Some Very Good Advice For the President

[Annie]

http://www.realclearpolitics.com/Commentary/com-8_17_05_LK.html

August 17, 2005
The Silence of the Bush Boom
By Lawrence Kudlow

Why President Bush seemingly gets no credit for the strong economy is one of the enduring political mysteries of our time. Some call it the “Goldilocks economy” -- a term widely used to describe the low-inflation growth of the second half of the 1990s. More accurately, it’s a non-inflationary boom where the economy is hitting on all cylinders and the outlook for the coming years is bright. In view of the ravages of the 2000-02 stock market plunge, the 9/11 terrorist attacks, and skyrocketing energy prices, the Bush boom stands as even more of a great achievement.

But still he gets no credit. Most polls show the president’s economic approval rating around 40 percent or even less. Scott Rasmussen, who does extensive consumer and investor polling, shows that the confidence ratings of both are about 15 percent lower than in late 2003.

Meanwhile, a splendid group of economic data points show clearly the effectiveness of the president’s marginal tax-rate reductions of two years ago. The tax-cut package was in large part directed at stock market and business capital formation, both hard hit a few years back. This was the correct target. Share prices have recovered about 70 percent in recent years, with a number of widely tracked indexes, like the NYSE and the S&P small- and mid-cap indexes, now trading at all-time highs. The economy itself is growing at about 4 percent per annum since the tax cuts, with business investment leading the surge.

Breaking down the major components of the economy, business spending on equipment and software is now contributing close to 30 percent of the increase in gross domestic product. (Prior to the Bush tax cuts on capital gains, dividends, and personal incomes, cap-ex was a net drag on economic growth.) The business surge has caused industrial production to rise by nearly 9 percent in the past couple of years, or 4.1 percent annually.

In this supply-side model, it is investment and production that create jobs. Not surprisingly, the total U.S. employment of 142 million workers stands at an all-time high. Since May 2003, non-farm payrolls have grown by 4 million, while the Labor Department’s household survey (which includes the self-employed) has surged by 4.5 million. The unemployment rate is 5 percent with real worker compensation growing by nearly 4 percent. Interest rates and core inflation are running at four-decade lows.

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 hishigh command can make these kinds of adjustments, they can move the economic polls up where they belong.

Lawrence Kudlow is a former Reagan economic advisor, a syndicated columnist, and the co-host of CNBC's Kudlow & Company.

 

[Adam's Apple]

Alas - testament to the strong influence that the liberal media still holds to form opinons with the clueless public.

 

[Bonnie]

You would think that people can judge for themselves and their own wallets how well the economy is actually doing.

This does confound me???

 

[ScreamingEagle]

You would think that people can judge for themselves and their own wallets how well the economy is actually doing.

This does confound me???

It also confounds me why Bush and the Republicans are not shouting out the successes of the tax cuts. Are they so sure of themselves that they can ignore politics or perhaps they don't care who succeeds Bush?

Maybe they don't/do want us to go to something like the Fair Tax proposal that is now before Congress - supposedly that is a "tax cut" that would really boost our economy?

 

[Bonnie]

It also confounds me why Bush and the Republicans are not shouting out the successes of the tax cuts. Are they so sure of themselves that they can ignore politics or perhaps they don't care who succeeds Bush?

Maybe they don't/do want us to go to something like the Fair Tax proposal that is now before Congress - supposedly that is a "tax cut" that would really boost our economy?

that does more than confuse me...it annoys me to death :finger: The Republicans never seem to be as aggressive as the Democrats when it comes to PR.

 

[ThomasPaine]

that does more than confuse me...it annoys me to death :finger: The Republicans never seem to be as aggressive as the Democrats when it comes to PR.

orchestra version.......... And a great flick too.

 

[Bonnie]

orchestra version.......... And a great flick too.

One of my favorites!!!! When I went to Hong Kong I was reminded of that movie...

 

[Gunny]

that does more than confuse me...it annoys me to death :finger: The Republicans never seem to be as aggressive as the Democrats when it comes to PR.

I agree. IMO, as much as anything else, it is partly what cost George I a second term. I remember I kept thinking, "Is this guy going to run for his office, or what?"

My best guess would be it has a lot to do with the "taking the higher road" mentality.

Some things just NEED to be pointed out.

 

[Adam's Apple]

Some things just NEED to be pointed out.

Yes, indeed! The RNC needs to take some of their millions of dollars and set up an office to refute all that negativity constantly appearing in the press. President Bush's current poll numbers would seem to indicate that the other side of the story needs to be gotten out so the public can make an informed decision.

 

[Bonnie]

I agree. IMO, as much as anything else, it is partly what cost George I a second term. I remember I kept thinking, "Is this guy going to run for his office, or what?"

My best guess would be it has a lot to do with the "taking the higher road" mentality.

Some things just NEED to be pointed out.

You know it's funny you say that, I worked on that campaign and I can tell you that privately our exact words were "it seems Bush doesn't care if he wins or not".
There was no fire in him.

 

[Bonnie]

Yes, indeed! The RNC needs to take some of their millions of dollars and set up an office to refute all that negativity constantly appearing in the press. President Bush's current poll numbers would seem to indicate that the other side of the story needs to be gotten out so the public can make an informed decision.

Absolutely 100% right! The dems do it everyday and they don't need any money... they have the press.

 

[Zhukov]

It's modesty. A bad trait for any would-be politician. Nevertheless, he has his second term so he probably doesn't really care. The media will never be on his side and he knows it, so why waste time and energy trying shout over them when he could be working. He's doing his job and he knows it, that's enough for him, and it's enough for me. If people are so stupid they believe what obviously biased reporters are telling them, well, that's democracy.