Bush's Economic Club Speech
Jude Wanniski
September 9, 1992


The White House is now playing down President Bush's speech to the Detroit Economic Club tomorrow at noon after earlier touting it to reporters as a major event. Budget Director Richard Darman, who is in the middle of Jim Baker's strategy-plotting team, is telling people there will be nothing new in the speech by way of policy initiatives. That may bother the policy wonks, but it's fine with me. I've urged that the speech focus on philosophy and direction, with Texas-sized objectives that stretch into the Twenty-First Century and with clear emphasis on entrepreneurial capitalism as the way to get there. People who have seen an early draft tell me that's pretty much what it is. Indeed, one of the people who has worked on the speech called me this morning to simply tell me that he thinks I will like it very much, precisely because it is the broad canvass of domestic and foreign economic philosophy that will guide the campaign in the critical weeks remaining. Its architects know how important this is, or they would not be following it up with President Bush on all three TV networks tomorrow night, giving a five-minute economic message that encapsulates the themes.

It's the only thing that could begin to turn around this election for the President. Evans & Novak report today that while the gap is closing in their Electoral College survey, with Bush picking up 76 electoral votes since the Houston GOP convention, he still trails badly, 265 votes to 159. California's 54 votes and New York's 33 seem hopelessly out of reach, and Pennsylvania's 23 may also be, according to E&N. If the election were held today, they posit the GOP might lose six Senate seats that are now in jeopardy and fall below 40 seats in total. The election will be decided in the last two weeks, though, which is when voters get serious in their calculations. If the electorate likes the theme it hears from the President tomorrow, and sees that theme holding together throughout the entire campaign effort, it could swing back in a big way. The kind of mindless balance-the-budget TV spots that the Sam Skinner White House okayed before the Houston convention can't be allowed near the campaign. The President's stump speeches, his press conferences, his radio and TV commercials, his debates with Clinton, have to be shaped by the positive growth picture he paints tomorrow, or the voters will not take it seriously.

Baker's team has to think beyond winning re-election if it is to win re-election. Until Baker showed up, the White House and the Bush-Quayle campaign staffs were so demoralized by dreadful polling results that they didn't give a moment's thought to the Congressional races. As The Wall Street Journal reports this morning, the "gridlocked" divided government which the President complains about may be contributing to his problems, as voters are being persuaded to turn both branches over to the Democrats in hopes of getting something accomplished.

I began writing about the divided government in 1977 and have come to believe the electorate elects Republican Presidents and Democratic Congresses because it does not trust the GOP on budget policy and does not trust Democrats on tax policy. It correctly fears that if the GOP were given Congress, it would savage the social support system built up over generations in a Hooverian dash to cut the budget deficit. In 1980, it rewarded the GOP with the Senate, because Ronald Reagan put such heavy emphasis on economic growth and a supply-side income-tax cut, downplaying the kind of stringent budget policy that appeals to the corporate elites. The voters were right to hold back the House, as the corporate elites co-opted Reagan, via David Stockman (and others in the White House whom I will not name), into deferring the tax cuts and going after spending, along with crippling monetary deflation -- a process that produced the harsh and unnecessary 1981-82 recession. In 1984, Reagan ran for re-election without seeking a clear mandate for further economic growth reforms. The tone of the campaign was dominated by Old Right budget balance themes, which helped the Democratic Party reignite the black vote in a manner that took back the Senate.

As hopeless as it seems, I still think President Bush can win back the Senate along with re-election if he plots his course along these lines. He must not only reaffirm his commitment to economic growth via reduced taxation of capital, aligning himself with Main Street America, he must also advise the minority components of the Democratic coalition that he will be sensitive to the maintenance of the social safety net. The Bush budget ads that Robert Teeter put together from his focus groups prior to Houston were pure poison. If the President asks the people for help with a Congress to help him put the economy on a fast track, to double GNP in a dozen years, he cannot allow subliminal appeals to Hooverian austerity to creep into his message. It is correct to bash Clinton as a "taxer," but it is unnecessary and counter-productive to call him a "spender." It is optimal to argue that Clinton does not understand entrepreneurial capitalism, that his economic program would do nothing to produce a dynamic economy.

One of my clients had dinner with Clinton last night, in a small group at a Wall Streeter's home in Westchester. He told me this morning how impressive Clinton seemed, with intricate knowledge of technical matters involving policy in several industries. He was even familiar with developments relating to auto emissions in Mexico City that took place in recent weeks, in discussing NAFTA, the environment, and alternative energy sources. It's agreed by practically everyone that he could dance circles around George Bush when it comes to domestic policy detail. But then, Ronald Reagan didn't know a tenth of the facts and figures that President Carter knew about the government.

In fact, Clinton's weakness may be that he knows too many facts and figures about this Leviathan we call the Federal Government, as if he could get it to work with a screwdriver, a pair of pliers, and four years in the Oval Office. My client reports he asked Clinton last night how he planned to get the economy rolling without capital, and Clinton replied that he understood lots of capital would be needed. He rattled off his laundry list of tax incentives to accomplish that -- an investment tax credit, R&D credits, a 50% capital gains exclusion on new business for investments held five years. Asked about indexing capgains, he said he was definitely in favor of indexing. Why doesn't he talk about it publicly? Because, he said, it was already well known that he favors indexing. When my client said he did not think Clinton's ideas would carry the economy far enough, Clinton invited him to come to Little Rock for further discussion, as he is always ready to listen, he said.

I don't doubt that he is, but at this late hour his campaign is probably just as frozen on detail as President Bush's. The fact that he is so far ahead in the polls means he is even less likely to adjust ideas to fit economic nuances. His economic advisors are likely to remain in the back seat, with James Carville, his campaign manager, steering along the lines that have brought him this far already. Clinton's economic menu sounds okay to many businessmen because it has a moderate ring to it. And a host of Nobel Prize winning economists has given it a seal of approval. But there is no economic growth in the plan, with the exception of the capgains indexation he doesn't talk about, not because it is well known, but because Carville doesn't want to confuse the voters.

President Bush's big advantage that counts for something, over and above the "character" issue, is that he was actually in business, the riskiest of all businesses, oil exploration. He could dance circles around Bill Clinton in discussing the economics of wildcatting. He never talks about this because his speechwriters don't know anything about the subject and none of his handlers ever thinks that this lapse from his otherwise perfect record of public service is worth talking about. It's what the voters most want to hear from him, though -- the part of him that most resembles Ross Perot and least resembles Nick Brady. The gambler on dreams. The combined experience of Bill Clinton and Albert Gore has been entirely at the public trough, and no amount of earnest listening by either of them can match George Bush's hands-on capitalist insights.

This is the Bush we may begin to see tomorrow in Detroit, the Bush buried so far by his handlers and their polls and their focus groups, by his first four years, by his born-rich pals from the Northeast, by family values, and a quarter century of Beltway public service. If JBIII, his Texas buddy, has managed to liberate the wildcatter buried inside the President, George Bush will be back in business.