2 candidates have major differences on the economy

The Insider

Your Money

August 22, 2004|By BILL BARNHART

LIKE THE stock market, President Bush faces headwinds as he prepares for his party's nominating convention.

Bush must overcome his mess in Iraq, softness in the economy and the fact that his last name has four letters.

"No incumbent with four letters in his last name has ever been re-elected," said Byron R. Wien, senior investment strategist at Morgan Stanley. Wien pointed to Presidents Polk, Taft, Ford and the first Bush.

This and other conversational statistics and factoids are being tossed around regarding the coming election.

Trivia aside, this election matters. Four years ago, many Americans saw little difference between Bush and Al Gore. The next four years will be quite different, depending on who wins.

Bush's ill-fated adventure into military conquest will lose its appeal in a second Bush White House. Having unseated Saddam Hussein, Bush has achieved his personal goal.

Terrorism hysteria will wear thin as a political strategy, especially if there is another attack that hardens a nation made skeptical by the Sept. 11 commission report.

John Kerry will feel obliged to mend global fences. He could just as likely spawn novel efforts by other nations to exploit the United States' low esteem.

Trade talks will be tough but vital under either presidency.

A convincing Bush victory would embolden the economic ideologues in his administration to push laissez faire regulatory policies, cut federal spending and privatize Social Security - none of which will be emphasized in the campaign.

"There's a real choice. Bush in '05 would move to much tougher spending restraint," said Gregory R. Valliere, director of the Washington research group for Schwab Capital Markets.

A decisive Kerry victory would be based on voter disenchantment with Bush. As Bush did with Clinton-era policies, Kerry will sweep clean.

Giant drugmakers and coal producers would lose a friend. Mortgage finance agency Fannie Mae would gain one. His pledge to raise taxes on individuals earning more than $200,000 a year will be limited by the likely Republican control of the House, if not the Senate.

Kerry's domestic agenda, which is expensive, will benefit from public acceptance of record deficits under Bush.

But regulatory agencies, and possibly Supreme Court appointments, will be the palette for Bush or Kerry, with sharply divergent outcomes.

Kerry will deny that he is just the anti-Bush candidate.

An intriguing question is how overtly Republicans in Congress will distance themselves from the failed Bush clan if Kerry wins.

In the campaign, Bush will talk about extending middle-class tax cuts set to expire this year - greater eligibility for the 10 percent tax bracket, marriage penalty relief and the child tax credit, Valliere said.

Bush probably will pen his first veto, to demonstrate fiscal resolve, he added.

Wien sees a bigger theme.

"Today, the war is more important than the economy, and the war is not going well," Wien said. "The war favors Kerry. ... For Kerry not to be in the lead now must worry his people."

Kerry has another problem, Wien observed: "No challenger with five letters in his last name has ever won. One of those isn't going to work this time."

Bill Barnhart is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. E-mail him at yourmoney@tribune.com.

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