COMMENTARY
War drums drowning out debate on Bush economic policy

By David Broder
Washington Post

WASHINGTON — Suppose, for a moment, that Iraq and the war on terrorism were not occupying the headlines and competing for voters' attention with the everyday economic issues. What would the campaign debate look like?

A Manhattan hot-dog seller knew of the recession early in 2001; leading economists came to the same conclusion months later. Advertiser library photo • Nov. 28, 2001

The speeches did not have the impact Democrats had hoped for; the war drums on Iraq and the hunt for the Washington sniper drowned them out. But the Democrats had a lengthy bill of particulars, which in other times might have carried some political weight.

Here, in bare-bones summary, are the charges the three Democratic leaders laid at the GOP's door:

• 2 million jobs lost in the private sector since George W. Bush became president.
• About 1.3 million more Americans below the poverty line.
• An additional 1.4 million people without health insurance.
• Unemployment up 2 percent, and long-term unemployment almost doubled.
• Overall economic growth 1 percent, the lowest for any administration in 50 years.
• The value of Americans' stock holdings down $4.5 trillion, including a 30-percent drop in the value of IRAs and 401(k) plans.
• A projected budget surplus of $5.6 trillion converted into a deficit of $400 billion.
• About $2 trillion transferred from Social Security taxes to the non-Social Security budget.
• And 45 states struggling with budget problems that are forcing program cuts or higher taxes.

That is a partial list of the economic crimes alleged by Democrats. If anyone were listening, Republicans would have to come up with explanations or rebuttals. It is not a subject the White House is eager to discuss, but I was able to put the issue to one of the president's senior economic advisers — a man who insisted on anonymity but was willing to respond.

Here's the essence of the Republican case.

First, the Democrats have no alternative economic plan; the Senate never even passed a budget this year.

Second, they are all wet in starting their clock on the day Bush took office. During the Clinton years, thanks in part to "too much cheerleading" by those in power, an unhealthy and unsustainable "bubble" built in the economy and inflated the markets, causing people to take foolish risks with their investments and their household budgets.

The bubble burst, not when Bush took office, but in the first quarter of 2000. Almost two-thirds of the inflated values of the Nasdaq stock market were gone by the time Bush was sworn in.

Bush and his economic team were well aware that they were inheriting a mess, and they moved promptly and appropriately to deal with it. With the Fed cutting interest rates, as was proper, the tax rebates that went out in late summer of 2001 stopped what could have been a fatal cycle of decreasing consumer demand. That bolstered confidence enough that economic growth resumed right then and has continued ever since, despite the shock of the 9/11 attacks.

As for the budget deficit, it is exactly what "any reputable economist" would say is appropriate for a soft economy — to say nothing of a time of national emergency. As a result, the country now is in its fifth straight quarter of economic growth.

Steady improvements in productivity, helped by a boost to business from possible further tax cuts next year, bode well for the future — though no one can be certain that we have shaken off all the effects of the bubble bursting. And, of course, another terrorist attack could damage the economy.

That's the essence of the rebuttal argument. I have two thoughts. If the voters were listening, the Democrats' catalogue of losses would probably outweigh the Republicans' efforts to put the record into a broader historical context.

And second, there is one question my administration source did not blow away. If, as he says, the Bush team was well aware by Inauguration Day that the bottom was dropping out of the "bubble" economy, then why did they rely on inflated budget surplus estimates to justify the long-term tax cuts that the president still defends?

"We were in line with the Blue Chip (consensus) estimates," my White House instructor said. But did you believe them? "That," he said, "is a good question."