Bush to Press Congress on Economic Plan

Faced with a plunging stock market, a souring mood among voters and anxious cries from his fellow Republicans, President Bush has decided not to push forward new policy proposals but to “ramp up the focus on Congress” to complete action on corporate reform legislation and approve key elements of his economic agenda.

A day after the Dow Jones industrial average fell nearly 400 points to a four-year low, a senior White House official said Saturday that Bush’s economic strategy for the immediate future is to take advantage of a president’s ability to make his voice heard above the competition.

“History shows when presidents focus on solutions, Congress tends to tie itself in knots by getting down in the weeds,” the White House official said. “Congress has an uphill battle when it comes to communicating with America.”

Accordingly, Bush will focus his energies this week on pressing Senate and House negotiators to move faster on corporate accounting reforms and the House to complete action on the new Department of Homeland Security. He will also sign a supplemental appropriation bill that should pump more money into the economy.

The emerging Democratic strategy, which will carry forward to the fall elections, when Democratic control of the Senate and GOP dominance in the House are on the line, is to tie the economy’s troubles to corporate misconduct and then to tie Bush and congressional Republicans to big business.

Bush, in his radio address Saturday, previewed the Republican response: While trying to identify himself with the cause of corporate reform, he pointed a finger at Congress for failing to provide him enhanced authority to negotiate trade deals and to control spending, which he said threatens a “decade of deficits.”

“As Congress approaches the August recess,” Bush insisted, “it must take decisive steps to provide economic security to the American people.”

Substantively, the White House believes, at least for now, that the president has done all he can, or needs to do, to stem the stock market decline.

Rhetorically, however, Bush is casting himself as a leading proponent of corporate reform. And the White House has sidestepped questions about how far the president would move toward the Democratic Senate’s version of corporate accounting reform, which is seen as tougher than Bush’s.

The White House will say only that Bush and Sen. Paul S. Sarbanes (D-Md.) share many goals and that the president will wait to see what emerges from the conference committee that is trying to reconcile the House and Senate bills.

While leaving the door open on tougher corporate reform, the White House continues to resist GOP suggestions to shake up the administration’s economic team. Even some Republicans are telling Bush he could bolster consumer confidence and the market by getting get rid of Treasury Secretary Paul H. O’Neill and Securities and Exchange Commission Chairman Harvey Pitt. Bush and his aides say they remain firmly behind both men.

The White House drive to focus public attention on Congress is meant to send the message that, while Bush is standing pat on policy and personnel, he is not insensitive to the pain and apprehension of voters.

“From a political point of view, he needs to be out there, show empathy, convey an impression he is in charge,” political consultant Stuart Rothenberg said. “A lot of times in politics, politicians just have to hold on and ride out the storm.”

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Mood Grows Gloomy

The backdrop for this maneuvering is a sharp deterioration in the country’s mood. While Bush’s job approval rating has remained high, the share of Americans who say the country is on the right track has plummeted with the stock market.

“It is a lack of a sense of security that is turning people into a foul mood,” says independent pollster John Zogby.

This widening unease may be changing the landscape for the midterm elections in November. For months, Republicans have hoped Bush’s astronomical approval ratings would boost their prospects. Now there is growing concern that anxiety about the country’s direction may prove a more decisive factor in the election--and slowly erode Bush’s strong support as well.

“Privately, Republican consultants are a little worried. Polls tend to lag,” conservative analyst William Kristol said, but he predicted the tide will turn.

“Right now we’re in the panic mode where everyone wants to be tough. I predict there will be a moment in the next week or two where the president turns on the Democrats for being too indiscriminate in attacking business,” Kristol said.

Yet if optimism about the country’s direction continues to fall, “then inevitably Bush is going to fall with it,” says Republican pollster Bill McInturff.

Faced with that prospect, Republicans appear to have decided that the best defense is a good offense. Over the last few days, key GOP leaders have escalated criticism of congressional Democrats for blocking key elements of Bush’s agenda.

On Friday, Republican National Committee Chairman Marc Racicot told a party meeting in San Francisco: “It seems to me that the Democrats are so eager to win at virtually any cost that they aren’t really interested in helping the economy grow ... because they feel they can win if the economy is disrupted.”

