance on the economy got a 49 percent positive rating in the Pew poll, compared with 61 percent for his overall approval. The positive rating on the economy was just 41 percent in the CBS/New York Times, which gave him 63 percent overall.
Both polls suggested that by wide margins - more than 60 percent to 30 percent - the public doesn't think Bush is paying enough attention to the economy or doing enough to help it.
In the CBS poll, only 43 percent of voters said the economy is currently "good," while 56 percent said it is "bad." On the other hand, only 39 percent said the economy was getting worse, while 59 percent said it would stay where it is or improve.
Both Gephardt and Senate Majority Leader Thomas Daschle (D-S.D.) went out of their way - as former Vice President Al Gore did in a speech earlier this month - to make the economy out to be in dire straits and to blame Bush for it almost exclusively.
None of them attributed any of the country's woes to the breaking of the stock market bubble of the 1990s or the recession that started as Bush became president in 2001.
Gephardt said "we are in the weakest economic period of economic growth in 40 years" and "America faces a clear and present danger to the economic life of working families."
Daschle said, "We're experiencing the worst market decline since the 1930s," which is true enough. He added that in September, "home foreclosure rates reached their highest rate in 30 years" and that "since President Bush took office ... more than 2 million people have lost jobs."
Gore said "there is a crisis of confidence in U.S. economic leadership throughout the world, and this lack of confidence has become in itself an obstacle to global economic recovery."
He added "to lead our nation the president needs to accept responsibility for the fact that his own fiscal policies are the largest factor responsible for the $5 trillion evaporation of our budget surplus."
The Democrats may be right. There are scenarios whereby a continued falling stock market could lead to greatly reduced consumer spending and tip the economy back into recession.
Things could get very grim if the rise in home prices encouraged by record-low interest rates turns around, bursting the so-called real estate bubble.
On the other hand, as Bush administration officials point out, the economy currently is far from the Great Depression condition painted by Democrats.
Contrary to Gephardt's assertion of a 40-year low in economic performance, Bush economic adviser Larry Lindsey said, "1980 was worse, 1982 was worse and 1973-75 were worse. In fact, we expect 3 percent economic growth for this quarter. It'll be the fourth straight quarter for growth."
Unemployment, which used to be the main political measure of economic performance, is at 5.6 percent - it actually improved 0.1 percent last month - compared to 10.1 percent in 1982 and 7.2 percent in 1992.
As the administration further argues, inflation is low, interest rates are low, productivity continues to rise, household income and consumer spending are up and so are housing starts and home sales.
It's true that the government's projected budget surplus has disappeared, and Bush's $1.6 trillion tax cut is partly responsible. But neither Daschle nor Gephardt - nor even Gore - recommended that it be rescinded.
It's understandable - if disingenuous - in the case of the two Congressional leaders. In Gephardt's case, most of the contested House seats this year are in rural or exurban districts where Democratic candidates might be hurt if Gephardt recommended a "tax increase."
Daschle is said to be "adamant" that his chances of holding the Senate will be destroyed if there's talk of repealing Bush's tax cuts.
Gore's failure to recommend such a step is less explainable - particularly because other Democratic presidential contenders, Sens. John Edwards (N.C.) and Joe Lieberman (Conn.), have done so.
Everyone knows, however, that if Democrats regained power, they would repeal part of Bush's cuts - and they should. It would enable the federal government to assist states in their current economic plight, help the uninsured and reduce deficits.
There is zero chance, in any event, that a tax-cut repeal could occur in the next two years. Even if a Democratic Congress passed one, Bush would veto it.
So the nation will ride the Bush economic path until 2004 - and judge it, favorably or harshly, in the next presidential election.
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