Bush prepares to meet economic team; Advisers cross fingers that tax cuts will do the trick

CBS Marketwatch ^ | 08-10-03

[Brian S]

WASHINGTON (CBS.MW) -- When President Bush's economic team descends on his Crawford, Texas, ranch on Wednesday, odds are that each will be carrying some sort of lucky charm, four-leaf clover or rabbit's foot.

With the 2003 White House economic agenda substantially in place after Bush signed the latest $350 billion tax cut into law last month, his advisers can only wait, keep their fingers crossed and watch to see if it helps the U.S. economy regain its footing.

Economists do expect a strong pickup in the second half of the year, in part due to the tax cut. But so far, "it's a hope and an expectation -- not a reality," said Sung Won Sohn, chief economist at Wells Fargo.

Analysts said White House officials have little ammunition left to help the economy, in any case.

"I don't think there is anything left on the shelf that would change things over the next 12 months," said Greg Valliere, chief strategist at Charles Schwab's Washington research unit.

"Just about everything that could improve the economy has been done," he said.

Charles Gabriel, director of Prudential Securities' Washington research unit, sounded a similar note. "They have used all the old economic policy tools as aggressively as they can," he said, adding that at this point "they are biting their nails."

The six-member Bush economic team consists of the three Cabinet-level officials -- Treasury Secretary John Snow, Labor Secretary Elaine Chao and Commerce Secretary Don Evans -- plus three White House advisers: White House budget chief Josh Bolten, White House chief economist Gregory Mankiw and top economic strategist Stephen Friedman.

Showing he cares

Bush and his advisers will begin the effort to convince the public that things are indeed turning around, while in the same breath, showing compassion for workers whose factory jobs have been moved overseas. The economy has been hemorrhaging manufacturing jobs for months now.

"We're beginning to see hopeful signs of faster growth in the economy, which over time will yield new jobs. But the unemployment rate is still too high," Bush said during a Rose Garden news conference before departing for his summer vacation.

A poll released last Thursday indicated Bush is showing some political vulnerability as the economy moves into the forefront over the war in Iraq.

The survey, by the Pew Research Center, found that six-in-10 Americans now say the economy -- not terrorism -- is the most important presidential priority.

"Perceptions are funny. Convincing voters he was engaged in making the economy better was a problem for his father and I think it could be for him as well," said Valliere.

But this could lead to more criticism that the current Bush economic team is taking its orders from White House political aides.

The New Republic, a conservative Democratic magazine, has published a stinging criticism of Snow and noted that when the Treasury secretary meets with top Bush political adviser Karl Rove, it's in Rove's office.

Sohn of Wells Fargo said the Bush team could discuss specific steps to lower the nation's unemployment rate, which hit a nine-year high in June before slipping a little last month.

White House spokesman Clair Buchan said the economic team meeting is intended "to review where the economy stands."

It might be added that where the economy stands is at a crossroads.

Greg Robb is a senior reporter for CBS MarketWatch based in Washington.

[sarcasm]

Bush and his advisers will begin the effort to convince the public that things are indeed turning around, while in the same breath, showing compassion for workers whose factory jobs have been moved overseas. The economy has been hemorrhaging manufacturing jobs for months now.

[BushCountry]

Perceptions are funny.

[ChicagahAl]

Why won't Bush just come right out and say that the problem is the guy who thought the stock market suffered from irrational exuberance? Do you suppose he's afraid Greenspan will retaliate by making things even worse? Or is George just such a nice guy that he can't stand to say bad things about Democrats, even when they deserve them?

[ex-snook]

"Analysts said White House officials have little ammunition left to help the economy, in any case.

Does that mean the neo-cons are out of favor?

[.cnI redruM]

There is a lot the government can do to hurt an economy, but very little the gov can do to help it. Bush should remember the Hipocratic Oath and endeavor to do no harm.

[Starwind]

"Just about everything that could improve the economy has been done," he said.

