- The Washington Times - Wednesday, March 21, 2001

Economists are divided on whether we are to have a recession or not, but the politicians have jumped into the debate up to their collective necks, and, in a strenuous effort to gain political advantage from the nation's possible misfortune, are muddying the economic waters. Their silence would be more useful.
Al Gore started the political negative impact on the economy by his Florida escapade, which created in December a month of national uncertainty. December saw the largest decline in consumer confidence in the history of that record-keeping, and one of the weakest Christmas retail seasons.
On Dec. 3, after six months of national economic weakening, Dick Cheney furthered the politicization of the economy by announcing that the United States might be "on the front edge of a recession." His presumed motive for that statement was to establish, before the Bush presidency began, that if there was to be a recession, it started on Bill Clinton's watch.
This doubtlessly seemed only fair since Mr. Clinton and Mr. Gore had spent the last nine years ludicrously calling the mild and brief recession of 1991 "the worst depression in 30 years." In the endless Washington blame game, Mr. Cheney's remarks seemed a very small "tat" for Mr. Clinton's grossly engorged "tit." But with a wavering consumer confidence being a major factor in causing or avoiding a recession, the game has gotten out of control.
In January, then Treasury Secretary-designate Paul O'Neal downplayed the stimulative value of the Bush tax cuts. The White House immediately punished him by reducing his role in selecting his sub-Cabinet appointments because it had become clear that fear of recession was the strongest selling point for the Bush tax cuts. The power of that argument was enhanced after Federal Reserve Chairman Alan Greenspan oversold that argument in testimony before Congress. Two weeks later, Mr. Greenspan backpedalled, but the White House had found its talking point.
On Feb. 8, President George W. Bush sent his tax cut proposal to Congress with the assertion that "a warning light is flashing on the dashboard of our economy, and we can't just drive on and hope for the best." The Democrats then jumped on Mr. Bush and raised the cry that he was "talking down" the economy. Democratic House Minority Leader Dick Gephardt then took that plausible argument to a nitwittish extreme and declared that we were in a "Bush recession."
With both parties' rhetoric outpacing their plausibility, the vaunted Bush White House message control went completely haywire last week. As the stock markets crashed, Mr. Bush turned optimistic saying, "I've got great faith in our economy." But then in his Saturday radio address he reverted to pessimism: "For several months economic indicators have pointed towards a slowdown, and now many Americans are beginning to feel its impact in your lives … The stock market is causing worries; high energy prices are straining family budgets, and some American workers and small business people have been directly affected by layoffs." He then made a pitch for his tax cuts as the cure.
Not to be left out of the gloom business, Secretary of State Colin Powell, of all people, pronounced himself very worried that the Japanese economic chaos could have a bad effect on the U.S. economy. Over the weekend White House Economic Adviser Larry Lindsey conceded the possibility of a recession-induced reduction in government revenues by speaking positively of a trigger for the tax cut. He then helpfully added that he hadn't talked with the president about this Democratic attack point on the Bush tax cut.
By Monday, Mr. Bush had again switched moods and was more upbeat in discussing the economy with a group of Hispanic business people. But Monday also saw Energy Secretary Spencer Abraham announce the alarming news that we could be in for the worst energy crisis since the 1970s.
Then, yesterday Mr. Greenspan lowered interest rates in an effort to boost consumer and investor confidence in the economy. But Mr. Bush's central argument that his tax cut is the cure for an economic collapse pulls consumer confidence in the opposite direction. It also oversells the point. If, as is fairly likely, we get both Mr. Bush's tax cut and a recession, he will have set himself up for a withering assault by the Democrats next year that his plan to avoid the recession failed.
The tax cut is well-justified by its positive long-term economic effect and the simple justice of equitably returning the public's overpayment of taxes. It's not too late for him to shift his argument: The tax cut can ameliorate, but cannot prevent, a recession (final passage of the tax bill is still four months off; the election is 20 months off.) At the same time, he needs to better coordinate all administration comments bearing on the state of the economy. A modest but upbeat tone in the bully pulpit may help and can't hurt. The American public usually reacts reasonably to reasonable arguments. But it sharply penalizes bombast and extravagant, undelivered promises.
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