The warning lights are flashing, the Presidential candidate intones grimly. American economic growth is slowing; the leading indicators are falling. Worse, wages have dropped--"the worst performance in eight years." And the incumbent President seems only too willing to tolerate slow growth, conceding, according to the challenger, that "America's economy has hit a glass ceiling."
Walter Mondale, trying to unseat Ronald Reagan in 1984? Or maybe Michael S. Dukakis in 1992, struggling to beat George Bush?
ODD MESSAGE. No. Those dire warnings come from Senate Majority Leader Bob Dole in the first major economic speech of his Presidential campaign. Addressing the Economic Club of Chicago on Sept. 5, front-runner Dole found himself on unfamiliar ground. A Republican traditionalist who has always backed fiscal austerity, Dole was now attacking a Democratic President for accepting subpar economic growth. It was an unlikely message coming from Dole, but one that is likely to be repeated often in the months ahead.
Dole's broadside illuminates the key strategic task facing the GOP: How can the opposition party oust an incumbent President when the economy is growing and inflation appears vanquished? Despite the second-quarter pause, gross domestic product has grown at a 3.3% annual rate under Clinton--topping even President Reagan's eight-year average of 2.8%. "Dole blames Clinton for a mediocre recovery," notes former Reagan adviser William A. Niskanen Jr., "but the mediocre part was on Bush's watch." With most forecasters predicting resumed growth, Republicans may have a tough time finding pockets of economic discontent on Election Day.
GOP candidates hope to stir the pot by charging that Democrats are stifling growth. In a GOP Administration, Dole declares, "3% growth should be a floor, not a ceiling." The candidate promises to unleash the nation's entrepreneurs by slashing regulation, balancing the budget, and requiring that future tax increases receive a three-fifths "supermajority" in Congress. Dole also offers a vow to scrap "the whole twisted wreck of federal tax law" in favor of a flat-tax system.
Not to be outdone, Dole's competitors are also vying for the mantle of Entrepreneur-in-Chief. Senator Phil Gramm (R-Tex.) promises that he will spell out his flat-tax proposal in detail, including capital-gains and inheritance-tax relief, when he delivers his economic manifesto on Sept. 11 in Detroit. America Firster Pat Buchanan proposes stiff tariffs on Japanese and Chinese goods in order to bolster American manufacturing. And California Governor Pete Wilson says that he will cut taxes and spending so that "America's entrepreneurs will bring our nation roaring into the 21st Century."
NO TEFLON. But the GOP candidates are playing with fire. The "glass ceiling" that Dole decries is imposed not by Clinton econoids but by productivity growth. The U.S. can't grow much faster for long, most economists believe, without igniting inflation. One of the most influential enforcers of that view: Federal Reserve Chairman Alan Greenspan, a GOP stalwart who owes his likely reappointment next year to pressure from Dole's Senate Republicans. The only safe way to boost long-term growth is to raise workers' efficiency. But the GOP hasn't yet found the philosophers' stone to make gold out of a 20-year history of slow productivity growth.
Clinton's economic record isn't Teflon-coated. Wages have slumped in the past two years, while mergers and downsizing have undermined job security for the middle class. That could be enough to make voters receptive to GOP rhetoric. But to exploit that opening, Republican candidates will have to offer more economic details--and hope the numbers don't keep going against them.