Bush Emphasizes Economy as Security Message Weakens (Update2)

By Matthew Benjamin and Brendan Murray

Oct. 6 (Bloomberg) -- President George W. Bush is intensifying his bid to win his party credit for an improving economy, a move given new urgency by Republicans' difficulty in making moral values and the war on terror central issues in the mid-term elections.

``Our economy is strong,'' Bush told workers at a FedEx Corp. facility in the Washington today. ``Wages are going up. Energy prices are falling, which means people are going to have more money in their pockets to save, invest and spend.''

Bush has given only one speech on the economy in the past six weeks, an event at Meyer Tool Inc., in Cincinnati, in which he extolled his record as a champion of small business. A new push on the economy is timely now thanks to lower gasoline prices, a rebounding stock market, and renewed hope about interest-rate cuts from the Federal Reserve, experts said.

``You go with what you've got, and right now the economy is the best thing they've got going,'' said Philip Klinkner, professor of government at Hamilton College in Clinton, New York.

White House political strategist Karl Rove originally envisioned a three-pronged strategy for retaining Republicans' congressional majority. The plan cast Republicans as tougher than Democrats on fighting terrorism, more attuned to Americans' values on moral issues and more likely to keep the economy humming thanks to the party's commitment to tax cuts.

Troubled Plan

With just over a month to go before the Nov. 7 election, Rove's plan has crashed into some daunting political realities. A best-selling book by Washington Post editor Bob Woodward has sown doubts about the Bush war cabinet's veracity and its vigilance over the terror threat posed by al-Qaeda.

The administration has also been thrown on the defensive by a leaked national intelligence assessment that concluded the Iraq war has fueled Islamic radicalism around the world.

Things haven't gone much better on the values front. A scandal involving former Florida congressman Mark Foley's sexually explicit messages to congressional pages, and how House Republican leaders handled the matter, has alienated grassroots conservatives.

The widening Capitol Hill sex scandal has the potential to undermine Rove's strategy of rallying the conservative base, said Greg Valliere, chief political strategist at Washington- based Stanford Washington Research. ``This is the party of family values, and to have this scandal occur in the Republican Party is devastating.''

Obscured Message

With much of the Republicans' core message obscured by controversy, the administration has little choice but to hit the economic issue hard. What remains unclear is whether voters, who have been more pessimistic about the economy than the president, will give his party credit for the recent spate of good news after years in which family finances have been stretched thin.

``I'm confident the president will continue to remind the American people that they have a big choice here come Nov. 7,'' said Allan Hubbard, director of the White House National Economic Council, in a briefing yesterday. ``The president will be reminding people of that over and over and over again.''

A majority of Americans -- 54 percent -- surveyed in a Bloomberg/Los Angeles Times poll in mid-September said the economy is doing well, up 4 percentage points from the beginning of August. Bush's approval ratings on handling the economy also rose, and almost 1 in 3 poll respondents said lower gasoline prices have enabled them to spend more on other household items.

Job Growth

The new economic push comes at the end of a week in which the Dow Jones Industrial Average closed at a record in three consecutive days and gasoline prices continued a 75-cent drop from early August. The U.S. Labor Department reported today that 51,000 additional jobs were created in September after a 188,000-job increase in August, larger than previously reported.

The economy has generated about 5.6 million new jobs since 2003, and national unemployment fell 0.1 percent in September to 4.6 percent, a five-year low and a level that economists consider full employment.

``I'm pleased with the economic progress we are making,'' Bush said, adding that making his tax cuts permanent would help sustain growth.

While Americans are growing more positive about the economy, there's concern that some of the gains of recent years have been skewed toward the well-to-do.

``This economy is making the super-rich richer and leaving middle-class American families further behind, deeper in debt and struggling to make ends meet,'' House Minority Leader Nancy Pelosi said yesterday in a speech in Washington. The California Democrat, who stands to become House speaker if her party gains 15 seats, said she'd push for raising the minimum wage and repealing tax cuts that encourage the export of jobs.

Workers' Expense

FedEx, the backdrop for Bush's economic message today, is the world's largest air-cargo shipper. The company's profits have grown 27 percent a year, on average, since 2002.

Union leaders said some of those gains came at workers' expense because management keeps a tight lid on wages and benefits, in part by resisting unionization and relying on contract employees.

``Their profits are made on the backs of the workers,'' said James P. Hoffa, general president of the International Brotherhood of Teamsters, in an interview. ``The rich CEOs are making lots of money, but the average worker is going backward.''

Moreover, some analysts have doubts that a late White House econo-blitz can help candidates who are hip-deep in bad news.

``I'm skeptical that the economy can save Republicans,'' said pollster John Zogby, president of Zogby International in Utica, New York. ``This is about the institution of government, and it's about Republicans losing their own base and Republican values.''

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net Brendan Murray in Washington at brmurray@bloomberg.net

Last Updated: October 6, 2006 11:40 EDT

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