For Bush: Man in Mirror Is Hoover : Politics: The economy is in such poor shape that comparisons between now and the ‘30s are almost inescapable for the President.

What do Saddam Hussein, Senate Majority Leader George J. Mitchell (D-Me.), Federal Reserve Board Chairman Alan Greenspan and U.S. bank and credit-card executives have in common?

The answer: They’ve all been blamed for the current economic recession or its longevity by George Herbert Walker Bush--now on his way to becoming George Herbert Hoover Bush and hard at work trying to scapegoat anyone but the man he sees in the mirror each morning. It’s not plausible, to be sure, but then little about Bush’s economic policy is.

According to Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), the United States is in a “silent depression,” and voters now have the gloomiest assessment of the economy in recent memory. Even Republicans are angry and disgusted. Overall, based on the latest Gallup and CBS News polls, Bush’s job approval has dropped 33-37 points in the last eight months. If his slide continues, it could soon become the biggest one-year drop in U.S. political history. In addition, in the last few months, the prospect of a 1992 Democratic presidential victory has gone from minimal to quite conceivable.

Arguably, the President has only begun to receive the economic-policy indictment he deserves--given that the nation is watching a repeat of a disturbing pattern not seen since the Hoover years. For the basic context of a strung-out, debt-weakened, speculative economy and Bush’s attempt to blame everyone but himself both recall that time. True, disgusted conservatives and politically salivating Democrats who talk about Bush being a second Hoover are ahead of themselves--but it could happen.

That is because the tragic economic progression from the debt-and-speculative bubble of the 1980s into the hangover-after-the-binge 1990s represents the third boom-and-bust cycle of conservative economics in the last hundred years. The first, during the late 19th Century Gilded Age, produced the panic and depression of 1893; the next blowout, during the 1920s, produced the 1929 Crash and ensuing Great Depression.

None of it was coincidental. Before each boom-bust sequence, too much government and runaway inflation had made voters ripe for conservatism, which then, in each period, developed 10 compelling yet unnerving parallels--a plumb line through all three eras. Presidents involved were almost all Republican, and conservative philosophy dominated. Each time, Americans wanted big government to get smaller. At the same time, because the public sector had grown too big, voters wanted business and the private sector to take a larger role. As a fourth ingredient, all these periods were tough on organized labor.

Merger waves and large-scale restructuring of U.S. industry provided a fifth shared characteristic. In addition, taxes were cut, particularly for the rich. Circumstance No. 7 was that disinflation curbed rising prices, so financial markets boomed. At the same time, national disinflation invariably produced something far more painful--outright deflation--in the commodity states of the Farm Belt, Rocky Mountain and Oil Patch, so the hinterland suffered.

Parallel No. 9 was that concentration of wealth surged--so these eras produced America’s great waves of millionaires and then billionaires. Last, each of these go-go years unleashed record surges of debt, leverage and speculation, creating the framework for the eventual bust.

It’s against this backdrop of the third such economic binge-and-hangover sequence that Bush’s attempts to blame Hussein, Mitchell and the folks at MasterCard becomes speciousness verging on gross historical and managerial negligence. Since the October, 1987, stock-market crash and the savings-and-loan debacle, the nation has seen--as has Bush--the accelerating 1988-90 slide of Northeastern real estate and a panic in the junk-bond market. Then, in 1990, commercial banks following S&Ls; into the tank, while 1991 has seen the Federal Deposit Insurance Corp. flirt with the insolvency that earlier overtook the Federal Savings and Loan Insurance Corp.

The rest, sadly, we know. U.S. financial institutions are experiencing their greatest crisis since the ‘30s, as is commercial real estate. Experts predict an unprecedented one million bankruptcies for 1991.

Meanwhile, in the public sector, even as the federal deficit set records and the mismanaged S&L; bail-out grew ever more costly, state and local finance fell into its biggest crisis since the 1930s, with California and New York as chief trauma centers. By mid-year, the largest number of Americans were receiving public assistance since the 1930s. As Democrats point out, under Bush, the U.S. economy has grown more slowly than during any Administration since, yes, Hoover’s.

None of this, however, have interfered with the upbeat blather coming out of the White House. Don’t worry, be happy--evil Hussein’s recession is over. Nothing’s wrong but a credit crunch. Don’t let the big-spending Democrats extend benefits for the unemployed because it’ll bust the budget. Don’t let the media doomsayers make you feel bad.

For a while, the President had more than his share of luck. Hussein was a useful diversion. Feckless Democrats were afraid to raise tough critiques. That could have bought time for hard-boiled measures. Yet Bush must not have understood the seriousness of what was happening. If he did, it’s hard to imagine how he could have spent so much time on the unpopular priority of reducing capital-gains taxation, with its principal benefits for the same people who staged the 1980s binge, while opposing middle-class tax cuts and extension of unemployment assistance for luckless Middle Americans whose benefits were running out.

Amid a slump, political economics like these have the potential for disaster. The economy may yet stage a rally of sorts for 1992, based on the relentless interest-rate cuts orchestrated by Fed Chairman Greenspan. But if we are heading into the second stage of a deeper slowdown--perhaps a 50-50 prospect--Bush will hear a lot more Hoover analogies.

It’s not just a matter of Bush’s job-approval ratings falling like a Bermuda barometer in hurricane season. The rancid economy has all sorts of other effects. A revivified Democratic Party is the most obvious. What gets less attention is the growing anger in the GOP.

Republicans in the House of Representatives are saying openly that Bush does not have the sort of economic program the country needs. In the Senate, Republican leader Bob Dole’s disenchantment with White House economics is part of the reason he’s considering retirement. And former President Richard M. Nixon sadly hears his 1968 campaign rhetoric about “forgotten middle-class Americans” stolen by 1992 Democratic presidential candidates like Arkansas Gov. Bill Clinton but ignored by the Republican in the Oval Office who once worked for him.

In Louisiana, the “silent depression” Bentsen invokes is what gave ex-Nazi David Duke the opportunity to win 60% of the white middle-class vote for governor. If former Reagan aide Patrick J. Buchanan does well in his planned challenge to Bush in New Hampshire’s GOP primary, it’ll be because of that state’s awful economy. In New Hampshire--which former Gov. John H. Sununu called “recession-proof” three years ago, before relocating his dubious skills to Bush’s White House--home prices have collapsed and unemployed executives do municipal labor to pay property taxes.

Bush has had a long time to understand how many Republicans disdain his neo-trickle-down economics. A year ago, after his 1990 budget positions saddled the GOP with “party of the rich” imagery, election-day exit polls showed 22% of Republicans backing Democrats for Congress, and Wall Street Journal surveys showed 40% of Republicans opposing the President’s capital-gains tax cut. Now, in turn, last week’s CBS poll revealed 63% of Republicans think the economy is in bad shape, and, by a 49% to 41% plurality, Republicans disapprove of the way Bush is handling the economy.

I don’t know whether Bush will be the first elected Republican President since Hoover to be defeated after one term. But one thing is already moving beyond debate: He’s the first to walk in so many of Hoover’s unfortunate footsteps.