On Wall Street, the President Steers Clear of 'Recession'
Saturday, March 15, 2008
NEW YORK, March 14 -- The S-word is okay ("slowdown"). Even the grimmer D-word is acceptable ("downturn"). But don't expect the R-word to slip out of the president's lips.
As President Bush tried to calm the nation's economic anxiety Friday, he resisted again any suggestion that the country has fallen into recession. "A tough time," he allowed. "A rough patch," he agreed. But he has seen tough times and rough patches before, he noted, and "every time, this economy has bounced back better and stronger than before."
If the economy has indeed entered an uncertain period as Bush said, so, too, has a president trying to manage it in his final 10 months in office. He is at once wary of appearing out of touch, as his father did during the recession of 1992, yet determined not to talk the economy down, either. He is a self-described man of action -- "the decider," as he once termed it -- yet argues against what he calls excessive intervention in the economy.
"Government policy is like a person trying to drive a car on a rough patch," he told the Economic Club of New York in a lunchtime speech just hours after the bailout of Bear Stearns rocked Wall Street. "If you ever get stuck in a situation like that, you know full well it's important not to overcorrect -- because when you overcorrect, you end up in the ditch."
But trying to strike a balance has left him open to Democratic accusations that he has already driven the country into a ditch. With each new dire economic report or corporate crisis, Democrats in Congress appear as eager to use the R-word as Bush is to avoid it -- in their case, hoping to hang it around his neck while heading toward an election that will decide his successor.
"This president is beginning to resemble Herbert Hoover," Sen. Charles E. Schumer (N.Y.) declared after the New York speech. Bush "has pursued the most reckless fiscal policies in American history," chided House Majority Leader Steny H. Hoyer (Md.). The president thinks "inaction is the cure-all for the economic problems hurting hard-working Americans," asserted Senate Majority Leader Harry M. Reid (Nev.).
And while Bush remains bullish about the economy's long-term prospects, independent economists are increasingly glum. Before his speech, the president sat down with the editorial-page staff of the Wall Street Journal, which reported Friday morning that its latest forecasting survey found that 36 of 51 leading economists think the nation has already slid into a recession.
The definition of a recession is a decrease in the gross domestic product for two straight quarters, but it sometimes takes months to determine that such a decrease has happened. In the meantime, Bush can ill afford the perception of such a slide and has been arguing that the economy will turn around by the summer, after tax-rebate checks start going out in the second week of May.
Bush has tried to avoid the mistakes of his father, President George H.W. Bush, who did not respond quickly to economic troubles and tried to make up for it by telling an audience, "Message: I care." As storm clouds gathered, his son has hit discordant notes. He seemed stunned when a reporter told him some economists had forecast $4-a-gallon gasoline. He took his concern for "hardworking Americans" Friday to an audience of the nation's corporate titans and investment giants.
But the younger Bush has also responded with a major initiative more promptly than his father did. Putting aside a year of partisan bickering, Bush cut a deal last month with Congress for a $152 billion economic stimulus package that will pump money into the economy through one-time tax rebates of $600 per individual and $300 per child, as well as tax breaks for businesses.
He has been more restrained in addressing the housing crisis that touched off the current downturn, organizing a program to help refinance hundreds of thousands of mortgages for troubled homeowners but resisting the more aggressive actions favored by Democrats. During his speech Friday, he talked more about the Democratic proposals he has opposed than any new initiatives of his own.
"The temptation of Washington is to say that anything short of a massive government intervention in the housing market amounts to inaction," Bush said. "I strongly disagree with that sentiment." The government cannot fix underlying problems, he said. "The market is in the process of correcting itself."
Bush arrived on Wall Street even as stocks were tumbling on the news of the crisis at Bear Stearns, the nation's second-largest mortgage underwriter. JPMorgan Chase and the Federal Reserve Bank of New York had just agreed to provide temporary funding to the firm. "It seems like I showed up in an interesting moment," he noted to laughter.
Bush praised various recent moves by the Federal Reserve, which have been coordinated with the Treasury Department, hailing the "strong action" and promising that the central bank and his administration "will take the appropriate steps to promote stability in our markets."
In the long term, though, the centerpiece of his approach is persuading the nation to share his confidence.
In addition to the speech and the Journal meeting, he gave an interview to CNBC, the business television channel, and taped his Saturday radio address on the economy. "I'm coming to you as an optimistic fellow," he told the Economic Club. "I've seen what happens when America deals with difficulty. I believe that we're a resilient economy. And I believe that the ingenuity and resolve of the American people is what helps us deal with these issues, and it's going to happen again."
After his speech, Bush headed uptown to headline a $1.4 million fundraiser for the Republican National Committee. The $20,000-a-head luncheon was held in the Beresford, a posh co-op building off Central Park that, in an unfortunate bit of circumstance, was completed a month before the 1929 stock market crash that ushered in the Great Depression.