NEW YORK (AP) - 0314dv--bush--economy
President Bush preached optimism and Republican orthodoxy of minimalist
government intervention Friday as the best approach to an increasingly troubled
economy.
The president chose the nation's financial heart as the backdrop -- and
titans of business as the audience -- for his most high-profile attempt to date
to calm nerves from Wall Street to Main Street.
His main message, aside from displaying confidence in the U.S. economy's
underpinnings and historical resilience, was to caution against overreaction by
policymakers that could damage the economy's short- and long-term prospects,
something he did about a half-dozen times in 40 minutes of remarks.
"Our economy obviously is going through a tough time," Bush told a gathering
of The Economic Club of New York. "The challenge is not to do anything foolish."
The Bush administration has been trying to find a balance between
acknowledging leaner times and forecasting that better ones will come soon.
White House officials predict that things will turn around by summer as the
effects are realized from a series of aggressive interest rate cuts by the
Federal Reserve and an economic stimulus package that will send tax rebate
checks to 130 million households starting in May.
But those actions face off against a series of blows; the dollar has dropped
to new lows, while oil and gold are hitting new highs. The economy is now
shedding jobs, rather than adding them. Retail sales have dropped.
Some economists believe the economy may already be in recession -- a
milestone that generally requires at least two consecutive quarters of negative
growth.
At the root of the troubles is a two-year slump in the housing sector that
has seen sales and prices plunge and created a severe credit squeeze that is
rippling through the economy. In the race to elect Bush's White House successor
this year, economic worries have now replaced the Iraq war as the No. 1 concern
of voters.
Presidents can do little to alter the economy's course. Perhaps the most
effective tool of the Oval Office is the bully pulpit, from which presidents try
to keep up people's spirits -- and their trips to the mall.
In that mold, Bush emphasized that this is not the first time the economy
has been rattled and that he remains certain it will ride out this period as
others. He said low unemployment, strong productivity, high exports and a
deficit small as a proportion of economic output are proof of the economy's
fundamental strength.
"Every time, this economy has bounced back better and stronger than before,"
the president said.
Delivering this message before the economic club's exclusive, wealthy,
largely homogenous membership of top executives had Bush somewhat literally
preaching to the choir: the 101-year-old group's new chairman is Glen Hubbard,
Bush's first head of the White House Council of Economic Advisers.
The president even began his remarks with a little joke about the state of
the economy. "It seems like I showed up in an interesting moment," Bush said,
drawing laughter from the group that included executives from troubled Bear
Stearns Cos.
He said his administration is staying abreast of the economy's developments.
Bush even made a special point of hailing the Fed's recent actions, including
moves this week to add liquidity to credit markets and on Friday to endorse an
arrangement to bolster Bear Stearns.
Bush said he opposed several measures aimed at the housing crisis that are
pending on Capitol Hill. They included proposals to allocate $400 billion to
purchase foreclosed-upon and now-abandoned homes, to change the bankruptcy code
to allow judges to adjust mortgage rates, and to artificially prop up home
prices.
"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'm deeply concerned about law and regulation that will make it harder for the
markets to recover -- and when they recover, make it harder for this economy to
be robust. And so we got to be careful and mindful that any time the government
intervenes in the market, it must do so with clear purpose and great care.
Government actions have far-reaching and unintended consequences."
He also said it would be a mistake to block trade agreements that could
generate new growth or fail to extend the tax cuts passed during his presidency.
"It's important not to overcorrect, because when you overcorrect you end up
in the ditch," Bush said.
He appeared to be counseling a certain amount of acceptance of economic
difficulties.
"In a free market, there's going to be good times and bad times, that's how
markets work," Bush said. "The market is in the process of correcting itself;
markets must have time to correct."
Democrats said Bush is paying attention to the wrong statistics.
"Under George Bush's economic boom, middle class families saw their incomes
drop by $1,100 in annual income over the last six years and their health care
and energy expenses go up," Rep. Rahm Emanuel, D-Ill., said in a statement.
"Under George Bush's recession, middle class families will suffer even more.
What we don't need are more speeches outlining more of the same."
In a brief question-and-answer session, Bush took a veiled shot at
Democratic presidential candidates Hillary Rodham Clinton and Barack Obama for
their criticism of trade agreements they say put American workers at a
disadvantage.
"When times are tough, it's much easier to find somebody else to blame," the
president said, without mentioning either candidate by name. "And sometimes that
somebody else that's easier to blame is somebody in a distant land. ... It's
easy politics."
He also was asked whether the United States has an inflation problem,
because of rising consumer prices and the weak dollar. Bush did not answer the
question directly. "We believe in a strong dollar," Bush said.
Following his speech, he went to a ritzy Upper West Side apartment building
overlooking Central Park to raise money for the national Republican Party. The
private event pulled in $1.4 million from about 70 attendees.
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