To the Republicans, the president's handling of the economy is equal to Ronald Reagan's - and better than Bill Clinton's when he sought reelection in 1996. The Democrats call President Bush a modern-day Herbert Hoover, often portrayed as a heartless president who failed to grasp the dynamics of the Great Depression.
Reagan or Hoover?
The economic debate over Mr. Bush's stewardship of the economy is one of the central themes of the campaign - one prominently on display Wednesday night as the Republican National Convention makes its case for an "ownership society."
The sparring will probably come down to two fundamental issues: jobs and taxes. The president believes his tax cuts rescued the economy from a recession that emanated from the Clinton administration. His critics say those tax cuts resulted in giant budget deficits where there used to be large surpluses. On jobs, the president points to an unemployment rate that is as low as Mr. Clinton enjoyed in 1996, while his critics say new job creation has lagged for the past four years.
"There are a lot of competing truths out there," says Robert Hormats, vice chairman of Goldman Sachs International.
Partisans are simply selecting the sides that fit their stories. Many economists, for example, say the Bush tax cuts helped stimulate a struggling economy but - if made permanent - will significantly widen federal deficits for years. Job creation under Bush is tepid, but economists don't generally pin the blame on his policies.
Compared with 1996, for example, the economy is in better shape in terms of the unemployment rate, the inflation rate, home-ownership gauges, and consumer confidence.
"I feel very good about the direction of the economy," says Ed Gillespie, chairman of the Republican National Committee.
Wednesday night, Republicans will make that case with speakers including Elaine Chao, secretary of Labor, and two female small-business owners: Lurita Doan of New Technology Management and Patricia Pliego Stout of the Alamo Travel Group.
However, Jason Furman, an economist with Sen. John Kerry's campaign, says Clinton created 10.2 million new jobs in his first term while Bush has lost 1.1 million. He calls Bush "the worst jobs president since Herbert Hoover."
That comparison might be a stretch: According to the National Bureau of Economic Research, the peak unemployment rate during the Great Depression was 25.2 percent. Under Bush, employment growth is down 0.2 percent, the first time that's happened since the Eisenhower years. However, the average unemployment rate, at 5.5 percent, is lower than the previous 50 years (5.7 percent), and the administrations of Kennedy-Johnson, Nixon-Ford, and Carter, as well as all the Reagan years and Clinton's first four years.
A nonaffiliated economist, Mark Zandi of Economy.com, says the data aren't good in terms of indicators the average person understands: the number of jobs created, the price of gasoline, the stock market, and wage gains. "Add it all up, and it paints a less than bright picture," he says.
But Mr. Zandi, like other economists, quickly points out that the country's economic problems are not all Bush's fault. His administration inherited the collapse of the dotcoms and the corporate scandals such as Enron that shook Wall Street's confidence. Then, the economy shuddered after Sept. 11, and Americans stopped flying. "There have been a lot of big shocks that it's clearly hard to ascribe to the president's policies," Zandi says.
Indeed, Mr. Gillespie makes the point that 62 percent of the job losses occurred in the six weeks after Sept. 11. Still, Zandi says it's possible to argue that Bush has used government resources poorly. From a surplus of $250 billion, the federal budget is now in the red by $450 billion.
Mr. Hormats, who has worked for both Republicans and Democrats, argues that Bush has ducked some major structural economic issues facing the nation. The US is carrying large budget and trade deficits. By the end of the next presidential term, baby boomers will be retiring and many will need healthcare coverage. "The bigger issue is whether our kids will be better off than 15 years ago and will we as a society be better off than today," says Hormats.
Over the shorter term, how one feels about the economy depends on how one's pocketbook has fared over the past four years. A blue-collar worker would have a completely different perspective from someone with investments, says Kim Wallace, a Washington analyst for Lehman Brothers, an investment banking firm. "If you are a worker doing 45 hours a week, prices are up and real wages are declining," he says. "But there are others with mutual funds [and] portfolio investments and in the top 15 percent tax bracket, where the economic polices for the last 3-1/2 years have proven beneficial."
Indeed, a July 22-25 ABC News/ Washington Post poll found that only 15 percent of those polled felt "most Americans" were better off; 41 percent said Americans were not as well off and 43 percent said about the same. "There's some concern about the economy," conceded Matthew Dowd, a senior strategist for the Bush-Cheney campaign at a Monitor breakfast. But he quickly pointed out that the polls are not nearly as bad as in 1992, when Clinton had a 20 point lead on the elder President Bush over the handling of the economy.