In recent weeks, a number of analysts have started drawing
comparisons between the economic situation under President George W. Bush
(Bush 41) and the current president, George H.W. Bush (Bush 43). This is a
matter I have also been considering for some time. Sadly, I have to agree
that the parallels are all too similar.
In a Sept. 30 Los Angeles Times article, Ron Brownstein clearly
articulated the similarities between Messrs. Bush 41 and 43. "Nearly halfway
through his term," he said, "President Bush's economic record is beginning
to look a lot like that of his father, former President George Bush. That
isn't good news for the younger Bush. Or for the economy."
The major similarities are these. Both Bushes became totally
preoccupied with Iraq to the exclusion of almost everything else. Both
presided over economic recessions that were very slow to end. Both seemed
utterly disinterested in economic policy and avoided their economic advisers
like the plague. And these advisers were unwilling or unable to confront
both presidents about the economic reality, and said little publicly except
that everything is OK.
Treasury Secretary Paul O'Neill seems especially disengaged.
Insiders tell me that he was instrumental in killing a plan to propose new
investment tax incentives. President Bush had indicated that such an
initiative would shortly be forthcoming after his Waco economic summit in
mid-August. But within days, it appeared to die of neglect. I am told that
O'Neill argued forcefully that no additional stimulus was needed because the
economy did not need it.
Joining O'Neill in opposing new stimulus was Commerce Secretary
Don Evans, I am told. He shares the treasury secretary's view that
everything in the economy is just peachy and opposed efforts by National
Economic Council Director Lawrence Lindsey and Council of Economic Advisers
Chairman Glenn Hubbard to do something before Congress adjourned.
A Sept. 30 Time Magazine article indicates that the split
between O'Neill and Evans, on the do-nothing side, and Lindsey and Hubbard,
on the do-something side, is getting nasty. The article says there will be a
major housecleaning of Bush's economic advisers after the election. It
strongly implied that Lindsey and Hubbard would be out and that Evans will
"step up to become the public voice of the economic team."
For as long as I have been in Washington, commerce secretaries
have been trying to promote themselves into major players on economic
issues. It has never worked because the Commerce Department simply lacks
control over key economic issues, such as tax policy or the budget. Nor does
the commerce secretary have the access that White House staffers like
Lindsey and Hubbard have. Consequently, all commerce secretaries, with the
possible exception of Herbert Hoover in the 1920s, have largely been
Clearly, among Bush's economic advisers, O'Neill is and should
be preeminent. But his unwillingness to step forward and address the
economy's problems makes him seem like a Pollyanna. Nor is he even willing
to seriously address the key issues within his purview. For example, rather
than put forward a significant tax reform proposal, which almost everyone
agrees is desperately needed, he plans to offer a grab bag of tiny little
simplification options later this year.
The fact that O'Neill is not willing to offer his tax plans
before the election is enough to tell you that the effort will probably sink
like a stone in Congress. After all, Congress's own Joint Committee on
Taxation put forward a similar initiative in April of last year without
anyone paying the slightest attention. What makes O'Neill think that
rehashing the same hash will have a different impact today?
To be sure, the economy is in better shape today than it was at
a similar point in Bush's father's administration. Then, taxes were being
increased, rather than cut, and interest rates were considerably higher. At
the beginning of the 1990-91 recession, the Federal Reserve had the federal
funds interest rate at 8.25 percent. By this point in that recession, it had
only fallen to 4.75 percent. At the beginning of this recession in March of
last year, the fed funds rate was at 5.5 percent and today is at just 1.75
But while some economic comparisons between Bush 41 and 43 may
be different, the public perception is almost the same. People felt then and
feel now that the Bush White House isn't really interested their personal
concerns, caring only about foreign policy.
According to a new poll by The Washington Post and ABC News, the
percentage of Americans saying the economy is in excellent or good shape has
fallen from 70 percent in January 2001 to only 29 percent today. At the same
time, the percentage saying the economy is not so good or poor has risen
from 31 percent to 69 percent -- a 180 degree turnaround on both counts.
Bill Clinton understood that you have to feel peoples' pain and
show that you care, even if you can't actually do anything. He also
understood that "it is the economy, stupid." This seems to be a lesson the
Bush family has never learned.