With the November presidential election steadily approaching,
President Bush was eager to highlight recent improvements in the
economy during his State of the Union address Tuesday.
The head of state sought to convince Americans that the series
of tax cuts he has implemented since his election has turned the
economy around.
“The economy is getting better; the tax relief you passed
is working,” Bush said in his address.
Since he first proposed cuts in 2001, Bush has reduced taxes
three times, with the most recent cutback occurring during the
summer of 2003. This plan, he said, resulted in growth in the third
quarter of 2003 unseen in almost 20 years.
Traditionally, the economy has been a make-or-break issue for
incumbent presidents seeking re-election.
“Past experience suggests it matters more than anything
““ at this stage, only a terrorist attack might trump its
importance,” said Matthew Baum, assistant professor of
political science.
Although presidential approval ratings used to match inflation
rates, Baum said today, they tend to be driven by unemployment
figures. Bush’s current approval rating is approximately 58
percent, according to an ABC-Washington Post poll taken Sunday.
But while Bush credited his tax reform program for boosting
economic performance, Anderson Forecast Director Edward Leamer said
the president may not necessarily have influenced improvement in
the economy.
“We would describe this as a return to normalcy ““ a
natural return to normalcy,” he said.
Leamer added that the economy has not recovered, clarifying that
a recovery is defined by an abnormal growth. True predictors of
growth, he said, are the increases in the number of jobs
available.
Nonetheless, economics professor Gary Hansen said the tax cuts
may have helped improve the economy, along with lower interest
rates, which together have encouraged greater spending and
borrowing.
Leamer maintained that Bush’s biggest problem remains the
job market, which has experienced normal but not supernormal
growth.
“He has the worst record with job formation of any
president,” Leamer said. “It’s not really his
fault, but it’s certainly an issue Democrats will look
at.”
The economy experienced strong growth in the third quarter, but
analysts were disappointed in December when the economy only added
a paltry 1,000 jobs.
The unemployment rate dropped to 5.7 percent, the lowest level
in 14 months, but this was mainly due to thousands of potential
workers giving up the search for jobs ““ thus excluding them
from the work force.
If job figures do not turn around, Baum said the president may
find himself with a weakness which could jeopardize his re-election
chances.
Bush may attempt to create programs which stimulate job creation
in the coming year, especially in healthcare and biotechnology,
fields he attributed with job growth.
Still, it is hard to predict how the public will perceive the
state of the economy prior to election, Baum said.
“The bottom line is that the people will credit the
president when things go right, and he will take the blame when
things go badly,” he said.
With reports from Daily Bruin wire services.