What Can Bush Do?

The polls show that President George W. Bush is in big trouble. It is clear that he would like to run his campaign for reelection on his record of accomplishment, especially the war on terrorism, Iraq and building peace and democracy in the Middle East, and tax cuts and economic revival, something like Ronald Reagan did in 1984. The political problem is that it is not clear to people that things are better for them today than they were four years ago on any of these matters.

Both Iraq and Afghanistan have hit tough times and now provoke as much political opposition as support for the president. The August Pew survey finds that Americans now say that John Kerry could handle Iraq better than the president and Mr. Bush's lead on handling terrorism generally has been declining, with less than a majority now saying he can handle the matter better. Sen. Kerry has been very effective in using his military service to establish his credentials for fighting terrorism and has increased his standing by six percent as a result of his convention appeals, although the president still holds on to a narrow advantage on this one policy.

More ominously for Mr. Bush's reelection chances, the economic recovery appears to be sputtering. The July employment statistics were much lower than expected by the president's men, and the economic community generally, while the stock market has been erratic to declining, important in these days of widespread 401(k) ownership. The Pew poll found 52 percent of Americans disapproving of the president's handling of the economy and saying that they believe Kerry could do a better job with it. A majority of Americans think the country is moving in the wrong direction and disapprove of the president's handling of his job, while only 27 percent of swing voters think things will improve over the next year. Kerry has a narrow lead over the president in the recent Pew, Gallup and Zogby polls. No president has won reelection with public opinion numbers like these this close to an election.

Clearly, President Bush will have to do more than extol his record and promise more of the same to change these dispiriting dynamics. Such a strategy gives no mandate for a second term anyway, as even President Reagan learned to his profound disappointment after the 1984 election. The strategy did not work for the president's father either. Bush's advisors recently released their preliminary campaign plan for the number one voter issue, the economy. Called "America's Ownership Society: Expanding Opportunities," it proposes to lower tax rates on businesses and possibly a sweeping revenue-neutral overhaul of the tax code to broaden the tax base and lower income taxes. A presidential speech in the first week of August added the idea from his 2000 campaign to partially privatize Social Security as a new kind of ownership and President Bush even said a national sales tax to replace the income tax should be explored.

Some conservatives in Washington have greeted the initiative positively. Yet, aside from business, no ordinary person seems to get lower taxes as a result of the proposals. Taxes are only shifted about. Indeed, "broaden the tax base" has long been a liberal codeword for higher taxes. To broaden the tax base and at the same time to further lower income taxes-which are mostly paid by the upper middle class-would give Mr. Kerry the issue he needs to win the fifty percent of the population that pays little income tax but pays Social Security and sales taxes. Kerry has already jumped at the sales tax idea, which proposal would need to add elimination of the income tax to become a help to the president. Social Security privatization, which has much merit as a policy matter, will only exacerbate the existing concern among the elderly about the president's Medicare prescription drug law, which is highly unpopular among seniors. Apparently, Social Security reform appeals to young people, who have the lowest support for President Bush of any recent incumbent, but is very unlikely that such a present-oriented generation is going to vote on their retirement, so many years in the future.

The problem is what else can President Bush do? Even the decidedly pro-Bush National Review concedes that he has not given an effective speech in "more than a year." The centrist-conservative magazine sees no other possible winning strategy than a slogan of "securing the future," with "winning the peace in Iraq" and Social Security privatization the leading themes. Yet, these are precisely the issues on which Bush is losing after a year of trying his best. National Review supports Social Security reform (which it considers the "foremost" part of its proposal) as an indirect way to increase the number of people in the investor class that, in turn, will increase the number of Republicans, which will "make it easier to limit government in the future."

In fact, the number of investors has exploded in recent years and Republican fortunes have not increased with it. Stock market instability may even depress GOP support among new shareholders. And why should this lead to limited government in the future? As National Review admits, in spite of the "way the federal government has expanded under him," it has urged support of President Bush anyway so he could wage war effectively. Why would this tradeoff not be made in a second term too? National Review professes concern about the growth of entitlements but Social Security is peanuts compared to Medicare in unfunded liabilities. Yet, the Bush increase in Medicare drug spending of $16 trillion--compared to a total Social Security unfunded balance of only $10 trillion--was met with mild rebuke at best even by National Review. Why should anyone be convinced this would change in a second term?

It is critical to remember that President Bush's original Medicare prescription drug proposal was sound. It would have reduced long-term financial obligations by allowing choice between the present Medicare system and a new more economical one with attractive drug coverage. Providing choice rather than only giving free, new goodies was too much for the Republican Congressional leadership, so they demanded that Mr. Bush offer a new expensive program on top of the old, which he then agreed to do. Why would not the same dynamics work for Social Security reform in a second term, with the entitlement problem ending up even worse?

No, the only way to limit government is to limit it, beginning by saying that cutting or at least stabilizing government spending is at least one goal of a second term. Any serious limited government conservative must demand that a Bush Social Security privatization be accomplished without increasing its long-term obligations. If he does not promise to veto any bill that increases such debt in his platform or in his nomination speech, one can simply assume that the $70 trillion entitlement debt that threatens to bankrupt the United States in a score of years or so will take place even sooner with a second Bush term. This is not unprecedented. The conservative democratic politicians of Weimar Germany were too afraid of the political repercussions to make the necessary reforms and it all collapsed under the weight of bankruptcy and inflation. We must hope the Republicans are not so cowardly but it would be reassuring to have them pledge in the platform not to increase liabilities as they pursue Social Security reform.

Could the president go further? He needs something different, unique. His present platform is not only flat, the new proposals by themselves probably would be a net political drag on his reelection. Perhaps getting serious about what everyone quietly knows is a coming collapse of entitlements that threatens the whole economy just might appeal to the few voters who tell the Pew interviewers they are still open to appeals by the candidates. Mr. Bush has already proposed a freeze on discretionary domestic spending but no one knows about it. He should get serious about controlling spending to avert a crisis and call for a Budget mechanism to enforce caps on all spending, including entitlements. He should propose a delay in implementing the already unpopular Medicare drug proposals that have not gone into effect, saying he has concluded the bill is too expensive and will make matters worse.

Would an appeal for fiscal soundness be political suicide? There is no question that explosive government spending is the greatest threat to America's future prosperity. The government trustees guarantee bankruptcy unless something is done about entitlements. We do know that if President Bush does not propose something dramatic, the polls prove he will lose. This type of seriousness on the president's part just might overcome voters' concerns about his flexibility and his prudence, shown in the polls, and emphasize his strong suit, which is leadership. If he does not win, unlike his father, at least he would have the satisfaction that he had the courage to propose what was required and that he would be proven right by history.

By Donald Devine, Editor.