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Democrats Lack a Plan

The Republican focus on the White House economic agenda may highlight the weakest link in the Democratic argument for the midterm elections: their lack of a competing economic plan. Democrats are accusing Bush of mismanaging the economy and blaming his $1.35-trillion, 10-year tax cut for the return of federal deficits. On Saturday, Al Gore, Bush’s rival in the 2000 presidential election, compared the administration’s handling of the economy to business decisions that led to the collapse of Enron Corp.

“It’s going to lead to bigger deficits than when the first Bush” was in the White House, the former vice president said.

But Democrats have not advanced an alternative plan to revive the economy or eliminate the deficit.

Rather than sending a broad economic message, Democrats are focusing on the corporate scandals. “Voters draw very much of a straight line from what is happening at WorldCom and Enron to what is happening in the larger economy,” says Democratic pollster Geoff Garin. “So a corporate accountability message becomes an economic message, not just a statement of moral values.”

That corporate accountability theme is infusing Democratic campaigns. Increasingly party leaders are citing the turmoil on Wall Street, and the parade of accounting scandals, as a new count in their indictment against Republican plans to partially privatize Social Security by allowing workers to divert part of their payroll taxes into individual investment accounts.

Most broadly, Democrats are trying to paint the White House and congressional Republicans as too close to the corporate executives now accused of fraud. In many campaigns, Garin said, the overall message will increasingly focus on ensuring “that corporations treat consumers, workers and investors fairly, rather than plundering the economy.”

A new ad for Sen. Tim Johnson (D-S.D.), who is locked in one of the nation’s closest Senate races against Republican Rep. John R. Thune, may prefigure a trend. As Johnson’s campaign criticizes Thune over his support for a House corporate reform bill less stringent than the Senate version, the ad declares: “Tim Johnson believes guilty corporations should be held accountable for their actions.”

The prospect of Democrats, who traditionally portray themselves as the party of the “little guy,” auditioning for the role as protector of the investor class underscores how much the trend toward mass participation in the stock market is reshaping the political environment.

Zogby and other analysts say the anxiety over the stock market is the key factor in growing gloom about the overall economy and the country’s direction.

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Optimism Has Faded

Polls in recent weeks show a sharp deterioration in voter assessment of the economy, even though, as Bush now repeatedly stresses, the gross national product grew sharply in this year’s first quarter. In a CBS/New York Times poll released last week, Americans split 49%-49% over whether the economy was doing well or poorly; that’s a sharp drop just since May, when two-thirds of Americans said it was doing well.

These concerns are puncturing the bubble of optimism that formed after the Sept. 11 terrorist attacks. That’s evident in the measure that many political operatives watch above all: the share of Americans who think the country is moving on the right track.

For most of the period since Sept. 11, a majority of Americans have said the country is on the right track. But that number is falling precipitously: In the latest McInturff survey, just 37% of Americans said the country is on the right track. What’s happened, he said, is that traditional economic concerns are reasserting themselves in shaping voters’ assessments of the country’s direction.

If this gloom lasts through this fall, the election could prove more tumultuous than has seemed likely until now, analysts in both parties agree.

Mitch Bainwol, executive director of the National Republican Senatorial Committee, said the increasing pessimism is most likely to hurt congressional incumbents in both parties.

But Democrats remain confident that voters will follow the traditional pattern in midterm elections of taking out dissatisfaction with the country’s direction on the party in the White House. “This is very much the kind of thing that has the potential to transform races,” Garin said.

Persistent gloom is also likely to change Bush’s position over time. McInturff’s research shows that historically the president’s job approval rating runs about 20 percentage points ahead of the number of people who think the country is on the right track.

With his post-Sept. 11 glow, Bush has been beating that precedent: In the latest McInturff survey, his approval rating is 65%, a full 28 points higher than the right track. That “bonus” is likely to erode over time, McInturff said, and unless the sense of optimism improves, Bush’s approval rating may drift down toward 60% or below.

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Times staff writers Edwin Chen, Lisa Getter and Richard Simon contributed to this report.