Dubya gets that old sinking feeling

The current Bush presidency seems even less equipped than the last one to grapple with an economic bust.

By Joan Walsh

Published September 11, 2001 7:00PM (EDT)

I can see it now: Karen Hughes walking down the aisle of Air Force One, trying to get reporters to hand back those "Communities of Character" blueprints she passed out earlier, because the Bush team has a new fall agenda. Message: We care -- we really, really care -- about the economy. Details to follow.

Autumn, you'll recall, was supposed to be Bush's golden season, when he traveled the country talking about character and education and values, and tried to convince soccer moms and moderates he wasn't the raging right-winger that his early initiatives -- scrapping Kyoto, handing energy policy over to his Texas drilling buddies, writing a $1.3 trillion tax cut that overwhelmingly favored the rich -- seemed to prove he was.

But now Bush's overmatched Austin political team is scrambling wildly, trying to cope with day after day of bad economic news, about looming budget deficits, rising unemployment and no-confidence votes from the Dow and NASDAQ. It's a gusher of bad tidings with no sign of letting up. While economists debate whether it's time to start calling the downturn a recession -- officially no, since the textbook definition requires two quarters of economic contraction, and we haven't even had one -- the Bush team seems preoccupied with spinning the latest troubles, rather than crafting a serious response to what is, no matter how we label it, an ominously stubborn economic malaise.

While layoffs mount, the New York Times tells us, Bush advisors fret about whether the president is making his speeches in front of the right-size lectern in order to reassure the American people he knows what he's doing. After Bush aced a month of photo ops from his Texas ranch, he seems to be asking the question lots of us ask in early September: Why can't my job be more like my vacation? While Bush strives mightily to master his increasingly demanding job, more and more of his fellow Americans are losing theirs.

Adding to the desperation, of course, is the constant reminder that Bush's patrician father was undone by the last recession, after he failed to convince Americans he understood their suffering, despite that now-famous snappy one-liner, "Message: I care." His son seems determined not to make the same mistake, but so far the administration's response to its economic challenges can be boiled down to, "Message: We don't have a clue."

To be fair, Democrats appear to occupy their days much the way the Bush team does, consulting more pollsters than policymakers as they respond to the day's headlines. "It's his budget, it's his economy, it's his tax cut, it's his solution," Senate majority leader Tom Daschle told ABC's "This Week," after a punishing week of economic bad news for Bush and the nation. Let's hope that's just Week 1 of Daschle's agenda. Schadenfreude is an irresistible human response, as delicious as sleep or sex, but too much gloating could backfire on Democrats, too, if the nation slips into recession while they sit back and enjoy the way Bush fouled up the federal budget, and maybe the nation's economy, with his disastrous tax cut.

Democrats can be forgiven for wanting to let Bush twist slowly in the wind, at least for a little while. It's hard to resist basking in the warmth of "We told you so" -- that a big tax cut packed with goodies for the rich would spend the non-Social Security surplus, and then some. And who can blame them for enjoying the political fix Bush put himself in. Now he's either got to raid the Social Security surplus he promised to leave untouched, or forget about his pricey missile defense shield and education priorities. And that's before he takes on what even Republicans now insist he must: Crafting a stimulus package that features tax cuts or new government spending to rev up the economy, or some combination of both.

What's clear is that both parties still miss President Clinton. Republicans are mad they don't have him to kick around anymore. William Safire tried in the Times Monday, blaming the former president for Bush's current fiscal impasse: Clinton "spooked the nation with his phony notion of a 'lockbox'" for the Social Security surplus, which the born-again Keynesian Safire insists unfairly ties the government's hands during a severe economic slowdown, when deficit spending, he says, is warranted.

