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Bush, Cheney tout economy; Dems criticize

Nation's fiscal health emerging as election issue

President Bush says he inherited a recession as Democrats criticize his handling of the economy.
President Bush says he inherited a recession as Democrats criticize his handling of the economy.  

From Kelly Wallace
Washington Bureau

WASHINGTON (CNN) -- With the November elections drawing closer -- and Democrats faulting the administration for its handling of the economy -- President Bush and Vice President Dick Cheney delivered Wednesday simultaneous speeches on the nation's fiscal health.

Both men said the long-term outlook is good, and Bush said he had inherited a recession.

House Democratic leader Richard Gephardt, however, said Bush and Cheney offered "the same status quo, finger-in-the-wind rhetoric" while American families are financially strapped.

"Instead of providing new ideas or honest answers to the economic downturn we are facing, Bush and Cheney offered empty rhetoric and blamed others for the recession," Gephardt said.

During a presidential visit to Madison, Mississippi, Bush said he believes the economy's foundation "is strong."

"Listen, our economy is growing. It's getting better," Bush said in the state that is home to the now bankrupt telecommunications giant WorldCom.

The president cited low inflation and worker productivity, which he said was "dramatically increasing."

Bush appears keenly aware of the potential significance of the economy as a campaign issue for the mid-term elections this fall. Many political pundits believe his father lost his re-election bid to Bill Clinton in 1992 in part because of a perception that the senior Bush was not paying attention to the economy.

In a speech in San Francisco, Cheney said that since he and Bush took office, the United States has gone through a "serious economic slowdown, a national emergency, a war abroad and a series of scandals in corporate America here at home."

"Yet there is no doubt of our nation's strength. This is a tribute above all to the American worker and entrepreneur ... productivity in the past four quarters has been very impressive. Higher productivity, of course, leads to wage increases and even greater investment and even more jobs down the line," Cheney said.

However, with the economy growing at only 1.1 percent in the second quarter of the year, lower than economists had predicted, some analysts have talked about the possibility of a double-dip recession, another period of negative economic growth after only a short recovery following last year's recession.

Glen Hubbard, chairman of the president's Council of Economic Advisers, said the chance of a double-dip recession is "remote."

"I think many forecasters are downgrading their forecast because of a drop in stock market wealth, but most of those adjustments, I think, will be in the neighborhood of a half to seven tenths of a percentage point over the next year. Bad to be sure but I think double-dip is quite remote," Hubbard told CNNfn.

Hubbard said most private economists still predict that the second half of the year will see growth around 3 percent and about 3.5 percent for next year.

The chief economic adviser, though, cautioned that investment by business is still not where it should be.

"For the recovery to be very sustainable over the long run, we've got to have business investment turn around," Hubbard said. "We've seen equipment and software spending begin that turn, non-residential construction always lags and is lagging. I've been saying for some time, I believe this will turn around by the end of the year and I still believe that."

Bush, in his remarks, continued to walk a fine line between talking up the economy and expressing concern for those who are out of work or worried about their financial futures.

"Listen, so long as anybody is looking for work and can't find work, I think we've got a problem," the president said. "When somebody is out there and says, I want to work and can't find a job, we need to do something about it."

Bush continued, "Look the role of government is not to create wealth, but an environment in which the economy can grow."

The president also, in a defense of his administration's handling of the economy, said he inherited a recession when he became president and that he has worked hard to prevent terrorism and now fraud from sending the economy into a tailspin.

"When I took office, our economy was beginning a recession," the president said. "That's what the facts have shown. Then our economy was hit by terrorists. Then our economy was hit by corporate scandals. But I'm certain of this, we won't let fear undermine our economy and we're not going to let fraud undermine (it) either."

The president also said his administration would make sure that corporate criminals no longer enjoy "easy money," but pay a price by serving "hard time."

Concerned about the impact a string of corporate scandals appear to be having on investor confidence, Bush plans an economic forum Tuesday in Waco, Texas. The goal is to bring together Cabinet members, policy experts, business leaders, students and workers to talk about issues such as corporate accountability and retirement security.

"I think in general this is an event to talk about the economy and about economic policy," Hubbard said. "The president, of course, has provided a great deal of leadership on this front and I think this is a chance for a two-way communication among all the participants who are there."

No members of Congress, Democrats or Republicans are invited, leading some Democrats to argue the forum is just a public relations blitz by the White House to try to prevent Democrats from having an issue to use against the GOP in November.

"America needs a serious economic discussion that brings in the best minds and a wide variety of opinions focused on the best way to create long-term economic growth and opportunity for all Americans," Gephardt said.




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