WASHINGTON -- Troubling signs that the economy is shifting into a lower gear have worried Republicans, who are calling for preemptive tax cuts this year to keep it running on all cylinders.
Slower growth is the last thing the GOP needs in an already volatile political environment, but a steeper decline at this early juncture in an election year would make their goal of holding onto the White House an even tougher nut to crack.
I still think there are a lot of strong fundamentals that bode well for our situation and I'll get to them in a minute. But the economy faces a lot of heavy lifting in the coming month -- with oil topping $100 a barrel, higher gas prices, a weaker housing sector and deeper consumer pessimism -- that calls for a booster shot to strengthen its stamina.
Tax cut architect Jack Kemp and economist Martin Feldstein are among those who have called for new incentives to boost economic growth, and the immediate-tax-cut camp is gaining wider support in Republican circles.
"The economy isn't headed for a recession. But growth is slowing down. What the economy needs now is a new round of pro-growth tax cuts," asserted GOP strategist Cesar Conda, who was Vice President Dick Cheney's chief domestic adviser.
"My top three tax cuts would be first-year business expensing, a cut in the corporate rate, and a cut in the corporate capital gains rate. All of these would produce a burst of economic activity," attested Conda, who is advising Mitt Romney.
When the current President Bush took office, his first domestic initiative was to cut taxes. He called it an "insurance policy" to protect the U.S. economy from any unforeseen circumstances. No domestic policy in recent decades was more prescient or better timed.
Bush's tax cuts kept the economy on its feet through the Sept. 11, 2001, terrorist attacks, the corporate accounting scandals that shook Wall Street, Hurricane Katrina and several international upheavals.
Now, as the economy enters 2008, there are persistent signs that additional insurance is needed to strengthen investor and business confidence both at home and abroad. The nation's manufacturing sector, whose month-to-month gyrations appear as volatile as ever, is looking shakier as it struggles with the prospects of higher energy costs and excessive taxation.
The Institute for Supply Management whose index measures manufacturing activity, fell to 47.7 in December, down from 50.8 in November. A reading below 50 suggests a contraction.