Economics and politics

Posted: Oct 15, 2002 12:00 AM
Republicans are sanguine and Democrats are frustrated going into the midterm elections, now just three weeks away. Detailed analyses by political professionals generally show Republicans keeping control of the House of Representatives and having a good shot at regaining control of the Senate, as well. The great unknown factor is how the economy will play. Historically, pocketbook issues dominate when people enter the voting booth. With the economy showing no signs of sustained growth and the stock market in the dumps, there is still a chance that voters will turn on Republicans -- as the party in power -- and blame them for the lost jobs, income and wealth they are suffering. A number of new polls are consistent in showing that Americans are very apprehensive about economic conditions and dissatisfied with the Bush administration's lack of concern. On Oct. 11, the University of Michigan reported that its index consumer sentiment has fallen to the lowest level since 1993. It is now even below the level recorded after the terrorist attacks of 9-11. Also on Oct.11, Ipsos-Reid released its latest index of consumer attitudes and spending by households. It shows that the fall in the stock market is not just affecting people's expectations, but their current spending, as well. On Oct. 10, Fox News released a poll showing that 45 percent of people rate the economy and jobs as their highest concern. Among voters, 30 percent said it would be the most important issue in deciding their votes. The next highest issues were terrorism and education, which were tied at 12 percent. Also that day, the Pew Research Center released a poll confirming the predominance of economic issues. Fifty-five percent of people now want more discussion of economic issues, up from 20 percent in June. The percentage of Americans saying Republicans are best able to handle economic issues has fallen to 37 percent from 45 percent in January, whereas the percentage saying that Democrats will do better has risen to 41 percent from 33 percent. Under ordinary circumstances, one would expect Republicans to be in trouble, given such numbers. But so far, they are not. Democrats believe that it is because Republicans have successfully diverted attention away from the economy, toward Iraq and terrorism. Indeed, some on the left believe that President Bush's heavy emphasis on the latter is little more than a political ploy to help his party. Nonpartisan analysts, however, point the finger at the total lack of a Democratic agenda on the economy. As political analyst Charlie Cook puts it, "The problem for Democrats is that they have sat back and waited for economic woes and statistics to beat Republicans -- and have yet to articulate even an anemic message on the issue." Michael Cramer, the liberal half of CNBC's "Kudlow & Cramer," complains that Republican economic failures should be the No. 1 issue for every Democrat running for office in America. "But no, the Democratic blockheads remain silent, even as their constituents feel Republican-induced pain every day," he says. Even prominent Democrats share this view. Last week, The Hill newspaper quoted Sen. Fritz Hollings, D-S.C., as saying: "Our problem is the Democrats whine and whine. Republicans say the trouble is spending. We say the reason for the trouble is 'we don't know.'" Hollings himself said the problem is "the tax cuts." Presumably, he would repeal last year's tax cut if he could, even though it would constitute a major tax increase for many Americans over what they would pay under current law. What conceivable good this would do is a mystery. As David Broder of The Washington Post notes, all reputable economists favor budget deficits in a soft economy. In an editorial on Oct. 5, the Post did a better job than most Republicans of refuting Hollings and his ilk. "President Bush's main economic policy -- the large tax cut of last year -- was not responsible for any of the current damage," it opined. "Indeed, given the twin shocks of 9-11 and the post-Enron stock market decline, the short-term stimulus created by the tax cuts has turned out to be fortuitously well timed." The Democrat dilemma is that they hate the tax cut, but cannot bring themselves to openly advocate its repeal. They really want more government spending, but have committed themselves to a balanced budget, which Bill Clinton and Bob Rubin convinced them was the key to prosperity. So they are left demanding a tax increase to pay for more spending to stimulate the economy. This strikes most Americans and all economists as a contradiction in terms. If Republicans prevail next month, therefore, it will not be because they have done a good job with the economy, but because Democrats have nothing better to offer.