the economy be a big liability for President
Bush's reelection campaign, as it was for
his father in 1992? Or will it turn up just
in time, as it did for Ronald Reagan in 1984?
And will the economy matter?
the optimists' case. The stock market, which
enjoyed a good quarter, often leads recoveries.
The unemployment rate of 6.4 percent -- the
worst in nine years -- looks bad. But if you
take a closer look, say the bulls, the economy
has stopped shedding jobs; the unemployment
rate keeps rising because more people are
looking for work.
those tax cuts, now totaling more than $4
trillion, have to produce economic stimulus
sometime soon. The Federal Reserve is helping
by lowering interest rates to the lowest level
since 1958. That keeps the housing boom going
and saves consumers money on everything from
refinancings to car payments.
the economy may not be spectacular, say the
Bushies and their allies, but it will be good
enough. And in any case, the economy remains
Topic B. National security is still Topic
this writer thinks the administration is whistling
past the graveyard. Here's why the economy
is likely to rain on George Bush's 2004 election
parade: For starters, the unemployment numbers
are truly awful. Since Bush took office the
economy has shed almost 2.5 million jobs,
the worst performance since the administration
of Herbert Hoover. A weak job market also
means flat or declining wages and benefits
for those employed.
people are not moved by statistics. They pay
attention to their own economic condition.
The same problem afflicted Bush I. The economic
numbers really weren't all that bad -- the
official recession was fairly shallow -- but
people felt terrible.
time people are not likely to feel great in
the fall of 2004. Few economists expect a
dramatic turnaround either in the stock market
or in the unemployment numbers. Stocks have
rebounded slightly, but corporate profits
have not gained enough ground to justify the
kind of stock market growth that people took
for granted in the booming 1990s. And businesses
are trying to rebuild profits by shedding
labor -- which means less new job creation
and flat wages.
different key voting groups. It's a dismal
economy for seniors. Interest rates are very
low, which means that older people living
on savings are earning practically nothing
on bank CDs or bonds. Fewer stocks pay dividends
than did a generation ago. Private pensions
are dwindling. The official rate of inflation
is low, which means minuscule annual inflation
adjustments in Social Security, but try explaining
that to an older American coping with escalating
drug prices and rising out-of-pocket payments
for medical care.
young are likely to be as frustrated as the
old. This summer is the worst job market in
at least a decade for recent college grads
and even worse for high school graduates not
going on to college. Unemployment for minorities
families, like seniors, can read the low inflation
statistics -- and wonder at their own personal
experience. Mortgages are a good deal, but
rental housing is scarce and sky-high. Health
costs keep soaring as employers shift costs
to their workers. As cities and states face
reduced federal aid, property taxes are rising
while services are being cut.
can rightly claim that he inherited the aftermath
of the Internet bubble. But the fair rejoinder
is to ask what he did about it.
he did, of course, was to bestow an immense
tax cut tilted to the very affluent. This
was advertised as pro-jobs. But as anti-recession
medicine, it's about the weakest remedy available.
The very rich don't spend most of that money.
And in a soft economy, neither do they invest
it entrepreneurially. The venture capital
boom has still not recovered from the Internet
would have been much more tonic to deliver
that money to the hard pressed states and
cities, something that presidents of both
parties have done in previous downturns; to
spend it on services like health and education
and child care; and to tilt the tax cut downwards,
putting buying power in the pockets of working
families. So Bush will be rightly held accountable
for economic policies since January 2001.
what about Topic A, national security? The
Bush team mounted a successful invasion of
Baghdad, but it's no better at rebuilding
Iraq's economy, society and security than
at reviving our own. And its foolish economic
policy of starve-the-states also hurts homeland
this president increasingly vulnerable on
Kuttner is co-editor of the Prospect.
column originally appeared in yesterday's
Boston Globe. Copyright © 2003 by The
American Prospect, Inc. Preferred Citation:
Robert Kuttner, "Weakest Link Why Bush
will be vulnerable on the economy in 2004,"
The American Prospect Online, July
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