Let's see, we've increased deficits, opened borders, helped companies relocate jobs overseas, inflated the money supply, reduced spending & entitlements nah, that'll never work.

[RipSawyer]

"There is a lot the government can do to hurt an economy, but very little the gov can do to help it."

If only the majority of voters were smart enough to understand that simple fact we wouldn't have a tenth of the problems we have.

[AwesomePossum]

unemployment....a nine year high..........let's see now, 2003 minus 9 years equals...... why it's June of 1994! Isn't that when America had the "greatest" president ever, and the best economy ever! Was the Clinton Administration juggling the numbers and cooking the books....YES! It got so bad, that even the Federal Reserve refused to use the Clinton White House numbers because they were so far fetched.

Bush 41 handed Clinton an economy in strong recovery, and the liberal media gave Clinton the credit. Clinton handed Bush 43 an economy in decline, and the liberal media blamed it on Bush 43. It's always the Republican's fault, no matter what.

Now, factor into that economy in decline;.....we are at war (and that is expensive), Clinton holdovers in the government are doing everything they can to sabatoge the economy (and also the war), congressional Democrats, under the direction of the Clintons, are fighting against Bush every step of the way, and the liberal media, of course, is blaming the Bush administration.

And, there are still sufficent numbers of Americans who continue to believe the liberal media, a media, by the way, that utterly refuses to admit it's bias.

[BushCountry]

You should have said an economy in declined combined with a massive terrorist attack that wreck havoc on almost every sector. It is amazing we are doing as well as we are, by that, still the best economic numbers in the world!

[meenie]

A large part of the problem arises when the Presidential candidate promises more than he can deliver. The biggest liar wins and then falls to task of explaining why it isn't his fault that the economy is going to h*ll. This is made possible by a public that is ignorant of all things economic other than his credit card.

Since the one-man one-vote, mob rule democracy, don't expect any improvement in the situation. There was a period of time in our Republic when it was recognized that government bills had to be paid. Now you just pass it onto your children and grandchildren and continue the irresponsible spending. When the economy fails to furnish the necessary profits to pay the bill, you have a tax cut to bribe the taxpayers to vote for you and get past the next election. Never mind that the next recession will be worse because of the deficit financing.

[oceanview]

Do something about offshoring of jobs and these H1B and L1 visa programs and all the rest. Make a speech, fire a warning shot across the bow of corporation engaging in these practices, end the visas. Do something. Sending people tax rebate checks that they use to run to Walmart and buy Chinese products will not be enough, I guarantee it. Voters are going to make up their own minds based on what they see happening in their own jobs and lives, not some retail sales figures.

[harpseal]

This meeting had better produce some chnages in policy or the re-elect Bush campaign may have "Prosperity is just arround the corner as their campaign theme" and we can look at one of the idiot Demons in power after Jan 2005.

[harpseal]

There is a lot the government can do to hurt an economy, but very little the gov can do to help it. Bush should remember the Hipocratic Oath and endeavor to do no harm.

Given the current state of the economy and government policies there is a whole lot that can be done.

1. Get rid of government subsidies for offshore investment of US companies. OPIC is the first such program which should go but support of World Bank programs that subsidize the outflow of Capital would be another.

2. Use tariffs on those nations which are engaged in unfair trade practices such as currency manipulation (China and India for example), those nations which refuse to open their markets to US products (China for example with uts 50% tariffs on US consumer goods and non tariff barriers), those nations that subsidize competition to American Industry(airbus for example) and those nations which have slave conditions for their workers.

3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain (No I do not like this last option and I will only defend its use as an absolute last resort like say in the case of rare earth magnets essential to smart bomb technology).

4. An immediate end to guest worker programs. If people wish to come to the USA to work and make a life let them immigrate according to the rules.

5 Provide economic development zones where the corporate income tax is zero for operations within these zones. In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations.

6. Scale back unnecesary regulation.

7. Increase the domestic content in purchases by the Department of defense and give absolute preference in non-domestic content to proven allies of the USA over say the French or Germans.

