As GOP Prepares Red Meat, Good Economic News is all Gravy

Donald Lambro

3/14/2006 6:09:15 PM - Donald Lambro

WASHINGTON -- The U.S. economy is producing jobs at an ever-faster pace, reinforcing President Bush's arguments that tax cuts were needed to stoke the nation's engine of growth.

After weeks of frustratingly weak job-approval numbers, followed by the Dubai ports fiasco that threatened to drive Bush's numbers deeper into the hole, the spectacular jobs report came out just at the moment when he and the country needed a dose of good news.

The Labor Department data showed that businesses created 243,000 new jobs in February, beating all of the consensus estimates by more than 40,000 jobs and giving the stock market something to cheer about. It also gives the president a reprieve from the bad news that has plagued his second term.

Though it draws very little news interest these days, Bush's job record is actually quite good. Some 2.1 million new jobs have been created in the last 12 months, nearly 5 million since August 2003. We've had 30 consecutive months of job growth. Nationally, the jobless rate was little changed at 4.8 percent, as more people return to the job market as a result of increasing demand for workers.

"These employment gains indicate strong first-quarter economic growth, in the range of 4 percent," said economist Peter Morici at the University of Maryland's School of Business.

The stunning jobs data is the latest evidence that, despite public doubts about the economic health of the country, the U.S. economy is not only getting stronger but showing remarkable staying power. All the gloom-and-doom stories last year about the economy slowing down in 2006 look rather silly right now, and few economists are flatly predicting a slowdown in the near future.

The professional punditry in this town can't be happy about this turn of events. The Dubai story, after the Arab-owned company divested itself from the ports deal, has all but evaporated from debate, shifting attention back to the issues Republicans want to run on this year. As the midterm-elections cycle gets under way, 4 percent growth and an expanding job market is exactly what Bush and the Republicans need most. If this economic trend continues through 2006, it will be difficult for Democrats to paint a dreary picture of America heading into the abyss.

Indeed, the jobs story struck hard at the Democrats' biggest domestic-policy weakness -- their love affair with higher taxes that would grind the American jobs machine to a halt.

The conventional wisdom in Washington states that the Democrats are headed for an election sweep in the fall. But I think such predictions are overblown right now.

Here are a few reasons why things may not work out as Democrats hope.

First, not only will the economy pick up a head of steam this year, but the stock market could be entering a long bull market -- helped later this year by the expected extension of the tax cuts on dividends and capital gains -- that will push worker and retiree 401(k) plans into a higher orbit.

Second, with increasing reports of stronger Iraqi security forces taking over more responsibility -- and Defense Secretary Donald Rumsfeld sending signals that that's exactly what he wants -- some U.S. troop withdrawals are in the cards this year.

That will likely improve Bush's polls and maybe boost support for the GOP Congress, changing the political equation dramatically.

Third, the old rule of politics is, you can't beat something with nothing. And nothing is what the Democrats have right now in terms of an agenda.

Unless you think higher taxes is a great issue to run on. Fourth, Republicans have begun to kick their political offensive up a notch. A preview of their campaign strategy was on view last weekend in Memphis at the Southern Republican Leadership Conference, where Republican National Committee chairman Ken Mehlman tore into the Democrats with a vengeance.

Following White House political guru Karl Rove's election game plan to play to the GOP's strong suit on national security, Mehlman went on the attack:

"Do you want the speaker of the House ... to be [Democratic leader Nancy Pelosi] who said, less than a year after 9/11, 'I don't really consider ourselves at war'?"

"Was [Senate Democratic leader] Harry Reid really proud when he announced last year, 'We killed the [anti-terrorist] Patriot Act'?"

If the Democrats take control of Congress in November, they will raise taxes and put liberal judges on the Supreme Court who will "strike 'Under God' from the Pledge of Allegiance" and "deny parents the right to know if their minor daughter is having an abortion," he said.

This is the kind of red-meat attacks we can expect from Republicans this year, tailored to energize and reunite the GOP's divided base, and Bush will be leading the charge. Don't underestimate them. They defied the historical odds and won in 2002 and again in 2004, and their prospects are looking better in 2006.