Bush vs. Greenspan on state of economy

Up or down?: President's dire warnings of gloom are in contrast to Fed chairman's upbeat tone.

IS THE GLASS half-empty or half-full?

If George W. Bush is talking about the state of the nation's economy, it depends on whether he's in campaign mode or presidential mode.

Campaigner Bush took a glass-is-half-full line. Yes, the economy is doing fine, he conceded on the stump last fall, but the only way to prolong the country's growth is passage of a $1.6 trillion tax cut.

President Bush, though, sees the economic glass as half-empty. Only a $1.6 trillion tax cut can save us from a recession, he keeps saying. His Treasury secretary, Paul H. O'Neill, told Congress it must act quickly to stave off a downturn.

There's a troubling inconsistency in Mr. Bush's rationale for his tax cut.

Contrast this waffling to Federal Reserve Chairman Alan Greenspan's consistent position that: a) the overall strength of the economy, with some help from the Fed, will make the current slowdown short-lived; b) debt reduction, not tax cuts, should remain the nation's No. 1 priority; and c) tax cuts are useless in fending off a recession.

Mr. Bush had better get his story straight if he hopes to win over skeptical members of Congress and a public that still isn't convinced tax cuts are essential.

Mr. O'Neill didn't help the president on the Hill. His insistence on rapid passage of a tax-cut bill ignores congressional reality. If part of this bill makes it to the president's desk by late summer, Mr. Bush will be lucky. Congress takes its time, as it should.

The Treasury chief further confused matters in discussing retroactive features of the bill "to put money in the hands of Americans quickly." Such a move would add another $400 billion to the cost of the president's program. Yet Mr. O'Neill told a House panel Mr. Bush won't increase the size of his $1.6 trillion plan. So what's going to be left off the list?

Further weakening his credibility, Mr. O'Neill said the Congressional Budget Office's estimate of a $5.6 trillion surplus was way too low. That clashes with the views of most economists.

"I guess I'm a congenital optimist," he said. Fine. But don't expect Congress to pass a $1.6 trillion tax cut simply on the basis of feel-good rhetoric.

The administration must stop dealing in vague campaign outlines and present a detailed tax bill. What are the precise terms of the Bush plan? What is the true 10-year cost? And what's the reasoning for abandoning the road championed by Mr. Greenspan -- debt reduction -- for tax cuts?

This is shaping up as Mr. Bush's biggest first-year challenge. His conflicting stances and lack of clarity undermine his case.