Bush fever may abate on economic realities

WASHINGTON, Nov. 4 (UPI) -- For many voters, the Nov. 2 elections were less about the economy and more about worries over terrorism as well as concerns about moral issues. But for many executives who put economic growth at the top of their voting agenda, Bush won their vote.

For big businesses and large-scale investors, times have certainly been not bad at all under Bush's first term in office, as the economy averted facing a long-term recession and started on a path to growth once again by last year. Moreover, they have benefited significantly from both the corporate and individual tax cuts pursued by the Bush administration, and would gain still further if --and in most likelihood, when-- those tax cuts are made permanent.

But even foreign investors, who don't gain directly from any tax cuts introduced by the federal government, have made clear that their man of choice was Bush and duly applauded his re-election.

"When there was nervousness across the world following the terrorist attacks of 2001, he worked hard to prevent the economy from collapsing by pursuing aggressive policies, and his ability to lead the economy is great," said the head of Japanese photocopying giant Canon Fujio Mitarai.

The Governor of the Bank of Japan, Toshihiko Fukui, meanwhile, said that given the fact Bush is entering a second term in office, the president should consolidate the policies he had pursued until now and ensure that the U.S. economy stays on a firm recovery path.

Indeed, for many economic policymakers outside the United States, officials in the Bush administration have been more favorable counterparts than those under Bill Clinton, as the Republicans have kept to their word about not getting too involved in the domestic affairs of other countries, at least on the economic front. As such, while Clinton officials were quick to tell Japan on how best to deregulate the banking system and reduce their non-performing loans, the Bush administration has refrained from making such comments, at least publicly, much to the relief of many Japanese government officials.

Similarly, the Bush administration has restrained itself from pressing China too aggressively to float its currency, despite considerable pressure from the U.S. business community to step up the rhetoric or even threaten to impose sanctions if otherwise. Such a laissez-faire stance by the United States certainly makes overseas businessmen be more comfortable, especially as there had been concern that a government headed by Democratic candidate John Kerry could be far more intrusive.

Nevertheless, not all investors are sharing the euphoria of a Bush win, even within the United States.

The chief economist at investment bank Morgan Stanley in New York, Stephen Roach, said in a note to clients that "now that President Bush has emerged the winner, his new administration will face the proverbial cold shower--a wake-up call that cuts through campaign rhetoric and focuses on the heaving lifting that now lies ahead."

"America will wake up after the election with the most daunting economic agenda it has faced in a generation," Roach said, pointing to the budget and trade deficits the administration must face, among other macroeconomic issues.

Indeed, even a former senior Bush White House economist was gloomy on what lies ahead.

"I am not sure that the economic policy priorities are entirely crystallized," said Glenn Hubbard, former chairman of the Council of Economic Advisors and current dean of Columbia University's business school in New York.

The director of tax policy studies at the Cato Institute, Chris Edwards, said that "Bush's fiscal priorities in his second term should e spending control and cutting wasteful programs to reduce the deficit," but at the same time, he endorsed the push to make tax cuts permanent as a means to bolster economic growth.