Recession and Re-Election

October 25, 1991

Robert R. Neall, the rising-star Republican executive of Anne Arundel County, remarked the other day that if the recession goes on until mid-1992 or later, "even Mickey Mouse could beat George Bush." He talked gloomily of layoffs and see-through buildings and an economy with no signs of zip.

Now Mr. Neall's forebodings are confirmed by an ABC-Washington Post poll that shows Mr. Bush's popularity slipping from a Desert Storm high of 68-20 percent over an undesignated Democratic nominee to a 47-37 percent margin.

"All is not well," the president concedes as he mulls tax-cut options to outbid the Democrats. The Federal Reserve Board describes the economy as weak. Orders for durable goods are down. Budget director Richard Darman acknowledges last year's plan to fight deficits is not working. Within the Cabinet, a gang of four is demanding an aggressive growth package. An administration official told Sun reporter Karen Hosler: "There is definitely increased concern about the economy, particularly by the president, who raised the issue of whether he hadn't done as much as he could have."

The nightmare spooking Republicans would be a double-dip recession that gives Democrats the kind of issue they can run with. Mr. Bush is scheduled to be out of the country on a fairly regular basis from now until Christmas. While he may add to his stature through a Middle East peace conference and more disarmament deals with Moscow, his travels will play into Democratic complaints that he is neglecting the nation's domestic needs.

One of Mr. Bush's problems is that the huge public and private debt legacy of the Reagan era limits what he can do -- or what can be done. While Democrats demand a sharp shift in federal spending priorities from defense to domestic programs, GOP conservatives insist that any "peace dividend" be used to decrease the deficit or cut taxes. What is missing in either formula is net fiscal stimulus, the usual remedy for recovery from an economic downturn. So Mr. Bush faces an election year in which market forces much beyond his control will determine the state of the economy.

Most economists figure that if there is any real growth next year, it will be under 3 percent -- hardly a figure to instill confidence.

If the White House does come up with a quick-growth package, it will include renewed calls for cuts in capital gains taxes, a new individual retirement account plan, a family savings plan and a tax credit for research, experimentation and business investment. Democrats are countering by demanding an increase in income taxes on the wealthy to pay for social welfare programs.

There's an old saying that "you can't beat somebody with nobody." And right now, Mr. Bush is a "somebody" facing such "nobodies" as Tom Harkin, Bill Clinton, Bob Kerrey and Doug Wilder. But if the recession hangs around past the middle of next year, Mr. Bush will have to worry he might be defeated by a "something" -- a sour economy.

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