Liberal economists like Paul Krugman ridicule the Bush boom as nothing more than a housing bubble destined to burst. But if the numbers-challenged Krugman would do some homework he would find that the GDP contribution of residential investment has dropped from 15 to 8 percent in the last two years. For that matter, the consumer contribution to GDP has slowed from 90 to 75 percent. By taxing investment less, the economy is generating more of it.
With comparable economic numbers in 1983 and 1984, President Reagan enjoyed a tremendous “morning in America” popularity that won him a 49 state landslide. Similarly, the economic boom of the late 1990s helped President Clinton withstand the political slings and arrows of impeachment. But for some reason this economy is not working for Bush.
Most pundits blame rising gas prices and Iraqi war difficulties for Bush’s slump. While these are involved, they’re not the whole story. The unwillingness of the Bushies to communicate and market an economic-recovery message is also to blame.
Politics is a lot like 12-step programs, where recovery comes through daily repetition. But on the Friday of an unexpected 207,000 jobs increase, President Bush was nowhere to be seen. Instead of a 10 a.m. news briefing in Crawford, Texas, the news vacuum was filled by blathering Wall Street pundits who turned good news on jobs into bad news on rate-hikes from the Fed. Bush did mention jobs in his radio address the next day, but who in steamy mid-August was listening?
This is the basic marketing problem of our MBA president.
Another possible sub-rosa problem plaguing the administration is the growing public distaste for wasteful federal spending. While the highway and energy bills both had positive elements, both the mainstream and conservative media used each as examples of pork-barrel politics. Adding to this, two-thirds of respondents to a recent CNBC poll favored lower spending and taxing, whereas only 4 percent approved of tax cuts alone. Another 30 percent favored government budget cuts alone.
The 2003 tax cuts were clearly an economic elixir, but the American public may well be growing uneasy with the failure of Washington to better manage taxpayer money. At the same time, the drumbeat of the economic pessimists in the media may only be exacerbating the problem.
Bush has a good story to tell, but he must tell it. Then he must add a chapter on new spending restraint. If the president and his high command can make these kinds of adjustments, they can move the economic polls up where they belong.