For Bush & Co., Little to Cheer

By Howard Gleckman

It's shaping up to be a pretty grim 2003. The possibility of war in Iraq, continued worldwide threats from radical Islamic terrorists, a growing risk of nuclear conflict on both the Korean Peninsula and the India-Pakistan border, the ever-boiling Mideast conflict, and burgeoning international resentment against the U.S. has created the most unstable international environment since the Cuban Missile Crisis 40 years ago.

Add to that a U.S. economy that can't seem to reach take-off speed, European and Japanese economies that are dead in the water, and a Latin American financial crisis of Great Depression proportions, and it's hard to find much to cheer about this New Year. The U.S. economy is showing signs of rebounding, but it has been sputtering this way for a year now. Prospects for growth in the U.S. would brighten noticeably with a quick end to the Iraq conflict and an easing of tensions in Asia.


  Unfortunately, few Washington insiders really expect such a sunny outcome. Privately, they believe that President Bush's war against Saddam Hussein would end fairly quickly. It is expected to begin in late January or early February and be over in perhaps two or three weeks. But overthrowing Saddam would be just the beginning of an extremely difficult period.

The U.S. military would become an occupying army in a badly fractured Iraq. With no obvious successor to Saddam, deep tribal and religious divisions, and an ongoing threat from neighbor Iran -- which has entrenched problems of its own -- Iraq's chances of reemerging as a stable country anytime soon would be remote at best. The U.S. faces years of instability in Baghdad, with the body count of GIs creeping ever upward. A landmine here, a helicopter crash there, and suddenly post-war casualties number in the hundreds. More troubling, insiders fully expect that an Iraqi war would set off a new round of terrorism in the U.S., shattering the relative calm that has settled as the events of September 11 begin to recede in memory.

On the home front -- if Washington can pay attention in the face of war -- Bush likely will push an aggressive domestic agenda. This White House, which is running a permanent reelection campaign that puts Bill Clinton to shame, sees all events, foreign and domestic, as moves in its 2004 chess game. Likewise, Democrats will probaly use 2003 to sort through their long list of candidates for the '04 race. By this time next year, even before the first primary, that list will be narrowed to the handful of contenders who have convinced the Big Money boys they have the right stuff.


  In the meantime, Bush is likely to raise several issues aimed at co-opting the Democratic agenda. A "jobs and growth" package of mostly tax cuts will be aimed at defusing the economy as an issue. And Bush will get much of what he wants: faster tax-rate cuts and tax breaks for investors and for businesses.

The President's health-care agenda will be built around a Medicare drug program. But providing even a modest benefit for seniors is going to cost $400 billion over the next decade. Chances are good some kind of legislation will pass, thus eliminating another powerful Democratic campaign issue. But don't expect to actually see a meaningful benefit until long after the next Presidential election.

Besides Bush, the key player in Washington in 2003 will be the incoming Senate Majority Leader, Tennessee Republican Bill Frist. Through the political demise of Trent Lott, Frist showed uncanny timing -- appearing to be far less ambitious than he really is.


  Now, he has to actually make the unruly Senate work, a task that has undone far more experienced legislators. Frist, in many ways, is a Republican Al Gore. He's the son of an immensely successful father, a cerebral policy wonk who is articulate, but unexciting. And, make no mistake, Frist wants to run for President. Don't be surprised if the matchup in 2008 is Frist vs. Hillary Clinton.

But first, Frist and the rest of the country have to make it through 2003. And that prospect is looking more daunting every day.

Gleckman is a senior correspondent in BusinessWeek's Washington bureau. Follow his views every Tuesday in Washington Watch, only on BusinessWeek Online

Edited by Beth Belton

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