A Peace Of the Action

It was "the economy, stupid."

Our good president, Mr. Bill Clinton, came within a hair trigger, last week, of shooting himself in the foot with his own good advice.

By holstering his cruise missiles, the ones pointed at Iraq, he not only took a forceful step towards peace, he also allowed his own economy to dodge a potent bullet.

Think back to the reminder that hung on the wall at Clinton headquarters during the 1992 election campaign: "The economy, stupid."

It defined the election issues with glaring simplicity and helped win Clinton the election against George Bush. But it might have lost him the home front in a war with Iraq.

The American people are just starting to get used to an economy that was once called "Goldilocks" (Everything was just right) and has now been promoted to Nirvana - almost too good to be true.

Take a look at four items in this week's Work & Money section. Flip to Page B2 where, in the upper left corner, Keeping Track notes a sharp rebound in consumer confidence last month. And it reports that inflation is still missing in action.

Drill down to the lower right corner for the latest on oil prices, some 30 percent lower than last year.

Yessir. This is great news, and all of it could have been a casualty of war with Iraq.

Consumer confidence literally bounced when war looked less likely, and confident consumers go shopping - driving two-thirds of the economy. If they lose that confidence, they lose that drive.

Inflation feels so good in part because oil prices are so low, and they would would have certainly spiked higher with a war's potent threat to Mideast oil.

Now look over to the left. David Francis' column talks about who's going to do what with how much of a US budget surplus. The prospect of a deficit has virtually vanished from the radar screen.

A war could have cost an estimated $1 billion a day, maybe more, sending much of that surplus up in smoke.

Finally, keep in mind that President Bush and the alliance waged war with Iraq at least in part over economics. Iraq was poised to choke the oil pipeline that ran straight from Kuwait and Saudi Arabia to the US and world economies.

This time around, Saddam Hussein threatened no one's economy except his own, which may help explain why so few of the world's nations answered the call of the US saber-rattle.

Ironically. it was Mr. Bush who rode a victorious war horse into the 1992 election, leading a nag of an economy. But it was candidate Clinton who rode that nag to the White House.

Need more convincing? Work your way back to the money. The Market Monitor on Page B2 shows a stock market that shot off like a rocket when peace broke out. It even blew past a dour Alan Greenspan, the Federal Reserve chairman, who cautioned this week about inflationary pressures in the economy.

Virtually every important measure of the US stock market blasted through a series of record highs last week.

Which takes us to the real business of America: figuring out what baby boomers will do with their money. Read Jim Tyson's excellent story on the new Roth IRA. It's a gift from Congress, and, more important, another way for boomers to bestow more bucks to the bulls starting to stampede again along Wall Street.

* Comments? mccormickl@csps.com