Soaring fuel prices and slowing job growth are presenting US President George W. Bush with a difficult choice: He can concede there are problems with his economic policies or insist the recovery is progressing -- and risk looking out of touch.
The first president George Bush -- this president's father -- lost re-election in 1992 in part because of a perception by voters that he was isolated from the concerns of average workers. The younger Bush has worked hard to show his engagement, traveling extensively to promote his tax cuts and other economic incentives.
But the recent spate of bad economic news threatens to undermine his message that the economy has "turned the corner" on jobs. Instead of turning a corner "our economy may be taking a U-turn instead,"asserts rival John Kerry.
With polls showing Kerry holding a clear advantage over Bush on the issue of creating new jobs, Democrats announced Monday that party leaders were heading for cities where Bush spoke last week -- in Michigan, Ohio, New Hampshire and Iowa -- to ask people whether they agreed America has turned a corner.
"If George Bush doesn't drop this new campaign slogan, he's in danger of becoming the new P.T. Barnum of American politics," Democratic National Chairman Terry McAuliffe said in a conference call with reporters.
Bush, meanwhile, is trying to hedge his bets -- insisting that the recovery is on track while his aides weigh a series of possible new economic campaign themes and initiatives for a second term, including tax code simplification.
"The economy is strong and it's getting better," Bush told reporters Monday in the Oval Office. "This campaign is going to be talking about visions, about how to keep the economic recovery going."
Part of Bush's dilemma is that economists are mixed on whether the recent spate of bad economic news is still the "soft patch" Federal Reserve Chairman Alan Greenspan identified in June or a harbinger of truly bleaker times ahead.
Recent reports have shown four months in a row of declining job growth, ever higher oil prices and a drop in consumer spending.
"The economy clearly has weakened. It's not clear why, and therefore it is particularly uncertain how the economy is going to perform between now and election day," said Mark Zandi, chief economist at Economy.com. "So Bush is taking a risk. But I don't know that he has a choice. The die has been cast."
The stimulative impact of Bush's policies may be wearing off after three years of tax cuts, low inflation and low interest rates. Skittish corporations are curtailing or putting off new hiring and investment. Possible terror attacks, conditions in Iraq and the close presidential race itself are adding to the economic uncertainty.
Even Greenspan's Federal Reserve, which pushed down interest rates to 40-year lows and held them there for months, can no longer help. It appeared poised to raise a key short term rate a quarter of a point yesterday, following a similar hike -- the first in four years -- in June.
"There are no policy tools left for Bush to use. He's taken his best shot," said Thomas Mann, a scholar at the Brookings Institution.
Bush remains on track to be the first president since Herbert Hoover to preside over a net loss of jobs.
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