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Archive for Sunday, January 7, 2001

Economic luck may have run out

January 7, 2001

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Maybe those who say that it is better to be lucky than smart know what they're talking about.

Who would have figured that eight years of prosperity would be showing signs of petering out less than three weeks before George W. Bush moves into the White House?

Perhaps Bush was smart enough to foresee it. That might explain why he, vice president-in-the-wings Dick Cheney and some leading congressional Republicans have taken of late to issuing gloomy prognostications about the near-term prospects for the economy.

Maybe it's wishful thinking on their part because an economic downturn at this time could be a political boon for Bush, regardless of the pain it might cause other Americans. One can only hope that this is not so; after the Florida election debacle, America needs a respite from cynicism.

A recent Los Angeles Times story goes so far as to suggest that Bush and Co. are actually orchestrating efforts to speed up the slowing down of the economy.

"The political motives behind the president-elect's efforts are apparent: to make sure that any problems are blamed on the outgoing Clinton administration rather than on him, and to advertise the need for the 10-year, $1.3-trillion tax cut plan that Bush touted during the campaign," wrote Times staffer Peter G. Gosselin on Dec. 26.

That's a pretty scary thought the notion that the new president would risk bringing on a recession in order to be able to ride to the rescue with the tax-cut cavalry. Historically, however, that cavalry almost always arrives late. The ranks of the unemployed, for example, rose markedly after Ronald Reagan's big tax cut.

Many economists and business leaders were already concerned about the downward trend of the economy before Bush, Cheney and House Majority Leader Dick Armey started underscoring it. Now, according to the Times, they are even more concerned because in their view Bush's pessimistic utterances are making a bad situation worse.

Their concern is justified. Instead of telling the nation, "You have nothing to fear but fear itself," the president-elect is saying to the public: "The good times may be rolling now, but the party will soon be over."

Those economists point out that the economy is still strong, although corporate profits, employment and household income are not growing as fast as they were a year or two ago. Therefore, there is no justification for the Bush team to paint such a bleak picture to the public.

Nevertheless, those economists confess to being mystified by how rapidly the growth of the economy is decelerating.

They need not be. The primary contributing factors is obvious. The turmoil in the Middle East has driven up the price of oil, and that has global economic repercussions.

Domestic political uncertainty also has played a major role in the slowdown. Keep in mind that more Americans voted for Al Gore than voted for Bush. The majority of the Gore voters chose him for economic reasons.

They wanted the good times to keep rolling, and they associate Republican administrations with recessions and with the rich getting richer while everyone else gets poorer.

Anyone who wonders why Christmas shopping didn't live up to retailers' expectations this year need only look to Dade County, Palm Beach County, Broward County, Tallahassee and the venerable chambers in which the U.S. Supreme Court in its worst hour found a way to give the presidency to Bush.

The resulting loss of trust in government has translated into a further erosion of confidence in the economy. The president-elect, therefore, needs to direct his energies toward restoring faith in the economy instead of trying to gain political advantage with potentially self-fulfilling forecasts of economic doom and gloom.

Such a political strategy could backfire. If there is a recession, the voters will not remember when it began. They will blame it on the guy currently sitting in the seat where the buck is supposed to stop. If joblessness rises during the next two years, some of Bush's fellow Republicans in Congress could find themselves among the ranks of the unemployed two years from now.

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