Commentary: Gospel has bad news for Bush

By MARTIN SIEFF, UPI Senior News Analyst   |   June 27, 2002 at 3:45 PM
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WASHINGTON, June 27 (UPI) -- Economic memo to President George W. Bush from the only book it usually seems he ever reads: "Oh ye hypocrites, ye can discern the face of the sky, but can ye not discern the signs of the times?"

The dollar has hit a two-year low against the euro. It is down by 10 percent against it since January and has also fallen 8 percent in that time against the yen. The U.S. trade deficit is the highest of any nation ever recorded in the history of the world.

The Bush administration has just approved an absurd $250 billion farm aid bill that gives new meaning to the term "pork barrel politics." It has totally squandered the healthy fiscal surplus it inherited from the Clinton administration and remains committed to its catastrophic and nonsensical, incompetently structured $1.5 trillion tax cut. It even has the gall to try to blame Congress for its free-spending woes although Republicans control the House of Representatives, which has federal spending authority.

What, therefore, are the economic prospects for the U.S. economy? That is not hard to work out. Once again, the words of Jesus recorded in the 16th chapter of the Gospel according to St. Matthew provide some useful answers. "In the morning, it will be foul weather today, for the sky is red."

The Bush administration has not even abandoned any pretense at following traditionally prudent Republican economic policies. It never had them in the first place.

No GOP president since Dwight D. Eisenhower has maintained the tariff protections that built the U.S. industrial colossus for a century under every previous Republican president starting with Abraham Lincoln. Gerald Ford was the last Republican president who tried to seriously hold down government and federal spending, and he paid for his wisdom and courage by being denied election in his own right in 1976.

But the current -- and no doubt last -- President Bush has also ignored -- either from design or more likely genuine ignorance and incompetence -- the unconventional but remarkably successful strategies President Ronald Reagan used 20 years ago to prevent his own soaring trade and federal spending deficits from proving catastrophic.

Reagan recognized that the dollar had to stay strong and international investor confidence in the domestic U.S. economy had to stay high to maintain prosperity. That was the only way he could get away with writing

what Democratic Sen. Lloyd Bentsen of Texas in 1988 accurately called his "blank checks" of hundreds of millions of dollars a year pumped into the economy to stimulate growth and demand. (Bentsen later proved a highly successful Treasury secretary under Bill Clinton.)

To maintain those two crucial factors, Reagan proved decisive, courageous and persistent. He allowed unemployment to soar in the recession of 1981-82,

and candidly told his advisers and intimates that he would not be surprised to be only a one-term president as a result.

Consider the contrast with the current Bush administration. It is wildly shoveling inflationary demand into a sluggish, fragile economy to maintain

the illusion of recovery, confidence and growth at least through the midterm congressional elections in November.

That would be quite bad enough if one had the confidence that that this dangerous, irresponsible policy was motivated by cynical competence. But on the contrary, all the indications are it reflects instead a genuine, sincere stupidity at the highest levels of decision-making.

No one outside the White House and the personal office of Treasury Secretary Paul O'Neill doubts that O'Neill has proved a hapless motormouth in his position and that he no longer retains any Wall Street confidence whatsoever.

Alan Greenspan's legendary accomplishments are indeed rooted in the legendary past. He is old and tired and has neither new ideas nor the energy and confidence left to impose unpopular but sound old ones. If the principle of term limits fleetingly -- but no longer -- beloved of House Republicans were applied to him, he would have been gone long ago.

As for the current Council of Economic Advisers, it is almost universally acknowledged among economists and fiscal analysts to be the weakest and most incompetent in memory. Its staff has the mindless boosterism of Sinclair Lewis's George F. Babbitt. They know only two mantras: "High taxes bad, low taxes good," and "Regulation is bad."

This CEA's members mindlessly played cheerleader to the president's beloved and catastrophic tax cuts plan before 9/11, and they have not raised a whisper to suggest revising them since. As a result of all this myopia, even the fundamentally flawed, chronically unsound euro now looks good against the dollar.

A June 21 analysis in the Business Section of The New York Times soberly warned, "A steady fall in the dollar could put upward pressure on inflation by pushing up import prices." We were warning of that danger more than a year ago in a UPI Analysis. It is cold comfort to be proven right.

The Economist magazine in London, hardly known for any bearish tendencies, reports in its June 13 issue that the Dow Jones industrial average has fallen in 10 of the past 13 weeks. It describes O'Neill as "cheerleader-in-chief" and dismisses his optimistic assessments as "wholly wrong."

The Economist has also -- belatedly -- come to share the long-documented assessment of UPI's Business Editor and Bear's Lair columnist Martin Hutchinson that Wall Street stocks are still chronically overvalued. "In so far as they ever made sense, such valuations assumed a speedy return to the extraordinarily high profit claims of the 1990s. That assumption seems increasingly far-fetched."

Against these ominous assessments all Bush and his boosters can offer is an increasingly frenzied hunt for a sign, any sign, that things are really better than they seem. According to St. Matthew, Jesus had an answer for them, too. "A wicked and adulterous generation seeketh after a sign; and there shall no sign be given unto it, but the sign of the prophet Jonas."

The Bible relates that Jonas, or Jonah, was three days and three nights in the belly of a great fish. As a consequence of the policies of Bush and his advisers, the American people may be swallowed in the belly of a major depression for a lot longer than that.

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