Bush Economic Policy Called Weak, Political White House Seeks Long-Term Stability; Private Economists Say Tools for Growth Are Absent
Amy Kaslow, writer of The Christian Science Monitor, The Christian Science Monitor
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 economic leadership.
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 bottle. …