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The sudden acceleration in what until the fall had been a very sluggish economic recovery has left many Bush aides and election strategists punching the air with excitement and relief. Their confidence has rebounded and they are persuaded now that even with problems in Iraq the president is sitting pretty when it comes to his re-election bid. White House incumbents, they point out, fare well when slumps start shifting into recoveries.
The White House indeed has had plenty of stunning economic figures to savor. The Commerce Department reported an 8.2 percent annual growth rate for gross domestic product for the third quarter – the highest since the first quarter of 1984. And the productivity of U.S. business has jumped to heights not seen in two decades, recording over the summer an annualized gain of 9.4 percent.
Not to be outdone by government statistics, the Institute for Supply Management has announced that the manufacturing sector enjoyed its best month in November since December 1983, with 18 of the 20 industries in the sector enjoying growth.
While job growth has been disappointing, many economists now believe job gains are just around the corner.
“Businesses have been able to increase margins and hold prices down,” said Sung Won Sohn, chief economist at Wells Fargo Bank. “This is very good news for the economy as well as corporate profits. But employers have probably squeezed as much as they can out of this orange.” In other words, there are limits to how much productivity can be improved and the time is fast approaching when businesses will have to add employees.
“You can do that for only so long before you exhaust your workers,” said Stephen Stanley, senior market economist for RBS Greenwich Capital. “They are going to have to start hiring.”
So the good times are set to roll again? President George W. Bush can expect re-election on the back of a rapidly improving economy? The answer to both is, “Yes, but … ” There will be a time lag before struggling Middle America starts perceiving and feeling the benefits of an economic resurgence, as happened with the slow-motion recovery in 1992. Despite Democratic propaganda at the time, there was an economic turnaround under way as the nation went to the polls to pick between Bush p?re, Bill Clinton and Ross Perot, but voters weren’t yet aware of feeling the recovery in their pocketbooks. The rest is history, as they say.
However robust the economy is next year, the net loss in payroll jobs since the year 2000 won’t be made up by Election Day. But, time-lag caveat aside, the improving economy certainly won’t help the Democrats in their effort to oust George W. They had earmarked the economy as a vote-winner for them. In recent weeks the Democratic candidates for president have been linking the economic hard times many ordinary Americans have been suffering to the cost of the Iraq War and the $87 billion tab for rebuilding Iraq. Sen. Joe Lieberman, D-Conn., has been at the forefront of that tactic, arguing “Eighty-seven billion dollars is a lot of money for Iraq – too much in fact.”
Sen. John Kerry, D-Mass., has been trying to tie in his foreign-policy critique of the president with the Bush “tax cuts for the wealthy” by calling for a repeal of tax cuts to high-earning families as a way for paying part of the Iraq reconstruction costs.
Both senators appeared to be tapping into a rich vein of discontent over the bill for Iraqi reconstruction – a discontent no doubt fueled by continuing terrorism in the region. But an improving economy isn’t going to assist the president’s rivals as Election Day looms and discontent with the economy erodes.
That leaves Democrats in a quandary about their election strategy. They can continue to attack the president about Iraq, and if things get further out of control there, then their criticism may help them as misgivings about the war mount. But whether that will be enough to unseat Bush remains in doubt – opinion polls don’t give much comfort to the Democrats when it comes to national-security issues.
One tactic the Democrats now seem keen to test is to attack the character of their Republican rival. Both Kerry and Lieberman are making full use of the Internet to do that – the former blasting e-mails detailing the “Daily Distortions from the Commander in Chief” and the latter launching bushintegritywatch.com, a website that questions the veracity of the president.
These critiques are tasteful by comparison with others in a Democrat-inspired Hate-Bush movement that is taking the Internet by storm.
Some Democratic strategists are worried though by the direct attacks on Bush’s character, fearing they may backfire in much the same way as happened with the furious GOP assault on Clinton. Recently, Democratic pollster Celina Lake warned: “We have to be careful about how we talk about him. We can’t just call him a liar, even though that’s what we think.” The reason for caution? She cited opinion polls suggesting that 67 percent of voters approve of Bush personally.
Jamie Dettmer is a senior editor for Insight.
