Bush Father-Son Parallels Begin, and End, on Economy

As a candidate, George W. Bush often seemed driven by a single political motive: to avoid the fate of his father, whose quest for a second presidential term foundered on a recession barely big enough to register on the statistical scales.

So concerned was the younger Bush that he devoted much of his 2000 campaign to pushing for tax cuts as “insurance” against a downturn almost no one at the time saw coming.

Yet having won both the presidency and his tax cuts--and having been proved right about the downturn--Bush has still not shaken the political demons of economic trouble.

Indeed, many analysts think Bush faces a maddening task in the coming year. Despite having acted so decisively in the face of the September terrorist attacks that he erased his stubborn reputation as a foreign policy lightweight, the president now must prove himself all over again--in the economic realm. And he must do so largely by expunging an image created not by him, but by his father--that Bushes don’t fully appreciate the pocketbook concerns of ordinary Americans.

“The economy is Bush’s soft underside,” said Bill McInturff, a partner with the prominent Republican polling firm of Public Opinion Strategies in Alexandria, Va. “His father lost because he had a kind of patrician, ‘let them eat cake’ attitude. He’s sworn not to let the same thing happen to him.”

The president starts with some advantages. He confronts the recession in a congressional, rather than a presidential, election year, unlike the elder Bush. He can plausibly blame the terrorist attacks and the anthrax threat, and not poor administration policies, for throwing the economy off. Perhaps most important, he faces a public that does not yet seem deeply worried about the recession, which began in March.

“We’re not seeing the kind of heightened anxiety we saw in the last two recessions,” said Karlyn K. Bowman, a polling expert with the business-oriented American Enterprise Institute in Washington.

But if Bush begins with a leg up, he still faces some daunting troubles. He suggested as much by devoting his first major appearances of the new year--in speeches over the weekend in California and Oregon--to a combative defense of his economic stewardship, rather than to a self-satisfied review of his anti-terrorism successes.

The dimensions of his economic dilemma are most apparent in the eerie parallels with his father’s situation of a decade ago.

Both men were militarily triumphant and enjoyed sky-high public approval ratings. But the senior Bush suffered a three-pronged economic curse that his successes elsewhere did little to help. He was saddled with an economy that stubbornly refused to recover in ways, such as creation of new jobs, that average Americans could appreciate. He advanced an economic policy that set off ideological alarm bells: tax hikes that infuriated Republican conservatives. And he was stuck with a team of economic advisors that could seldom agree.

Although it is still too early to say whether the current president faces a similar fate, some analysts see troubling signs.

“There’s a real risk that even when growth resumes, it will be extraordinarily modest, much as it was in the early 1990s,” said David D. Hale, chief global economist with Zurich Financial Services in Chicago. “The administration’s economic team has shown little interest in doing much about it; they have not been able to carry the ball.”

Supporters of former President Bush never tire of noting that the early 1990s recession was the mildest in the postwar period, a mere three-quarter contraction amid two solid decades of growth. Their message: Had it not been for the economic fear-mongering of Democrat Bill Clinton, their man would have won in 1992.

What the supporters tend to overlook is that when measured in ways that most matter to average Americans the recession was anything but mild. It took the jobless rate a full 15 months after the start of recovery to begin steadily declining. It took it almost three years to return to pre-recession levels. And it knocked critical California into a tailspin from which it took years to recover.

The early ‘90s experience has to weigh heavily on the current president because there’s good reason to believe the economy could perform similarly this time around.

“The recovery is going to be slow and sluggish, not rapid and robust. And so is job growth,” said Donald H. Straszheim, president of Straszheim Global Advisors in Los Angeles.

Even if growth snaps back quickly, analysts said, it is unlikely to result in companies adding lots of new workers or hiring back those they have laid off. That’s because of the unusual, inverted nature of this recession.

Most downturns in the post-war period began when consumers got carried away with themselves and pushed demand beyond supply, setting off inflation and forcing the Federal Reserve to raise interest rates and slow consumption.

But this time, analysts said it was businesses that got carried away by investing too much in new plants and equipment, pushing supply beyond demand, driving down prices and forcing the Fed to slash rates.

“We’ve got 180 degrees the opposite of what we usually have,” said James W. Paulsen, chief investment officer with Wells Capital Management in Minneapolis.

This unusual state of affairs cannot last, according to Paulsen and others. Companies are already coping with over-investment through layoffs and plant closings, and they are likely to continue doing so.

That’s certainly what happened in the only post-war recession similar to the current one, the 1990-91 downturn, with dire political consequences for the president.

Bush senior is widely regarded as having committed one of the great blunders of American politics--embracing a “no new taxes” policy critical to the Republican right, only to renege on it, setting off howls of betrayal. His son has gone to extraordinary lengths to avoid committing the same error.

But some analysts question whether, in his effort to distinguish himself from his father, the president has set off similarly powerful political alarms among Democrats. They wonder whether the resulting partisan clashes make it unlikely the two parties could agree on an effective economic stimulus package.

They worry that by hewing to the right on economic policy, Bush risks being seen by much of the public as not acting when the economy needs it--the very perception that destroyed his father’s chances for reelection.

“Bush is not thought of as a real powerhouse on the economy,” said polling expert Bowman.

That, Bowman said, is because one of the president’s biggest accomplishments--the 10-year, $1.35-trillion tax cut--although “very important to his [Republican] base, . . . wasn’t anything most Americans thought they were going to see, so it wasn’t anything they focused a lot of attention on.”

Some of the political fallout is already apparent.

“The economy and jobs issues are up for grabs,” said GOP pollster McInturff. “We have to do something about the economy and be perceived as doing it.”

Although the president has certainly revived the economic issue in recent days, he so far has offered no new policy proposals and shown little appetite for compromise.

Indeed, he seemed to go out of his way to echo the “no new taxes” pledge that got his father in such trouble, telling an Ontario, Calif., audience that Democrats could reverse portions of last year’s tax cut package only “over my dead body.”

In a city where all politics is personal, no one caught more flak for the elder Bush’s 1992 defeat than his budget director, Richard G. Darman. Darman’s internecine war with other top economic advisors was widely blamed for crippling administration efforts to fix the economy.

Although there is no similar spat underway now, a wide array of observers express deep disappointment with the current president’s economic team.

“They’re a very big puzzle,” said William A. Niskanen, chairman of business-backed Cato Institute in Washington.

At key points last fall, Treasury Secretary Paul H. O’Neill appeared to contradict chief economic advisor Lawrence B. Lindsey and R. Glenn Hubbard, chairman of the White House Council of Economic Advisers, on administration support for corporate tax cuts. But analysts said the real problem was O’Neill’s penchant for off-the-cuff remarks.

The group’s rising star may be budget director Mitchell E. Daniels Jr., who will be on prominent display in the next month as the administration unveils its budget blueprint for the coming fiscal year. But he comes with his own baggage; he has proved to be so politically abrasive even powerful Republicans such as House Appropriations Committee Chairman C.W. “Bill” Young of Florida have refused to return his phone calls.

In the end, it appears that Bush himself will have to take on the task of selling his economic program.

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Previous stories in this series on President Bush’s first year, including an audio analysis with Times political writer Ronald Brownstein, are on The Times’ Web site. Go to latimes.com/firstyear