Bush Steps Up Defense of His Economic Policy

President Bush made an impassioned defense of his economic policies Wednesday, traveling to a state considered crucial to his reelection campaign to confront what polls say is his greatest political vulnerability.

In a speech to a convention of female entrepreneurs, Bush argued that the economy was on the mend and that the unemployment rate was no higher now than it was, on average, for the previous three decades.

“Inflation is low. Interest rates are low. Manufacturing activity is up. Home ownership is at an all-time high,” Bush told the audience of 1,000 at the Cleveland Convention Center. “The unemployment rate today is lower than the average rate in the 1970s, 1980s and the 1990s.

“Thanks to our productive workers, thanks to business leaders such as yourselves, the United States of America is the fastest-growing major industrialized economy in the world.”

Ohio has lost more than 225,000 jobs since Bush took office, and the state unemployment rate has risen from 3.9% to 6.2%, above the national rate of 5.6%.

The state’s steep job losses are a key reason it is considered one of the toughest battlegrounds of the upcoming election. In 2000, Bush won Ohio by a narrow margin, and campaign workers in both parties have taken to referring to it as “ground zero” or “this year’s Florida.”

This was Bush’s 15th visit to the state as president -- a disproportionately high number for a state of its size. His last trip was in January, when he visited Toledo the day after his State of the Union address to promote his job-training proposals. Previously, Bush has not dwelled on the plight of the unemployed. But in Cleveland, he took pains to express sympathy for jobless Ohioans, saying he understood they were going through a “transition.”

“Manufacturing communities like Youngstown and Cleveland have been hit especially hard. I understand that,” Bush said. “I know there are workers here concerned about their jobs going overseas. I share that concern. I know they’re wondering whether they’ll ever be able to find new skills necessary to fill the new jobs of the 21st century. I understand that.”

Bush encouraged the unemployed to retrain. “If you become a more productive citizen, you’ll make more money. Better productivity, better skills means higher pay,” he said.

Bush portrayed the current unemployment rate as below the national three-decade average. Hundreds of thousands of workers have given up looking for jobs in recent months and so are not counted toward the unemployment rate. In February, 392,000 Americans gave up looking for work.

Bush referred only in passing to the anemic job-creation numbers that have sapped his support in states such as Ohio, whose economies are heavily dependent on manufacturing.

Instead, at greater length than in the past, he offered an explanation for the country’s economic woes. He primarily blamed the Sept. 11 terrorist attacks, combined with economic conditions that predated his presidency and a loss of confidence from corporate scandals and the Iraq war. And he said the economy’s current low rate of job creation was primarily a result of increases in productivity.

“In Ohio, you know firsthand the effects of economic change,” Bush said. “Manufacturers are more productive, so they aren’t creating as many jobs as they used to.”

Bush’s decision to visit Cleveland was especially welcome to Ohio’s congressional Republicans, many of whom have been telling the White House that the president needs to acknowledge more explicitly that the state’s economy has been slower to recover than the rest of the country. They also have urged him to defend his economic policies more aggressively.

“Anybody not talking about jobs in Ohio is not going to be listened to,” said Rep. Steven C. LaTourette (R-Ohio). “People are looking for reassurance this thing has turned the corner, but we are not there yet.”

He noted that recent polls in Ohio found that 60% of those surveyed believed the country was moving in the wrong direction. “That’s not a good number. That splashes up on people who are incumbents,” LaTourette said.

Rep. Patrick J. Tiberi (R- Ohio) said the Democratic advertisements that blanketed Ohio before the party’s recent presidential primary have had a powerful negative impact on voters’ view of the economy.

“It has taken a cumulative toll,” Tiberi said.

Bush’s arguments made little headway with at least one Republican. Elaine Haasz came to the speech in part because she hoped it would help her decide whether to vote for the president. As of now, she said, he does not have her vote.

“Some of the things he said I don’t think are true, like the economy is coming back, “ said Haasz, 54, manager of a Ford dealership in Barberton, about 50 miles south of Cleveland. “I don’t see it in my sales.”

In his speech, Bush lambasted his political opponents for responding to America’s economic challenges with what he described as calls for “economic isolation” and higher taxes. He did not refer by name to the presumptive Democratic presidential nominee, Massachusetts Sen. John F. Kerry, who despite the president’s assertions voted for NAFTA and is on record as supporting trade agreements as long as they are “fair” to American workers.

“Some politicians in Washington see this new challenge, and yet they want to respond in old ways,” Bush said. “Their agenda is to increase federal taxes, to build a wall around this country and to isolate America from the rest of the world. They never get around to explaining how higher taxes would help create a single job in America -- except maybe at the IRS.”

Bush also highlighted the role of small business in the economy, saying that tax cuts on the upper-income brackets were aimed at helping small businesses, which commonly pay taxes at individual rates and generate most new jobs in the economy.

“We lowered tax rates on everybody who paid taxes,” Bush said. “We didn’t play the old political game of winners and losers in the tax code.”

Kerry has proposed rescinding Bush’s tax cuts on the top two income brackets. According to the IRS, 88% of small businesses earn less than $100,000 a year, keeping them well below the top two brackets.

The president described small businesses as the engine of job creation, but they appear to be backing away from hiring.

A recent membership survey by the National Federation of Independent Business found that small businesses were retreating from plans to hire more staff. The share of small firms planning to hire in the next three months fell from 17% in January to 13% last month, the trade group reported on Friday.

Times staff writers Janet Hook and Edwin Chen in Washington contributed to this report.