WITH six months to go before the onset of a presidential election
year, the White House is emphasizing the word "stability" to
characterize its stewardship over the United States economy.
President Bush's advisers also say economic growth is their top
priority, but private economists say the White House lacks the
influence and political will to achieve this in the long term.
Critics say the administration is long on rhetoric and short on
progress toward ensuring economic stability.
"We're definitely doing poorly in three areas that ought to be
integral to a long-term US economic policy," says Barry Bosworth, a
Brookings Institution economist. "Capital accumulation - funds
available for investment - is very low; in research and development,
we've been cutting back - particularly in the civilian sector where
our competitiveness is at stake; in education, it's very hard to see
that we're doing a better job."
But Michael Boskin, chairman of the White House Council of
Economic Advisers, stresses stability when discussing the Bush's
Mr. Boskin's long-term economic strategy to improve the average
American's standard of living includes an increased national savings
rate that will make borrowing cheaper, investments viable, and
economic activity strong. An improved educational system, a focus on
research and development, and better jobs are all parts and products
of a sound economy, he says.
Mr. Bosworth counters that "the administration is just an
observer in terms of stabilizing the economy, reflecting the
inability of the president and the Congress to work together. It's a
battle of ideologies: The budget deficit is terrible, but even worse
is a tax increase, and worse still is a cut in spending."
An administration absence of leverage over generating capital to
finance long-term growth, he says, means "the US has simply lost
fiscal policy as a tool."
The Federal Reserve Board, with monetary control, is the only
economic policymaker with any influence, Bosworth says. Conscious of
inflation, Fed chairman Alan Greenspan and his board have failed to
respond to White House pleas for lower interest rates. The timing
has been the Fed's, not the administration's.
"We've had our differences," says Boskin of the White House and
the Federal Reserve. "We wanted the Fed to act more aggressively,
sooner. And in recent months the Fed has certainly moved much more
aggressively. In order for an economy to grow, it's necessary to
have a sustained expansion in the supply of money and credit. It's
also important that you don't let an inflation genie out of the