Does the Bush administration's political sanguinity depend on the market's health?

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W A S H I N G T O N, July 15
115 Days Until The Election....

—By the time you read this, you'll know a bit about what the markets are likely to do this morning — which is to say, you'll have some idea of the current political EKG of the Bush Administration and the Republican party.

Having shackled his and the GOP's political health to the state of the markets, the president will make another attempt today to do what the punditocracy now views as his primary mission (a distant second to fighting the once-in-a-lifetime war against terrorism under this rubric): restoring consumer and business confidence.

President Bush will head to Birmingham, AL to give a speech on the economy and headline a fundraiser for Rep. Bob Riley, his party's nominee for governor.

Following on his press conference and Wall Street address from last week, Bush's remarks this afternoon could either be "third time's the charm" or "bad things come in three's" for 43. Or, as the other two performances were, somewhere in between, though listing toward the latter.

This may gall the White House, but Bill Clinton and Bob Rubin were models of discipline compared to this Administration when it came to the economy and the role of the Economic Cheerleader-in-Chief.

The rules for success in these efforts are simple: don't become captive to the vagaries of the day-to-day market ups and downs; stress the long-term fundamental health of the economy with reassuring specifics; be seen as having a plan to grow the economy from Washington, which includes fiscal discipline; and, don't stop thinking about tomorrow (which really is more of a pop song than a rule, but is still key in this).

Republicans mostly are still publicly saying that Democratic efforts to make the midterm elections about "this" — that is, the economy — won't work, but restiveness is beginning to show in some corners, and the administration is violating all those Clinton/Rubin rules.

To wit: the moment Ari Fleischer played the press' game by trying to convince them that the president's Wall Street speech actually buoyed the market for about 90 minutes, any attempts thereafter to disengage White House words from market performance became folly.

And Democrats, of course, are out there trying to tie the two even more closely together, a la Senator Joe Lieberman on "This Week" saying the economy "will suffer unless President Bush and Vice President Richard B. Cheney release more details of their actions as private-sector corporate executives," as the Washington Times sums it up. LINK

(These developments, not surprisingly, are firing up more aspiring Democratic presidential nominees than you can shake a stick at, as well as tripping up a few, and you can catch some of 'em trying to gauge their words carefully so as not to unnerve supporters in the business world.)

Stressing long-term fundamentals is tough when no one in the administration seems to be able to identify which sectors of the economy are going to lead a surge in growth.

The Bush/Cheney worldview for fostering economic growth involves: tax cuts (more of which are unaffordable in a world in which tax cuts are not scored dynamically by budgeteers); less business regulation (unlikely, given the rush to re-regulate business now); free trade (always tough to pass, but made harder given Congress' full plate); lower federal spending (tough with all the prescription drug, homeland security, Pentagon, and farm subsidy spending to which the president is now committed); and fiscal discipline (not credible, despite Mitch the Knife's best efforts, with deficits stretching as far as the eye can see).

As for thinking about tomorrow, well, that's tough to achieve, too, when we are all still bracing for more details on Bush and Cheney's yesterdays, with unanswered questions remaining, press inquiries, Judicial Watch and other lawsuits, and the SEC's Halliburton probe all still outstanding.

It is undoubtedly true that Secretaries O'Neill and Evans are good, honest men (and we don't mean that in anything but a genuine way), and that Harvey Pitt knows a lot about how businesses work. But are any of them positioned to help the president out of this?

And the dour (sometimes when he's not with the grandkids, he can seem that way, Mary Matalin), under-investigation Veep has been MIA, although he will surface in Connecticut today. Will cameras and inquiring journalists get anywhere near him?

Pitt continued his less-than-convincing-to-many Ralph Nader imitation on the Sunday shows, defending his agency, saying he has no intention of going anywhere, and insisting that Harken is all old news and that his agency is ready to get tough on Halliburton if necessary.

"Pitt said on NBC's 'Meet the Press' that the [Harken] matter had been thoroughly investigated and is now closed. But he said he would make the SEC file public at the president's request. Senator John Edwards (D-N.C.) urged Bush to do just that. 'This president ran on the idea that he was going to restore integrity to the White House, that he would be forthright with the American people,' Edwards told CNN's 'Late Edition.' 'He has an opportunity now to prove that.'" LINK

"House Minority Leader Richard A. Gephardt (D-Mo.) … suggested that Pitt remove himself from any involvement in the Halliburton probe."

Ought-four aside, is there a connection between the White House winning the news cycle these days and Republicans doing well in the 2002 midterm elections?

We think there probably is.

So if you are a Republican, you might be asking, what will it take for the president to start winning some?

The president (always aware of the Ghost of 41 and that supermarket scanner/Nick Brady/Georgette Mosbacher image from the 1992 campaign) doesn't want to appear out of touch with people who are hurting or worried about the current economy, but showing that he feels their pain can get in the way of sounding totally upbeat about the economy.

And now the words of this President are being questioned, personified by a weekend Broder/Dowd/Brownstein one-two-three punch.

Dean Broder might have well have headlined his CW-making Sunday piece "Bush IS Clinton!!!!" LINK

Whether you are a mixed-feeling Bill Clinton (who didn't like it when Broder took after him), or a pushing-back Tucker Eskew, the Broder column is a must-read, but here are the key parts:

"Presumably, at some point the stock market will recover, but the first returns on Bush's efforts to restore confidence in Wall Street were anything but encouraging. In the first two days after Bush journeyed to the heart of the financial world on a self-assigned mission to banish the world's worries about the integrity of corporate America, the Dow Jones industrial average fell more than 400 points and the Nasdaq market index hit its lowest mark since 1997."

"Whether this was just rhetoric or was meant to be taken seriously, Bush's words clearly linked confidence in him and his policies with trust in financial markets and the corporate culture from which he sprang."

"Bush's personal performance has added to the wobble in confidence. The last-minute news conference in which he returned to the public stage from his Independence Day holiday was the weakest, most inarticulate showing he has made since the early months of his presidency. Asked repeatedly about his sale of stock in Harken Energy Corp., where he was a director, shortly before it had to revise upward its reported losses for the year, he responded eight times with variations on the words, 'It has been looked at by the SEC,' the Securities and Exchange Commission, which found no reason to challenge the legality of his action."

As for the Divine Ms. Dowd, her last faux Bush line ("Where's Karen?") is simply the parting shot in what is a classic column that had even some Republicans laughing and shaking their heads.

And from Olympus, Ron Brownstein hurls down a catalogue of criticisms: LINK

With Greenspan poised to appear on Capitol Hill on Tuesday, here are some things we DON'T think the president will do to try to fix what is seen in some quarters as a jobless, profitless mini-recovery:
1) He won't fire any of his economic team or Harvey Pitt (not his style at all).
2) He won't recalibrate his Wall Street rhetoric (although don't think this former CEO likes high-flying Wall Street chieftains — he mostly disdains them as much as if they were Yale English department faculty members).
3) He won't propose any legislative fixes that out-flank Congress on the regulation side.

Posted by DeLong at July 15, 2002 03:32 PM | Trackback