- The Washington Times - Wednesday, December 15, 2004

President Bush will try to boost his second-term domestic agenda with a two-day economic conference, beginning today, that will showcase hand-picked business leaders and campaign contributors, who will push his desires for further tax cuts and Social Security reform.

But several of the nation’s most prominent business groups and Wall Street firms — many of which also gave to his campaign — are criticizing those priorities, saying that cutting the deficit should take priority and that Social Security reform should not raise the deficit significantly.

The conference, at the Ronald Reagan Building and International Trade Center near the White House, will feature panel discussions moderated by top administration advisers and Cabinet secretaries and filled out by 35 corporate executives and economic analysts known to be Bush supporters.

The president will participate in two panel discussions, one on “the high cost of lawsuit abuse,” a favorite topic of the president on the campaign trail, and one that is expected to focus on incorporating private savings accounts into the structure of Social Security.

White House spokesman Scott McClellan said yesterday that despite the chummy atmosphere, the conference represents “a broad cross-section of panelists from various sectors of the economy.”

“This will be an opportunity to have a thoughtful discussion on the state of the economy, the challenges we face, and how we make sure workers are prepared with the skills they need to fill the high-paying, high-growth jobs of the 21st century and to meet the other challenges of our changing economy,” Mr. McClellan said.

Critics have called the summit an echo chamber and point to the dollar’s steep fall to near record lows against other major currencies since the election as adding urgency to the call for action on the deficit. Most economists blame the budget and trade deficits for the currency’s plight.

The Business Roundtable was the latest to weigh in with a letter to Mr. Bush this week that emphasized the importance to the economy of getting the government’s fiscal house in order and urged the president to go beyond his campaign pledge to cut the $413 billion deficit in half and instead aim to balance the budget.

“We are very concerned that unless action is begun now, future growth in spending — especially in the three significant entitlement programs of Social Security, Medicare and Medicaid — will overwhelm the federal budget and the economy,” said the chief executives of 150 leading corporations with 10 million employees and $4 trillion in yearly revenues. The Roundtable includes financial giants such as Fannie Mae, Pfizer and State Farm.

Some of the 35 persons expected to testify at the summit today and tomorrow are not members of the Business Roundtable, including Dell Chief Executive Officer Kevin Rollins and Time Warner Chief Executive Officer Richard Parsons.

At least one conference participant is on the Roundtable, however. Home Depot Chief Executive Officer Bob Nardelli is expected to appear with Mr. Bush on the lawsuit panel. Mr. Nardelli also participated in a “conversation on the economy” with Mr. Bush in Maryland during the campaign.

Still, the White House did nothing yesterday or Friday to knock down the idea that only businessmen and experts friendly to the president’s agenda were invited.

“I think you can expect that [the panelists] will have some unique and different perspectives to offer about how we can move forward on some of the [president’s] initiatives,” Mr. McClellan said.

Vice President Dick Cheney will open the conference with a speech today, then take part in a panel designed to explore “ways we can ensure continued growth and job creation,” according to a White House summary of the event.

The White House also is expected to push its plan to allow workers to divert part of their Social Security payroll tax payments — perhaps as much as two-thirds — into private investment accounts, a reform that could lower government spending decades from now but add more than $1 trillion to the national debt in the meantime.

But top Wall Street banks and investment houses have been warning since the election that the administration must shift its focus to deficit reduction to reverse the dramatic increase of debt during Mr. Bush’s first term.

Richard Berner, chief U.S. economist with Morgan Stanley, said extending the president’s tax cuts, by itself, would keep federal budget deficits elevated at 3 percent of economic output.

“Some think deficits don’t matter,” he said. “History indicates that what matters is committing to fiscal restraint, which is hard to find in Washington.”

The president’s proposal to reform Social Security “won’t do the job,” he said. “Additional measures would be needed to assure solvency over a 75-year period, and all will cost more money.”

John Silvia, chief economist with Wachovia Securities, which wrote the president urging action on the deficit, said investors also are alarmed about the growth of the U.S. trade deficit to unprecedented levels of more than $660 billion a year or nearly 6 percent of economic output.

Both deficits will only get worse if Mr. Bush goes through with his current plans, he said, and that will drive the dollar even lower and force up interest rates, posing obstacles to growth.

Joseph Quinlan, chief market strategist with Banc of America Capital Management, said global investors have been voting against the dollar since the election to register their dissatisfaction with U.S. economic and foreign policies.

“The message is … the free ride for the ‘rogue nation’ is over,” he said. “No more guns and butter, or wads of foreign cash for a nation deeply embroiled in the Middle East, heavily indebted at home and seemingly disengaged from the rest of the world.”

The ties between Mr. Bush and the business officials are extensive and long-standing.

Mr. Nardelli and his wife contributed $55,000 to the Republican National Committee (RNC) this year and his company has contributed $1.5 million to the Republican Party since 1999. The Nardellis also hosted a fund-raiser at their Atlanta home in May, which was attended by Mr. Bush and netted $3.2 million for the RNC.

Mr. Rollins, who will participate in the first panel with Mr. Cheney, contributed nearly $65,000 to Republican campaigns this year and gave Mr. Bush the maximum personal contribution of $2,000.

Mr. Parsons, who serves as the co-chairman of Mr. Bush’s Social Security commission and will sit in on the panel that will discuss reforming the entitlement, also has given the maximum to the president’s last two campaigns.

All told, according to the Center for Responsive Politics, participants in the conference have contributed just short of $390,000 to Mr. Bush’s 2000 and 2004 presidential campaigns.

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