By Richard S. Dunham
George W. Bush can send his economic team around the country as often as he wants to reassure Americans about his new "growth and jobs" plan. Still, there's no substitute for hearing it from the top guy himself in a small, conversational setting at the White House.
And that's just what I got on Feb. 25, joining eight other reporters from business news organizations for a 45-minute, roundtable discussion of economic policy with the President. Bush responded calmly and often convincingly to some pointed political and policy questions about his embattled economic plan. And in the end, he presented a detailed case for the merits of his proposal for $1.46 trillion in new and accelerated tax cuts that dispelled any doubts -- at least to me -- about his knowledge and grasp of the challenges he faces.
"The best thing I can do is to continue to explain as clearly as I can the rationale behind the plan," the President said, "and hope the people buy it."
Bush hasn't given up on the plan's controversial centerpiece -- its elimination of double taxation of dividends. Democrats describe it as a massive giveaway to wealthy Americans, and polls show Americans are skeptical of the provision. But Bush went beyond his normal talking points about the "unfairness" of double taxation to explain the political context for the move. A giveway to Big Business? Hardly. He's motivated by conservative populism, he declared.
In making his target the repeal of double taxation on dividends to individual taxpayers, Bush said he weighed it against ending taxation of corporate dividends, which he rejected. "I felt like it would be better for the impact to be felt in the individual's wallet," he explained. "And I looked at both sides. I felt in order to get it through Congress, it makes it easier for me to personalize the issue by saying to Congressman So-and-So, 'Your mother's dividend will not be taxed twice.' In other words, there's a certain personal populist aspect to it."
Bush also telegraphed what will become an increasingly important part of his sales pitch: that cutting dividend taxes will lead to more honesty in business accounting in this post-Enron era. He recalled watching a TV show several years ago and hearing a hotshot New Economy exec say that viewers should invest in his company "because I've got a great story..." As Bush recalled it: "I saw the [interviewer] say, 'Well, but you don't have any assets.' And he goes, 'Well, this is the New Economy.' And I said to myself, but there is Old Accounting: that when you run out of money, you're broke. And that's what happened."
The moral of Bush's story, as he explained it: "A dividend-paying company will be, I guess, conservative -- I don't know if that's the proper word -- but it will be a company that now no longer relies upon this justification for stock price based upon hope, as opposed to be valuing stock price based upon merit."
Hard to argue with that. But the President will need all the good stories he can come up with to change the nation's resistance to his dividend proposal -- and an increasingly sour mood on the economy. On Feb. 25, the Conference Board's Consumer Confidence Index fell to its lowest point in nearly 10 years. As Senate Minority Leader Thomas Daschle (D-S.D.) likes to point out, unemployment is up about 80% since Bush became President. And, as the nation's Chief Executive noted during his reporters' roundtable, "there is a risk that we're not really through with the recession."
Still, I left thinking that risk would be lessened if Bush could project to the public at large the kind of confidence -- and competence -- he displayed during our session in the Roosevelt Room. While the President can come across as tight and uncomfortable before large groups, sometimes blurting things out, he's at his best in a small-group setting. He can be thoughtful, engaged, and analytical. And he displayed a strong knowledge about economic issues. Quite a contrast to the guy who mangles the English language in campaign-style speeches.
"TYRANNY AND TORTURE."
He can still be surprisingly blunt, too. Speaking of congressional appropriators, he observed: "They're great deficit hawks until it comes to funding their own special projects." On charges that the crisis in Iraq boils down to who controls that country's oil supply, he said: "Are there economic interests? Of course. All around the world, people have got their economic interests. And our interest, however, is based upon -- my decision will be based upon -- how to make America as safe as possible."
Even in a discussion of economic policy, Iraq is never far away. Bush insisted that the showdown is all about freeing Iraq from tyranny and torture. "And for those who don't see that, that's their position," he said. "History, in my judgment, will prove them wrong if we didn't act."
The President was less certain about his ability to quickly turn around the American economy. "We're dealing with the aftermath of a recession and a war and an emergency [September 11]," he told the group of reporters. "And we're just going to have to deal with it as best we can." All in all, it was a largely reassuring chat in uncertain and perilous times.
Dunham covers the White House for BusinessWeek
Edited by Douglas Harbrecht