Washington -- PRESIDENT BUSH'S response to growing economic distress has been the predictable one. He called together another meeting of men in gray suits and red ties to recommend that the tax rate on capital gains be reduced, then told a group of newspaper editors that such action would set off "an explosion of small business formation" to lift the economomy out of recession.
Thus, the president demonstrated once again that the man who once characterized supply-side theory as "voodoo economics" has become the ultimate true believer. What he doesn't seem to recognize is that the political clock is ticking and that there is an immediate problem that cannot be solved with capital gains tax breaks even if -- and it is a huge "if" -- that reduction eventually worked the miracles its advocates claim.
Bush's veto of the measure to extend unemployment benefits for those who have been out of work for more than 26 weeks is politically baffling. Every president of either party since World War II has approved such a program in a situation like this one. Yet Bush rejects extended benefits because they would "bust" the budget when he has been quite willing to do so for other purposes, principally foreign aid.
The real flaw in the White House attitude on extended benefits is that the president and his supporters seem to see such a program as another form of welfare. In fact, the beneficiaries would be largely middle-class white workers with long histories on the job and, not incidentally, the regular habit of voting. Demographic breakdowns suggest they are, in fact, just the kind of people who left the Democratic line to support both Ronald Reagan and Bush in the last three elections.
That Bush is playing some odd and risky politics is perhaps most apparent in the signs that even some of his staunchest Republican supporters are uneasy about the state of the economy and about the prospect of identifying themselves with those who would gain from capital gains tax reduction rather than those out of work.
The difference seems to be in the assessment different Republicans are making of the condition of the economy. Bush keeps saying that, as he put it the other day, "trends look good" when many economists and some of his closest allies are obviously dubious. Sen. Phil Gramm of Texas, for example, left the meeting with Bush to say of the economy: "We should recognize that if it did turn the corner, it didn't leave any skid marks."
Looking ahead to 1992, the White House has been basing its political plans on several assumptions. The first was that Bush's strong suit would be foreign affairs in general and the Persian Gulf war in particular. The second was that Bush once again could trump the liberal Democrats on "values" questions with such issues as his opposition to racial quotas. A third was that there is little market in a skeptical electorate for grand new federal programs to deal with domestic ills.
All of those assumptions make political sense, given the mood of the electorate today. But the White House also has proceeded on another premise -- that the economy would have recovered sufficiently so that it would be at least a neutral factor in the campaign. And that is the premise that is being called into question. For every indicator of recovery, there is another pointing toward another downturn.
Meanwhile, astute Democrats have been making assumptions of their own. They, too, have proceeded on the expectation that the recession would be far enough in the past so that their campaign could not be based on economic issues alone. That is why all the Democratic candidates have focused on domestic problems such as health care and education reform on which they believe, and polls suggest, Bush is most vulnerable.
But in American politics there is nothing short of a war that is as controlling as the condition of the economy. Candidates of both parties recall that the Republicans took a bath in the 1982 mid-term elections, despite Reagan's personal popularity, because of the recession that year. And candidates of both parties are beginning to wonder if that might not happen again next year.
President Bush is blithely assuming that won't happen. That is the only rational explanation of his hard line on unemployment benefits and insistence on the capital gains tax cut. But it is a serious political risk, even for someone as invulnerable as George Bush appears today.