George W. Bush inherited an economy that had already started into a cyclical downturn, which the terrorist attacks of 9/11 only made worse. There is little indication, however, that the American public blames President Bush. Although the economy grew at a sluggish 1.6 percent in the last quarter, other economic indicators are healthy. Interest rates are at historic lows; inflation is modest; consumer confidence is up; and energy prices, which had been rising, are coming back down again. The best thing President Bush can do for the economy is to ignore Democratic cries to fix it.
With its size and complexity, there is no way to jump-start the U.S. economy by government stimulus packages or other quick-fix gimmicks. President Bush's goal should be to make long-term adjustments that will allow businesses to thrive and encourage ordinary Americans to save and invest. With a closely divided Congress, it's unlikely the president will be able to win support for some of the most important changes that would affect the permanent health of the economy -- the elimination of capital gains taxes and a sizable reduction in marginal tax rates. Even moderate Republicans have resisted the president's full tax cut proposal out of fear that budget deficits will grow uncontrollably.
Of course Republicans, who control both houses of Congress and the White House, could reduce the deficit by significantly cutting government spending -- but neither the president nor GOP leaders in Congress are interested in that politically risky solution. Unlike most families, who tighten their belts and do without when faced with smaller paychecks, politicians seem unable to cut spending when there's a budget shortfall.
Nonetheless, despite Democrats' hopes that the economy will nose-dive into a double-dip recession in the next few months, most economists predict that the economy will either continue to grow at its current modest rate or actually expand more rapidly over the next year. Either way, the voters are likely to give President Bush the benefit of the doubt on the economy and re-elect him based on his leadership in fighting terrorism at home and abroad.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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