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A New Economic Story Line

From the Dec. 9, 2002 Wall Street Journal: President Bush tries to rewrite the script of his administration's economic performance.

11:00 PM, Dec 9, 2002 • By FRED BARNES
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IN THE MONTHS after the 1986 election, President Reagan was in serious political trouble. Republicans had unexpectedly lost control of the Senate and the Iran-Contra scandal was threatening to engulf Washington. A senior Reagan adviser came up with a plan for reviving the sagging presidency. Reagan would fire a number of cabinet secretaries and White House aides and propose a set of striking new initiatives. The policy ideas wouldn't fundamentally clash with the conservatism of the Reagan administration, but they would be new. The effect would be to break with the past and to create a fresh presidency with energy and momentum. And a new story line would come out of Washington.

The plan was never pursued by Reagan, who limped through his final two years in office. But in a far less sweeping way, it is exactly what President Bush has in mind in firing his top economic advisers, Treasury Secretary Paul O'Neill and senior adviser Larry Lindsey, and promising new proposals to spur the economy. Bush wants to create a new story line--one that will strengthen his chances of re-election in 2004.

The current line is that Bush is distracted by the war on terrorism and struggle with Saddam Hussein and not paying enough attention to the shaky economy. This is reflected in public opinion polls that alarm the White House. A Fox News survey last week found 65 percent support for Bush's overall performance and 66 percent for his actions against terrorism. But only 47 percent endorsed his performance on the economy.

The story line sought by Bush would have him taking charge of the economy--or at least of the economic issue--and moving boldly with new ideas to generate growth and jobs. What's key here is recognizing that this cannot be produced by words alone, even by a presidential address billed as "major." There must be actions. Thus, the firings and the naming of replacements. And there must be new policies. Thus, the assurances from Bush advisers that the economic stimulus won't be limited to ideas we've heard before from the president.

Shortly after the Nov. 5 election, I was on a political panel with Jack Oliver, the deputy Republican national chairman and close ally of Karl Rove, the White House political chief. I suggested Bush need only make his 2001 tax cut permanent and immediate, instead of phasing it in. Oh, no, said Oliver. The president has to offer new ideas. Oliver was right. To rivet national (and press) attention and prompt a fresh look at Bush's handling of the economy, a bit more of the old Bush policies wouldn't suffice.

In one sense, Messrs. O'Neill and Lindsey are scapegoats, victims of Bush's political needs. But they had shortcomings of their own, particularly O'Neill. Neither was seen as an effective spokesman for Bush's policies. They were treated by the media as proxies for a weak economy, for measures that hadn't worked sufficiently, and for an indifferent administration.

A president in trouble is not helped by standpatters. He needs activists, people with plans and ideas. For months, though, O'Neill recommended minimal action and maximum patience. After the post-Sept. 11 stock-market decline, he insisted the market would rise to new highs in 12 to 18 months. It hasn't. Nor was O'Neill eager for further economic stimulus. The result: only a modest package was enacted early in 2002. More recently, he expressed doubts about further steps to boost the economy.

A significant moment occurred last August at the president's economic summit in Waco, Texas. Charles Schwab, the discount broker, caught Bush's eye with a string of proposals to ease the pain of embattled investors, rally the stock market, and stir savings. Bush was intrigued. O'Neill wasn't. His cautious approach might have won the day if he had a constituency in the media, the political community, or Wall Street. Even inside the Bush administration, O'Neill had few champions.

What Bush wants at the Treasury Department now is a driving force for his policies, not a brake on them. If the secretary is a leader with a global reputation like James Baker or Robert Rubin, fine. But between now and the 2004 election, Bush will gladly settle for less. His person at Treasury must be well-regarded in financial and corporate circles, active in public policy, a reasonably strong communicator, and in sync with Bush both philosophically and on the need for new measures to jack up the economy.