As war with Iraq increasingly appears inevit-
able, President Bush is walking a precarious political tightrope-attempting to balance his ambitious foreign-policy goals on the one side, and a myriad of economic and domestic challenges on the other. If he falls off that tightrope, he'll likely go down in history as a one-term president.
Just for a moment, let's assume that the United States wins the war with Iraq in a matter of weeks, with minimal loss of allied military and Iraqi civilian lives, that Iraq's oil fields, pipelines, and refineries remain in good working order, and that the postwar peace goes remarkably smoothly. That's the best-case scenario, one that some might call unreasonably optimistic.
What would happen then? The price of oil would likely come down a bit, but not a lot, since shortages would still exist because of the unusually cold U.S. winter and the strike among Venezuelan oil workers. With the uncertainty about the war over, the stock market would almost certainly go up, but perhaps not as much as some hope. And the economy would likely improve somewhat, simply because lower fuel costs and the elimination of war worries would put the business community in the mood for new investments.
But even if all of that were to happen, the U.S. economy would still be plagued by significant underlying problems. As Tom Gallagher, a Washington-based political economist for ISI Group, a leading Wall Street research firm, notes, "We face an outlook of slow growth due to working out excesses built up during the bubble years, such as excess industrial capacity, high consumer-debt levels, and a high current-account deficit."
While much has been said and written about the nation's excess-capacity woes, many financial-market experts think that the current-account deficit is an even bigger problem. As one partner in a Wall Street hedge firm puts it, "What won't be fixed by a successful war is the size of America's dependence on foreign savings. To just keep our weak growth where it is requires the U.S. to suck in over 80 percent of available global savings. If the U.S. saving rate declines further-as it is expected to do as a result of credit-burdened households, profit-strapped businesses, and deepening government deficits-America will have to suck in even more world savings next year to maintain some positive growth."
This pessimistic economist goes on to argue that "to get more and more funds, the U.S. has to offer higher and higher interest rates. Don't be confused by low U.S. Treasury security and mortgage interest rates. These are government rates pushed lower by Federal Reserve rate cuts. The Fed's cuts are essential, but interest-rate increases in the private sector are what is most important for the economy. The private-sector cost of funds is rising. It's these rising private-sector interest rates that depress growth and job creation now. And as they go higher, the economy will weaken further."
Even if the economy were to improve somewhat at the end of the expected war with Iraq, the war's end would allow public attention to shift away from foreign policy, which for the past 18 months has been Bush's strong suit, to the economy and other domestic issues, areas in which his performance and his policies have come under more consistent fire. The president's most recent times at bat on domestic and economic policy have not been pretty-no matter whether he was touting an economic package whose centerpiece is elimination of the taxation of stock dividends or whether his administration was pushing the since-retracted Medicare prescription drug benefit that senior citizens would have received only if they shifted into health maintenance organizations.
As Bush does his balancing act, his public-opinion poll numbers are continuing to deteriorate. For example, the most recent Ipsos Public Affairs/Cook Political Report polling, conducted from March 4 to 6, shows a notable decline. The president's once-spectacular approval numbers fell to mediocre levels and are now starting to trend toward the danger zone. While poll numbers this early in an election cycle traditionally have been of little or no value in predicting how a president's re-election bid will fare, no president interested in renewing his lease on the White House wants to see his poll results weakening during a prolonged, stubborn economic downturn.
The spirit of national unity that followed the 9/11 terrorist attacks dwindled in the winter and spring of last year. And all 12 of the Ipsos/Cook surveys conducted since early October have found that more Americans think the country is "off on the wrong track" than think it is "heading in the right direction." (Sixteen of the 19 surveys taken since the beginning of July found most adults saying that the country is on the wrong track.) In both January and February, 39 percent of adults polled thought the country was headed in the right direction, while 52 percent and 51 percent, respectively, said things were on the wrong track. In the most recent survey, just 34 percent of adults said the country is heading in the right direction, while 54 said it is on the wrong track. These are troubling numbers for the White House.
In terms of his overall job ratings, Bush's poll odyssey has taken him from stratospherically high approval numbers immediately after 9/11, to just-plain-high ratings, and recently down to a more ordinary range. And now the president's popularity is showing signs of dipping into a troublesome zone. During the first quarter of 2002, an average of 77 percent of the registered voters in the surveys approved of Bush's overall performance; that rating dipped to 73 percent in the second quarter, to 65 percent in the third quarter, and to 62 percent in the last quarter.
