A Plan for Recovery of the Iffy Economy

Bruce Chapman and Stephen C. Meyer
Seattle Times, December 28, 2000
Discovery Institute

Remember the presidential campaign--just six weeks ago? The "booming economy" was supposed to be Al Gore's ace in the hole. All summer and fall, the Clinton-Gore administration resisted Republican efforts in Congress to cut taxes, while candidate Gore tagged George W. Bush's tax cut plan "a risky scheme."

Meanwhile, Federal Reserve Chairman Alan Greenspan dismissed suggestions to reduce interest rates to head off a recession. Even while warning of a downturn himself, Greenspan declined the chance to reduce interest rates to mount a revival. The stock market swooned.

The record books may well show that we already are in the early stages of a recession. There have been untold dollars in stock portfolios devalued, making 2000 the worst year in the market in two decades.

Retail spending over Christmas and charitable giving are turning down. Yet Democrats still oppose broad-based tax cuts and the Fed has refused to act until its next meeting at the end of January--a week and a half after Bush the Younger is inaugurated. At that point the misery on Wall Street may be felt in unemployment lines on Main Street. Bush himself may begin to wish for another recount in Florida.

Taxes, energy and Justice

More likely, the new president will want at once to move a comprehensive economic package to the top of his agenda. The economic downturn is certainly not his fault, but it just as certainly will become his problem. It could also be his opportunity for broad reforms if his program encompasses social and energy policies as well as monetary and fiscal measures. Such a program would include:

Avoiding the Bush recession

Given the closeness of the election, Bush also is now under tremendous political pressure to act in a bipartisan way. Yet he must remember that in a polarized, ideological climate there are two types of bipartisanship. In one, members of both parties in Congress cooperate with presidential initiative to benefit the nation. In the other, the executive is forced to capitulate to congressional obscurity, undermining his leadership and subverting his agenda. Bush can use his new bully pulpit to establish the urgency of the current economic situation and then enlist Congress to address his agenda before others are set.

Polls suggest that many of Bush's specific economic policies already enjoy popular support. A recent Fox News poll shows that 61 percent of the public favors his tax cut plan. Many polls have shown a 60 percent consensus favoring smaller government and fewer services. Others show his Social Security plan has achieved considerable acceptance, while Gore-style environmentalism remains politically unpopular--especially during cold winters and energy shortages.

If Bush fails to take the initiative, he will have to settle for a form of minimalist, least-common-denominator bipartisanship that will be imposed on him. But if the new president presents a comprehensive economic package at once, he stands to gain the mandate that his opponents claim the close election denied him. And he will have set the country on course for a much better planned economic expansion than the one that now appears to be ending.

Bruce Chapman, president of Discovery Institute in Seattle, ran the Office of Planning and Evaluation in the Reagan White House. Stephen Meyer is a Senior Fellow of Discovery Institute and professor of philosophy at Whitworth College in Spokane.