December 17, 2007
World Leaders Watch: The Economy, Stupid
To no one's surprise, Russian President Vladimir Putin said today that he accepts his top aide's offer of the prime minister's slot should Dmitry Medvedev win the presidency in March. Medvedev is Putin's longtime aide and handpicked successor for the presidency -- an office Putin is barred by law from seeking again.
"If the citizens of Russia show trust in Dmitry Medvedev and elect him the new president, I would be ready to continue our joint work as prime minister without changing the distribution of authority between the positions," Putin said in an address to his United Russia party.
Putin sought to allay concerns that the coming election would amount to just moving the deck chairs, but few Russians are under the illusion that Putin's power would really be capped by the traditional bounds of the much-weaker prime minister's post. Nonetheless, Medvedev, who was formally nominated by United Russia today, is assured a decisive victory in the March 2 vote. Why hasn't Putin's authoritarian power-grabbing dented his popularity? The economy.
Russians can forgive Putin his flaws because their economy is rocketing -- even if Putin isn't exactly responsible for that trend. Here in the United States, the perception that the economy is flagging is threatening to upend next year's elections -- and President Bush's legacy. For the second time this month, Bush devoted a public address to the economy in an attempt to persuade the public that things weren't as dire as they seemed.
"My attitude was if you're paying taxes you ought to get tax relief," Bush told the Rotary Club in Fredericksburg, Va., recalling concerns about the economy after the 9/11 attacks. "If you think about where we were, coming out of 2001, and where we are today, you can't help but say the plan worked.
"We've had a pretty good economic run in this country," the president added, noting the six years straight of GDP growth and productivity under his administration.
Despite those indicators that the economy continues to grow, most Americans just aren't feeling it. High productivity is a result of the weak dollar, which is itself a concern. And in real terms, wages are not keeping pace with inflation, so many middle-class earners are bringing home less in spite of Bush's heralded tax breaks.
For the first time in a long time, Americans are naming the economy as more important to them than the Iraq war [PDF] as they head into the presidential nominating process next month. Nearly six in 10 respondents to last week's CNN/Opinion Research Corporation survey also said that the economy was in recession. The experts aren't quite there yet (subscription), but history tells us that voter angst about the economy, baseless or not, has the power to move policy and electoral politics.
In other words, if Americans were feeling fat and happy, they could probably forgive much more than they are currently. Because they aren't, ending this administration on a high or simply OK note may be a remote possibility.
Bush conceded that the credit crunch and housing fall-off were "challenges," and he again said that while his administration was on top of the situation, Congress needed to do its part.
"I'm concerned, and I know you're concerned about the housing industry. It's going to take a while to work through the housing bubble, but we can mitigate some of those issues," Bush said, calling for Congress to pass reform of Fannie Mae/Freddie Mac in a fix for struggling homeowners.
Bush vowed again to veto any tax hikes that came his way. He's made good on that promise with regard to a proposal to expand the State Children's Health Insurance Program, which he vetoed twice because it was partly funded with a higher tax on cigarettes. Last week, Senate Democrats were forced to scrap a bid to lower tax breaks for Big Oil in an energy bill under threat of another veto.
"Congress cannot take economic vitality for granted," Bush said. "There are some positive things Congress can do to make sure the economy continues to grow. The most negative thing Congress can do in the age of some economic uncertainty is to raise taxes on the American people."
The president also called on Congress to push through an alternative minimum tax fix, and he warned lawmakers not to send him defense appropriations packed with withdrawal timelines or other provisions designed to bring the Iraq war to an end. Lawmakers have worked past the original date for their holiday break in order to finalize an omnibus spending bill, which may be introduced to the House floor tonight.
"I'm pleased to report we're making some pretty good progress toward coming up with a fiscally sound budget," Bush said.
The president also spoke forcefully on the need to explore nuclear energy in order to wean the U.S. off energy sources in the volatile Middle East. "If you're genuinely an environmentalist, you need to be in the forefront of supporting nuclear power plants," he said. Bush went on to tout oil exploration in Alaska, something opposed by many environmentalists.
Just as it has in polling, the economy is overtaking once-dominant issues like Iraq as the crisis of Bush's second term. Despite a lack of enthusiasm for his domestic policy agenda in the Democratic Congress, Bush told the Rotary Club members that his administration would push for health savings accounts and tort reform next year, his last in office.
Asked his overall thoughts on the market, Bush refused to respond. "No. I'm not going to answer your question," he said, to laughter in the room. "If I were an investor I would be looking at the basic fundamentals of the economy.... When you open up markets for goods and services and we are treated fairly, we can compete with just about anybody, anywhere.
"I apologize for not being in a position to answer your question," he told the audience member. "Don't think you want your president opining on whether the Dow Jones is going up or going down."
Posted at 2:15 PM
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Bush Administration, Campaigns, Congress, Economy, Media, President Bush, Russia, Vladimir Putin
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