- The Washington Times - Wednesday, January 9, 2002

Senate Majority Leader Tom Daschle’s big gamble that the Democrats can reap major gains in the midterm elections from the recession will come up empty if the economy recovers as early as most analysts now think it will.

Mr. Daschle, who delivered a stinging election-year kickoff speech Friday blaming President Bush and the Republicans for the recession, is betting that the economy will continue to be weak throughout most of the year. But political and economic analysts said yesterday that there is increasing evidence the economy has begun growing again and will gain strength throughout the spring and summer robbing Democrats of the pivotal campaign issue that they hope will help them win closely contested House and Senate seats this fall.

“Daschle is throwing the Hail Mary pass. If the economy is crashing down, he can say, ‘I told you so,’ though we have the counterargument to that by saying, ‘We told you the economy is weak. You blocked the stimulus bill, so it’s your fault,’” said tax-cut crusader Grover Norquist, one of Mr. Bush’s outside political advisers.

“But if the economy recovers earlier and stronger than expected, then the Democrats have a big problem. Bush can say that the tax cuts pulled us out of the recession, and then where does that leave Daschle and the Democrats?” Mr. Norquist said. “They’ve already ceded foreign policy to the president. Now they would be ceding him fiscal policy, too. That would not be a good year for the Democrats.”

In fact, while Mr. Daschle was blaming the Bush tax cuts for all that was wrong with the economy, new economic data suggested that the worst of the recession was over and that the country may now be recovering.

“The economy is coming back. We’ve seen data recently that suggests that it bottomed out in the fourth quarter and is heading back to positive growth in the first quarter,” said Martin Regalia, chief economist for the U.S. Chamber of Commerce.

The latest economic data show that job layoffs are slowing, retail sales are stronger than previously reported, factory orders are rising in certain sectors to replenish declining inventories, especially in the auto and computer industries, and home sales and residential construction remain strong.

“I tend to think that the comeback will be faster rather than slower. We’re looking at just 2 percent growth in the first quarter, close to 3 in the second quarter, and over 3.5 percent in the second half of the year,” Mr. Regalia said.

Mr. Daschle and the Democrats have pretty much set their campaign themes on three big issues: the declining economy, the return of deficits, and the use of the Social Security surplus to fund more of the government’s operations. Mr. Regalia thinks that if the economy recovers as he expects, the deficits will shrink in time and the surpluses will resume.

“If the economic growth rates materialize, the whole deficit questions raised by Daschle would be moot,” he said.

“Daschle does not exactly have a good hand to play. He just has to hope and pray that the economy goes south and a million people get thrown out of work. It’s not a very cheerful strategy, but that is his only strategy,” Mr. Norquist said.

However, political and economic analysts said yesterday that timing and public perceptions will be critical to how the economic numbers affect the elections.

Republican pollster Frank Luntz thinks Mr. Bush and the GOP have until Labor Day to show that their fiscal policies have turned the economy around.

“Most of the job layoffs will end in the first quarter. What needs to happen, though, is a perceived recovery of the economy at least two months before the elections. It does need to be clearly perceived that the recovery is well under way,” Mr. Luntz said.

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