THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Bush seeks cover as economy falls

Poll, and history, cite vulnerability

By Wayne Washington
Globe Staff / September 10, 2001

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With the weak US economy rising to the top of Americans' concerns, President Bush is trying to limit the political damage, while Democrats look on skeptically.

Rapidly shrinking federal budget surpluses are limiting the president's ability to push traditional stimulative spending and testing Bush's leadership skills.

Friday's announced rise in unemployment to a four-year high of 4.9 percent prompted a special address from Bush.

"This slowdown is real, and it's affecting too many lives and we're concerned about it," he said.

Analysts say it is important for Bush to demonstrate empathy and show he has a plan of action.

David Gergen, a former political adviser to Bill Clinton and a number of Republican presidents, said: "A downward spiraling economy is very likely to cost him seats in the 2002 election, which will hurt his power in the following two years and could well cost him the election."

Discussion about the slumping economy intensified yesterday, with Republican leaders saying they would push for across-the-board spending cuts before using Social Security surplus funds for other programs.

"We must hold the line on spending," House majority leader Dick Armey of Texas said on NBC's "Meet the Press."

Armey and other Republicans also embraced a proposed cut in the capital-gains tax as a way to stimulate growth in an economy whose continued sluggishness has now emerged as a crucial test for Bush.

Democrats said that cutting the taxes people pay on gains from selling assets such as real estate or stocks can be a good idea under certain circumstances. But they said they do not support such a cut if Social Security funds must be used for other programs.

Senator John F. Kerry, Democrat of Massachusetts, said that Republicans will have to use Social Security funds, once their plans to increase spending for education and defense are taken into account.

"They are not telling the truth when they say they are not dipping into Social Security," Kerry said on CBS's "Face the Nation."

Recent poll numbers suggest the slumping economy is already harming Bush.

A CBS News poll conducted Aug. 28 through Aug. 31 found that 52 percent of those surveyed believe Bush is out of touch with average people. Nearly half, 48 percent, say the economy is getting worse, and 45 percent disapprove of his handling of it.

The same poll showed that the economy is the nation's top concern.

No one knows better than Bush that Americans demand presidential empathy when they go through hard times. His father was denied a second term largely because voters perceived the economy to be bad and the president unsympathetic.

The fact that the economy was actually on the rebound well before the 1992 election didn't matter. Nor, analysts say, will the truth that the current economic slide began before George W. Bush took office.

Presidents know that their political fortunes will match the current economic fortunes of American voters.

Bush had a front-row seat as his father learned that lesson.

"He's a very close and careful student of his father's successes and failures," said Bruce Buchanan, a political science professor at the University of Texas. "Whenever there are clouds on the horizon, he is going to jump on it and show concern and say, `I have a plan.' "

At the heart of the president's plan is the tax cut he pushed through Congress earlier this year. Democrats, however, say the tax cut is too large and, coupled with the spending priorities of both parties, soon will wipe out the budget surplus.

They offer no economic solutions, preferring instead to watch Bush run into the walls of a box they believe he has locked himself into.

"His pen is worth two-thirds of us - that's the veto pen," said House minority leader Richard A. Gephardt, Democrat of Missouri. "We can spin our wheels and come up with all kinds of ideas for how to do this, [but] he is the one who has to give us the suggestion because he's the one that has to sign the bills."

Kerry, a potential Bush challenger in 2004, said the president has not demonstrated the type of dexterity needed to solve the country's economic problems.

"I don't see any flexibility," Kerry said. "I don't see honest numbers. I see ideological rigidity."

One factor restricting Bush's options is his pledge not to use Social Security funds for other government programs.

The government collects far more money for Social Security than the program currently needs, but the number of people getting Social Security assistance is expected to rise dramatically when the baby boom generation retires.

As he campaigned for president, Bush joined Vice President Al Gore in pledging not to use the Social Security surplus for other programs. He repeated that pledge as recently as Thursday, though the top Republican on the Senate Budget Committee, Pete Domenici of New Mexico, has said he sees no reason why Social Security funds can't be used.

Without an improving economy, the government may not take in enough money to pay for Bush's priorities: increased spending for education and defense.

"This is the big one," said Representative Rob Portman, an Ohio Republican who knows the president well. "He has a lot of goals and objectives that can't be reached in a bad economy."