Economy staggers, but war may still buoy Bush

It is almost a political cliché: Now that President Bush has ousted Saddam Hussein, he must focus on the lackluster economy to avoid his father's fate.

That is true, but not the whole truth, say political analysts and Republican advisers. The world of 2003 is different from the world of 1991, when the first President Bush booted Iraq out of Kuwait, scored a 90 percent approval rating, and then appeared unconcerned about domestic issues and lost reelection. By 1991, the cold war was over and foreign threats seemed distant.

Now, as the younger Bush's team lays the groundwork for his reelection campaign, national security is once again just as important as the economy - marking a return to the political calculus of the cold war.

"Security" - both national and economic - will be the key issue of the 2004 election, said Karl Rove, the president's top political adviser, last week. "When this war ends, we still will have a very dangerous enemy in the form of international and transnational terrorism," Mr. Rove told the American Society of Newspaper Editors (ASNE) convention.

"It's not like it's going to be, 'Iraq is over. America can withdraw within itself again.'"

Unlike the last war against Iraq, which was a discrete episode, the current war is framed as part of the larger war on terrorism - an issue that won't vanish anytime soon.

And so the current President Bush - with the Sept. 11 attacks and wars in Afghanistan and Iraq under his belt - begins the campaign with a built-in advantage over the Democratic nominee, even if he or she has direct national-security experience, such as military service, analysts say.

"Now the slogan ought to be 'It's not just the economy, stupid,'" says Larry Sabato, a political scientist at the University of Virginia in Charlottesville. "We have returned to the days before the fall of the Berlin Wall, when for 40 years national security was as important as the economy in predicting election results."

Of the three major election predictors - the economy, national security, and scandal - only two apply, so far, as the Bush White House has avoided the taint of scandal. There is also no sign that Bush will be challenged for the Republican nomination.

Still, this White House is taking no chances on 2004. Even since the start of the Iraq war, Bush has regularly raised the economy and other domestic concerns, such as Medicare and education. Tuesday, he signaled that he'd be willing to take less than his proposed $726 billion in tax cuts over 10 years, stating, "We need tax relief totaling at least $550 billion to make sure our economy grows." That's the figure approved by the House. Over the next two weeks, 25 administration officials will fan out across the country to promote Bush's economic plan. Wednesday, Bush speaks on the economy in St. Louis.

Meanwhile, planning for the 2004 campaign continues apace, as Rove travels around the country speaking at fundraisers, giving speeches, and quietly offering advice to Republicans on how to frame discussion on the war and domestic issues.

The Bush White House has two sets of memories to keep hubris at bay: the elder Bush's failed reelection bid and the current president's political near-death experience in 2000, when he lost the popular vote after his team predicted a big victory.

From the memorable moments of the first Bush presidency, political observers still recall this startling 1991 quote from chief of staff John Sununu: "If Congress wants to come together, adjourn, and leave, it's all right with us."

In contrast, White House spokesman Ari Fleischer arrived at Monday's press briefing armed with several paragraphs' worth of recent congressional action to tout - from passage of the wartime supplemental appropriations bill, which Bush will sign Wednesday, to passage of the National Amber Alert System, aimed at protecting children.

Of course, the first President Bush faced a Congress controlled by opposition Democrats, while the current president has a Congress controlled by his own Republican Party. And for now, Bush can go along with the view that the GOP is working, more or less, from one playbook - even though a crucial handful of Republican senators balked at Bush's proposed $726 billion tax cut and have a commitment from an influential GOP senator to limit the tax cut to $350 billion.

If Bush finds his party's moderates too balky, effectively denying him control of the Senate, he may resort to a new version of "triangulation," turning the House against the Senate if it won't pass a big enough tax cut.

"He's a good politician," says Stephen Wayne, a government professor at Georgetown University. "He has the bully pulpit."

The bottom line, says an aide to a Republican senator who opposes the full tax cut, is that Bush truly has to address the sluggish economy, which threatens to dip into a second recession.

"National security is more critical than in '92," says the aide. "But the Achilles' heel of this administration is its perceived preference for the wealthy, which then becomes exacerbated if there's a weak economy."

And even if Bush can score points on Iraq against the Democrats, who are deeply divided over the war, the Democrats can collectively pound Bush over his domestic agenda. Bush knows the best defense is a good offense: At his speech before ASNE, Rove highlighted the economy, Medicare and health care, education, and welfare reform. He also predicted a "close, competitive" race in 2004.

For now, the war seems to have given Bush a lift even on economic matters. According to the latest Christian Science Monitor/TIPP poll, consumer confidence in early April jumped by more than 7 points compared to a month earlier. The poll's economic-optimism index went from a slightly negative reading of 48.8 in March to a modestly upbeat 56.4 in April.

Other polls show Bush's approval ratings getting a boost into the 70 percent range, increasing even in his handling of the economy. The latest Wall Street Journal/NBC poll shows that a plurality of Americans approve of how Bush is managing the economy, 49 percent to 42 percent.

But despite the polls, this Bush White House won't rest easy. Bush's aides know that as memories of the Iraq successes fade, and the US gets into the trickier process of trying to establish a democracy in Iraq, Americans could slip into a "what have you done for me lately" attitude. And, analysts agree, it's way too early to predict the outcome of the 2004 election.