8. Do not allow expense involved in moving operations overseas to be included in business expenses under the IRS code.

9. Prosecute for perjury anyone who has made a false staement in order to employ an H1B or L1 visa worker. I will be lienient on the actual perjurer if he/she was ordered to make this false statement and he/she provides testimony to aid in the conviction of the person ordering the perjury. Just because a person is a CEO does not give them a pss on criminal behavior.

10. Prosecute anyone who orders the transfer of vital defense technology overseas except to stroing allies of the USA. The UK, and Australia come to mind as meeting these criteria first.

Absolutely nothing there is socialist. It is entirely centered on the free market.

[harpseal]

Bush 41 handed Clinton an economy in strong recovery, and the liberal media gave Clinton the credit. Clinton handed Bush 43 an economy in decline, and the liberal media blamed it on Bush 43. It's always the Republican's fault, no matter what.

True

Now, factor into that economy in decline;.....we are at war (and that is expensive), Clinton holdovers in the government are doing everything they can to sabatoge the economy (and also the war),

It is 2003 over two years since GWB came into office can you or anyone give me a reason why these holdovers from teh Clinton years are still in office.

...congressional Democrats, under the direction of the Clintons, are fighting against Bush every step of the way, and the liberal media, of course, is blaming the Bush administration.

True.

And, there are still sufficent numbers of Americans who continue to believe the liberal media, a media, by the way, that utterly refuses to admit it's bias.

Also true

Those are among the reasons GWB needs to address the structural economic problems put in place by the Clinton administration. See my proposal above as to how GWB can effectively addres the economy. Now this may irritate some donors to his campaign but it is the right course to win because it gets Americans back working in high paying positions.

[Semper Paratus]

Do something about offshoring of jobs and these H1B and L1 visa programs and all the rest.

One high profile indictment by Ashcroft could do wonders for compliance.

[harpseal]

You should have said an economy in declined combined with a massive terrorist attack that wreck havoc on almost every sector.

I have no problem with this statement.

It is amazing we are doing as well as we are, by that, still the best economic numbers in the world!

I will agree that it is amazing we are doing as well as we are with so many of the Clinton economic policies held over by the Bush administration but stating our economic numbers are teh best in teh world is far from a factual statement. China is having an 8% growth year. Us economic growth byy the rosiest estimates will be arround 2% without any increases in employment. Some economists put that figure well below that number.

Further when you take out imports from teh picture one may even find negative economic growth but any such projection necessarily involves estimates that are not reliable as the hard statistical data is not provided. In short it can not be easily proven so is subject to question and is an unprovabe assertion on my part.

[harpseal]

Well I know of one fortune 500 company or if you wish fortune 5 company that has adirected someone I know to fill out the paperwork for hiring H1B's even though that manager knows several Americans who could do the job better and who are looking for work. Note this manager has worked with these people before and is aware of their capabilities and they submitted resumes with salary requests below the stated salary for the job which is above what an H1B will be compensated.

This direction according to the manager who is senior enough to know comes from the very top of the company and failure to comply means this manager will be let go. So the manager is faced with perjury or job loss without chance of future employment. Said manager has mortgage, children and loomimg college expenses.

Now were the CEO of this corporation which is so large it is almost a government in and of itself should IMHOP be indicted tried convicted and sentenced to a maximum security prison. And even though I dislike asset forfeiture laws this CEO should have all his assetts seized as he has met the criteria for having this respected corporatiopn become a criminal enterprise.

[LibertyAndJusticeForAll]

Reality isn't so funny.

"Economists do expect a strong pickup in the second half of the year, in part due to the tax cut. But so far, "it's a hope and an expectation -- not a reality," said Sung Won Sohn, chief economist at Wells Fargo."

The old economic formulas are not working because they do not factor in billions of unemployed people in the world, now available for employment. The tax cuts will no doubt generate new jobs, just not in America.