Good News for America - Bad News for the Libs

Booming Economy Boosts Spirits at White House
NewsMax.com Wires
Thursday, Dec. 22, 2005

WASHINGTON -- President Bush, working to retool the Republican message for 2006, is trying to shift public attention to something in short supply during his almost five years in office: a run of good economic figures.

"We're heading into a new year with an economy that is the envy of the world, and we have every reason to be optimistic about our economic future," he told a news conference this week.

Bush's pivot to highlight the economy started at the beginning of the month after a government report revealed that 215,000 jobs had been created in November. Bush went before reporters in the Rose Garden to personally welcome the news. A few days later, he visited a plant in North Carolina to salute those numbers and others, including a third-quarter growth rate that was the highest since early 2004 and a jobless rate that was being kept to 5 percent.

Hoping to keep a spotlight trained on the economy while Bush mounted a concentrated defense of his Iraq policies, the White House press office started issuing a "week ahead" schedule listing upcoming appearances of Commerce Secretary Carlos Gutierrez, Treasury Secretary John Snow and Labor Secretary Elaine Chao. Last week, for instance, House Speaker Dennis Hastert, R-Ill., and Gutierrez teamed up at a suburban Chicago mall to promote holiday-season shopping. On Monday, it was Snow's turn to Christmas-shop for the cameras.

Suddenly, the president's economic team is getting a measure of respect - something it didn't get much of in his first term.

It's beginning to look like "prosperity all across America," Snow told reporters at a year-end news conference to bask in the numbers, exuding an optimism not shared by many Democrats.

Republicans hope talking up the economy will blunt Democratic attempts to use it as an issue in next year's elections and help shift public attention away from casualties in Iraq. Bush continues to face low poll numbers on his handling of the economy, despite the recent improvements.

"Politically, war trumps the economy. But the president has very few things that he can brag about right now," said American University political scientist James Thurber. "He has to point out that the economy is doing very well. It would be foolish not to."

Administration officials can point to the creation of some 1.8 million new jobs in the past year. The economy grew in the July-September quarter at a healthy 4.3 percent, despite Katrina and other hurricanes. Retail sales are up as the holiday season nears.

Democrats point to confusing new Medicare prescription drug choices facing seniors, the threat of huge home heating bills and continued dislocations due to Katrina. "Many families are spending the holidays still in tent cities," said House Democratic leader Nancy Pelosi of California.

David Wyss, chief economist for Standard and Poors in New York, said for now, the economy looks fairly solid, and is likely to remain so through 2006, potentially making it a better 2006 political issue for Republicans than for Democrats.
"Right now it's 'so-far so-good.' The economy's doing much better than we thought it would at this point," Wyss said.

But he said he has some worries - including energy availability and prices and an overvalued dollar that is making U.S. products less attractive overseas.

Some potential problems that economists see lurking:


If gasoline prices spike upward again, as they did in September and October when they pushed above $3 a gallon, consumers could get spooked and cut back on purchases. Soaring home heating bills from a colder-than-normal winter could help depress consumer sentiment.

If the Federal Reserve goes too far in raising interest rates in an effort to fend off inflation, it could stall the economy.
The Fed last week raised short-term rates to a 4 1/2 year high of 4.25 percent. Most economists see one or two additional quarter-point rate hikes - one at Chairman Alan Greenspan's last meeting in January and perhaps another at incoming Chairman Ben Bernanke's first in March.

But inflation persists, and if Bernanke keeps raising rates to demonstrate his credentials as an inflation-fighter, the economy could take a hit.

In Bush's first term, his economic team took a back seat to his national security team, made up of such policy heavyweights as Vice President Dick Cheney, Secretary of State Colin Powell, Defense Secretary Donald Rumsfeld, and Condoleezza Rice, then the national security adviser and now the secretary of state.

Bush fired his first treasury secretary, Paul O'Neill, in December 2002 after O'Neill questioned the need for a fresh round of tax cuts. Lawrence Lindsey was forced out at the same time as director of the president's National Economic Council after suggesting that a war with Iraq and the aftermath could cost $100 billion to $200 billion, which turned out to be a little on the low side.

So far, Snow has proved wrong forecasts of an early retirement and is serving as top cheerleader for Bush's handling of the economy.

Gutierrez, the former chief executive of cereal giant Kellogg, has been taking an active role in stumping for the president's agenda and promoting the recent economic momentum.

"The challenge, of course, is how do you keep it going," the commerce secretary said.

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