Newspaper article The Christian Science Monitor

The Pocketbook Issue

Newspaper article The Christian Science Monitor

The Pocketbook Issue

Article excerpt

BECAUSE the economy will largely determine the outcome of this year's election, it is useful to analyse the economic criteria that might guide voters through the maze of interpretations.

Economist Ray Fair of Yale University has a simple econometric model that predicts President Bush will capture around 55 percent of the vote. A Republican incumbent, the model says, starts out with about a 7-percent vote advantage; it would take a severe economic downturn this quarter and far worse inflation to knock Bush out of office.

Mr. Fair acknowledges that voter behavior could change suddenly. His model looks at economic growth in the two quarters prior to an election. Perhaps, he speculates, the unusually slow growth of the past four years has made consumers especially gloomy and will change votes.

An incumbent president should not get either the full blame or full credit for the status of the economy. The monetary policy of the Federal Reserve System has much to do with the business cycle.

Nonetheless, in the 1988 campaign President Bush gladly took credit for the prosperity then and promised that voters would be better off in four years. It is no surprise that the Democrats are trying to pin today's economic malaise on Bush.

The Bush administration has presided over an economy that is stalled in recession; there is no arguing about that. Bill Clinton and the Democrats promise they will get the economy, and jobs, growing again; that is an assertion. As voters weigh the Bush facts against the Clinton assertions, they should keep in mind some key factors:

* The deficit: Both parties carry some of the blame for the $330 billion federal budget deficit this fiscal year and the $3 trillion in federal debt.

In the 1980s, the Reagan administration accepted the myth that massive tax cuts would stimulate the economy so much that revenues would grow enough to shrink the deficit. In fact, economic growth in the 1981 to 1988 period, though greater than from 1973 to 1981 (the era of the oil-price shocks), was considerably less than from 1948 to 1973. Neither the White House nor the Democrat-controlled Congress has shown much courage in tackling such budget busters as health-care spending. …

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