Dubya on the Defensive
Capital Hill Blue | August 13, 2005
By TOM RAUM
The war in Iraq and the soaring price of gasoline are drowning out a succession of positive reports on the economy, putting President Bush on the defensive at a time when he could be basking in good economic news.
Despite months of economic growth, tame inflation, resurgent job growth and an unemployment rate near a four-year low, public approval of Bush's handling of the economy is at the lowest levels of his presidency.
That has left his supporters perplexed over why Bush hasn't gotten more credit for the improving economy.
But analysts suggest a host of reasons _ including anxiety over terrorism and the Iraq war, soaring gasoline prices and high levels of mortgage debt in an environment of increasing interest rates.
"The economy is good, but it hasn't improved for everybody," said Mark Zandi, chief economist of Economy.com, an economics research firm. "The gains have predominantly gone to higher-income and higher net-worth households. Lower net-worth households are still struggling."
Another factor in the president's low approval levels on the economy may be his talk about a Social Security crisis, some analysts suggested.
Bush crisscrossed the country saying that the national retirement program was headed toward bankruptcy. But he drummed up little public support for his prescription for fixing it, which includes individual investment accounts for workers under age 55 _ in exchange for a reduction in future promised benefits.
"You don't keep real confidence in the economy when you hear that the Social Security system is going broke," said Thomas Mann, a scholar on Congress and the presidency at the Brookings Institution. "Americans weren't persuaded by his solution. So we got a crisis without a solution."
An Associated Press-Ipsos poll conducted this month found Bush's economic approval rating at 41 percent _ his lowest rating yet in that poll and down from 47 percent in January.
Trying to turn things around, Bush and his top advisers have held a series of public events to talk up the economy. They included an energy bill-signing ceremony in New Mexico, a meeting with his economic team at his Texas ranch and a trip to Illinois to sign a transportation bill the administration claims will create tens of thousands of jobs.
At a news conference with his economic team Tuesday, the president conceded there were challenges to the economy. He suggested that rising energy and health care costs were chief among them.
But overall, he asserted that the economy was strong _ and sought to take some credit.
"I'm pleased to say that the strategy is working," Bush said of his domestic initiatives, including a variety of tax cuts in his first term. He cited a string of recent upbeat economic reports, including creation of 207,000 jobs in July, the biggest jump in three months.
But pollster Andrew Kohut, director of the Pew Research Center, said Americans are far more negative about their personal finances than the government data cited by Bush would suggest.
Despite the job-creation figures and a relatively low unemployment rate of 5 percent, "people continue to tell us the job market in their local communities is not particularly good," Kohut said.
"Since we know that unemployment is not very high, the only inference we can draw is that they are complaining about the quality of jobs that are available."
"There is a fair degree of discontent among middle-income people," he added.
Rising gasoline prices are a major source of economic anxiety for many Americans, "and they see Bush's Middle East policy as part of the problem," said Standard and Poor's chief economist David Wyss.
Oil prices have hit a new high of nearly $67 a barrel. Adjusting for inflation, oil hasn't been this high since the early 1980s, when prices peaked at the inflation-adjusted equivalent of just over $90 a barrel.
That had political consequences Bush might want to bear in mind, Wyss said. "Remember Jimmy Carter?"
President Carter lost his re-election bid in 1980 to Ronald Reagan, in part because of energy-price distress and the holding of U.S. hostages in Iran.
Bush doesn't have to worry about re-election. But other Republicans do, and they're getting increasingly nervous about both rising energy prices and continued U.S. deaths in Iraq.