Even 62 percent is a high approval rating, by traditional standards. During January and February of this year, however, Bush's overall approval rating ranged from 54 percent to 58 percent, averaging 56 percent-then dipped down to 51 percent in the most recent sampling, taken early this month. In that latest snapshot of public opinion, 43 percent disapproved of how the president is handling his job.
Bush's approval ratings on his handling of the economy have tended to run 9 to 12 points lower than his overall approval numbers. They started last year averaging 66 percent among registered voters, notched down slightly to 63 percent in the second quarter, then fell to 55 percent in the third, before ticking down to 53 percent for the last quarter of 2002. This year, however, Bush averaged an economic-approval rating of just 50 percent in the two Ipsos/Cook January surveys, dropped a point to 49 percent in the two February polls, then fell to 43 percent in the most recent sampling. A majority of adults-51 percent-now disapprove of Bush's handling of the economy. When a president's numbers get "upside down," as pollsters phrase it, that's a real problem for the incumbent.
Polling on Bush's handling of "domestic issues like health care, education, the environment, and energy" fits a fairly similar pattern. Generally, his domestic-issue numbers trail his overall approval ratings by 10 to 17 points. In the first quarter of last year, his approval score started at 61 percent, then proceeded to fall to 56 percent, 53 percent, and 52 percent. In the two polls taken this January, his domestic rating averaged 51 percent. In February, it averaged 49 percent. Then, in the most recent poll, Bush's domestic-approval rating dropped 6 points and into the upside-down range, to 44 percent, with 49 percent disapproving.
Since the start of 2002, the president's overall approval rating has been closer to his rating on "handling foreign policy issues and the war on terrorism" than to his economic or domestic ratings. Last year, his foreign-policy/terrorism ratings averaged 1 to 6 points above his overall rating, starting off with 83 percent in the first quarter, then hitting 74 percent, 70 percent, and finally, 65 percent in the fourth quarter. This year, he started at 59 percent in the two January surveys and 60 percent in the February polls. But now, his foreign-policy approval rating is down to 55 percent-with a 38 percent disapproval rating.
Of all the new survey results, perhaps most disturbing for the Bush White House are the president's "re-elect" numbers. Those are gleaned by asking voting-age Americans, "If the election were held today, would you definitely vote to re-elect Bush as president, consider voting for someone else, or definitely vote for someone else?" During the first quarter of 2002, during Bush's post-9/11 halo period, an astronomically high 54 percent said that they would definitely vote to re-elect him, 20 percent said they'd vote for someone else, and 24 percent said that they would consider voting for someone else. In the second quarter, the proportion of voters saying they'd definitely vote for Bush dropped a bit, to 50 percent, while those saying they would support someone else rose to 22 percent, with 25 percent saying they would consider someone else. The drop in Bush's support was a bit greater during the third quarter, with his "definite" supporters declining to 42 percent, "someone else" rising to 26 percent and "consider someone else" reaching 29 percent. In the last quarter of 2002, the president actually picked up a bit of support, with 44 percent definitely favoring his re-election. But "someone else" also gained popularity-rising 2 points to 28 percent. In both January and February of this year, just 41 percent said they definitely would vote to re-elect Bush. "Someone else" drew 31 percent and 32 percent, respectively. In the latest survey, Bush's support was down even farther, to 38 percent definitely in favor of his re-election, 37 percent definitely favoring "someone else," and 22 percent considering someone else.
According to Thom Riehle, president of Ipsos Public Affairs, the nonpartisan firm that conducted these surveys in conjunction with The Cook Political Report, the president's support is deteriorating for several reasons. At the very time when concerns about the economy, as measured by consumer-confidence ratings, have fallen to nine- and 10-year lows and when the president is failing to get traction on his domestic agenda, the public's focus is shifting from Bush's record on fighting terrorism to the impending war in Iraq, something that voters are considerably more ambivalent about. As a result, a president who seemed politically untouchable a year ago now has dropped in the polls to the point where, arguably, he could really have to fight for re-election.
Charlie Cook National Journal
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