CAN THE DEMOCRATS HAVE A DO-OVER?

Economy flashes more signs it has turned the corner (MARTIN CRUTSINGER, July 28, 2003, Associated Press)

"We think almost all of the child tax credit payments will get spent," said Sung Won Sohn, chief economist at Wells Fargo in
Minneapolis. "Those checks will be arriving just when families will need the money for back-to-school items."

By giving Americans more disposable income, the tax cuts are also expected to help lift consumer confidence. Analysts believe that Tuesday's report on consumer confidence could show a gain to around 85 for June, up from 83.5 in May. That would be the highest reading since last fall and an indication that consumer optimism is rebounding from the jittery days before the Iraq war. [...]

David Wyss, chief economist at Standard & Poor's in New York, said he expected the sub-par GDP growth of the past nine months will be replaced with much stronger growth of around 4 percent in the second half of this year. Many analysts believe that growth in the first half of next year will hit 4.5 percent or better, given the kick expected from the new tax cuts.

Even with growth improving, it will still take time to make much of a dent in unemployment rate. Mark Zandi, chief economist at Economy.com, said the country isn't likely to see a significant rebound in employment until next year. But the improvement should still come in time to give Bush a boost in his 2004 re-election campaign.

Republicans did something foolish in 1993: they argued that the Clinton tax increase would lead to recession, despite its being vastly outweighed by the inevitable post-war boom that had to follow the Cold War. This was not quite as foolish as George Bush Sr. passing a tax increase despite that coming boom, but it did end up allowing Mr. Clinton to take some credit for the growth of the latter '90s and particularly for the eventual balanced budget, even though it was exclusively a function of the cut in defense spending and the growth cycle. The lesson that should have been learned by both parties is that you can't fight the laws of economics with partisan political rhetoric.

The Democrats seem not to have been paying attention to the lesson, as they have spent months draping the economy around President Bush's neck, making him solely responsible for it, even as he's cut taxes repeatedly, the Fed has cut interest rates repeatedly, and Americans' sense of personal security has recovered in the wake of two successful post-9/11 wars. Whether he deserves it or not, they've created a political environment in which Mr. Bush will get exclusive credit for the coming period of robust growth. Any chance they had to keep the '04 election competitive, and there was never much of a chance, was squandered as the Democrats for some reason decided to paint themselves into the same corner that Republicans occupied at the end of Bill Clinton's first term. Not too bright. Posted by Orrin Judd at July 28, 2003 2:50 PM