But have a little mercy. While the presidency is touted to be The Most Powerful Office in the World, and while Bush would surely be taking bows if the economy were robust, there isn’t much that this president, or any president, can do to keep it that way. “The public tends to vastly overstate the extent to which the president affects short-term economic performance,” says economist Mickey Levy of CRT Securities in New York. Admittedly, Bush’s tired call for lower capital gains taxes as the sure-fire remedy for poverty and unemployment doesn’t exactly inspire public confidence. But most of the quick fixes he could conjure up to cure the malaise of 1992–a tax cut, a program to make work for the unemployed, contracts to save unneeded jobs in defense plants-would mean higher budget deficits and interest rates for years to come. Our ideal calls for a president to be a man of action, but sometimes doing nothing is wiser.
The excesses of the Reagan years bear some of the blame for the economy’s doldrums: the consumer-spending binge of the 1980s left families awash in debt, crimping further spending, while construction is dragging because overbuilding in the late ’80s created enough empty office space to meet demand until the turn of the century. But the economy is also in the midst of a major structural shift. As businesses focus on international competition in an era of low inflation, cost control is the new corporate creed. Companies aren’t jumping to buy new equipment; first, they’re changing schedules and production plans to get the most out of what they already have. Employers like the Bridgestone/Firestone tire plant in Wilson, N.C., are focusing on making current workers more productive but aren’t adding new ones. " We’re not going to hire permanent people and then lay them off," insists manager George Ruccio. That cost-consciousness is one reason 117,000 jobs disappeared in June.
In the face of intense administration pressure, the Federal Reserve cut short-term interest rates another one-half percentage point last week. But the pressure is counterproductive: the interest rates that really matter, on long-term borrowing, are set by the market, not the Fed; politicians’ demands for easier money have helped keep rates on 30-year bonds more than twice as high as on six-month notes. Some Fed insiders doubt that the lower short-term rates will make much difference, given the obstacles in the economy’s path. Says one key Fed adviser: “We are pretty much convinced that it’s going to be slow.”
November’s victor should have it better. The experience over the last few years has left the economy in a really good situation for growth," says John Taylor, a former Bush economic adviser. The rest of the 1990s won’t be a boom time, but the next presidential term is likely to see much better performance than the past four years. “Whoever comes in will get credit he doesn’t deserve,” predicts Washington economist John Makin. If George Bush is no longer in office to enjoy the fruits, rest assured that his successor will.