But Democrats don't yet have a leader who's proven he can outwit Bush, or at least his advisors. On that score, they miss Clinton, too, and so does the nation. The very lack of ideological moorings that enraged Clinton's critics on the right and left served him, and the country, incredibly well when it came to the economy. He came into office promising a program of government spending to prime the still-slow economy and help those suffering most. But Treasury Secretary Robert Rubin and other business leaders got his ear, and convinced him that a counterintuitive (for a Democrat) program of deficit cutting was what was needed, because the economy was already showing signs of recovery that needed to be hurried along. And they turned out to be right.

It's still almost impossible to know how much Clinton deserves credit for the economic boom of his two terms, and how much blame Bush should shoulder for what's beginning to look like a bust. Crashes are, after all, built into the business cycle, or at least used to be before the days of "Dow 36,000" hokum. Dark economic clouds were already visible last year before Bush took office.

But a couple of things seem clear: Bush's tax cut, with its threat of pending deficits, has spooked Wall Street. Long-term interest rates still aren't coming down fast enough, even after seven Greenspan-ordered cuts already this year, because of fears about a return to the days of big federal borrowing. Bush's surplus-busting tax cut unsettled lenders and investors, and increasingly employers and consumers are feeling the jitters, too. (And guess what? Treasury Secretary Paul O'Neill is no Robert Rubin.)

Maybe more important, it's hard to trust that Bush will know enough to do the right thing when it comes to an economic stimulus program, or that he'd have the ideological flexibility to make the right choice even if it were made clear to him. He lacks Clinton's synthesizing intelligence, and his situational approach to decision-making, both of which are crucial when it comes to economic policy. He's unlikely to have the political courage to break into the lockbox, no matter what William Safire says. He's more apt to try to force Congress to enact spending cuts that could hurt the economy by taking money out of it, rather than putting more in.

It's by no means obvious which decisions will provide the most direct route to recovery. I agree with Safire on the right and former Labor Secretary Robert Reich on the left: The "lockbox" is a political creation, and could be dismantled given the political will to do it -- and if the economy goes into a real recession, it should be. In the current uncertain economic climate, though, both sides are unlikely to flinch in their game of political chicken, and there's certainly no reason for the Democrats to be the first to do so.

Sooner or later, though, the Democrats are going to have to come up with a smart stimulus program. There's no stimulus without spending, so there will be tough decisions about what to do. There's almost no political will to rescind the tax cut, though there are proposals for reforming it: imposing a "trigger" mechanism, which would prevent the wealthiest Americans from receiving a tax cut if the economy doesn't rebound. And there have been quiet discussions of rescinding the cut for the top 1 percent of taxpayers, in order to fund other programs. One or the other seems crucial, though the trigger is less politically risky than rescinding the cut outright.

Another good idea is cutting the payroll taxes that go to fund Social Security, which disproportionately hit middle-income Americans, since the tax is phased out on incomes above $80,000. So far that idea's been floated by Democrats, but it used to be championed by no less fervent a conservative than John Ashcroft when he was in the Senate. It's an end run around the lockbox, spending the money before it can get locked up, but it's targeted to those who need it most and who are most likely to spend it, and goose the economy.

It's still early; the Democrats may yet craft a persuasive response to the twin problems of the deficit and the downturn. But so far, they've been unimpressive. Despite Daschle's crack about Bush Sunday -- "It's his budget, it's his economy, it's his tax cut, it's his solution" -- it's not Bush's economy, it's everyone's, and all of us will suffer if the Democrats don't show some spine and play a leading role in crafting a response to the downturn.

Meanwhile, you've got to feel a little sorry for Bush. He knows his father's presidency was doomed by an economic downturn and his inability to convince the nation he knew how to deal with it. On his bad days you see him pondering the wisdom of his favorite philosopher, Yogi Berra (he was just pandering to the Christian right when he said it was Jesus Christ last year): It's dij` vu all over again, and that's bad news for the Bush presidency, and the nation.

Joan Walsh

Joan Walsh is the author of "What's the Matter With White People: Finding Our Way in the Next America."

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Democratic Party George W. Bush Republican Party Social Security U.s. Economy