by John M. Curtis
(310) 204-8700

Copyright Feb. 3, 2008
All Rights Reserved.

aced with opposition to his stimulus package in the U.S. Senate, President George W. Bush resorted to some good healthy coercion, warning about “troubling signs.” While GOP presidential front-runner Sen. John McCain (R-Ariz.) warns about excessive government spending, he doesn't, like Bush, admit to the economic damage caused by the Iraq War. It's hypocritical to rail against government spending, while, at the same time, financing Iraq's reconstruction to the tune of $12 billion a month out of the U.S. treasury. No other spending program, including Medicare and Social Security, comes close to the extravagance of the Iraq War. Bush and McCain see Iraq as the colossal battle against the terrorists responsible fro Sept. 11. No other expert, in foreign policy or intelligence, corroborates White House propaganda that Iraq is the central front in the war on terror.

      Bush now complains about real warning signs in the economy. Nearly a year ago, former Federal Reserve Board chairman Alan Greenspan warned that the U.S. economy was heading into recession. “There are certainly some troubling signs, serious signs that the economy is weakening and we've got to do something about it,” said Bush, pushing the Senate to approve his stimulus plan. Bush and Vice President Dick Cheney were asleep at the switch while the U.S. economy headed south over the last year. Why he's finally getting it is anyone's guess. No presidential candidate—including Democratic front-runner Sen. Hillary Rodham Clinton (D-N.Y.) and Sen. Barack Obama (D-Il.)—have linked the wasteful spending on the Iraq War to current economic woes. No government, including one with a $3 trillion budget, can spend $12 billion a month without serious economic repercussions.

      Bush wants his stimulus plan approved but won't consider Iraq's damage to the U.S. economy. Fed Chairman Ben Bernanke has slashed the federal funds rate 1.25% to 3% in the last two weeks, hoping to avoid recession. Friday's Labor Dept. report indicates that the economy lost 17,000 jobs in December. Layoffs are a sure sign that the economy has stalled. Whether the economy meets the technical definition of recession, namely, two quarters of negative growth, remains to be seen. Layoffs signal a sick economy. “The sooner the package makes it to my desk . . . the better off our economy is going to be,” said Bush, urging Congress to act quickly. Bush wants Congress to act quickly while he sat on his hands since Greenspan warned the country of recession Feb. 26, 2007. Most economists expect the Fed's actions to lower interest rates to eventually help the economy.

      Those same economists have little hope that Bush's rebate checks will carry much stimulus. It's more psychological than real, in terms of the real impact of rebates on the economy. Tax cuts too help to stimulate more consumer spending, but, in the end, the Fed's cheap money policy causes economic growth. “The fundamentals are strong,” Bush insisted. “We're just in a rough patch, witnessed by the unemployment figures today. I'm confident we can get through this rough patch,” doing his utmost to use the bully pulpit to talk up the economy. When Bush talks about “strong fundamentals,” he's not referring to fiscal discipline. No economy can have good “fundamentals” when there's no fiscal discipline. Since launching the Iraq War March 20, 2003, government spending has been out of control, strangling credit, penalizing thrift and damaging the U.S. economy.

      Fed Chairman Ben S. Bernanke knows that slashing interest rates will eventually stimulate the economy. Since slashing rates, the stock market has jumped 600 points, proving, if nothing else, that Wall Street likes the Fed's loose monetary policy. An improving economy hurts McCain's chances of becoming president by refocusing voters back on Iraq. January's casualty rate nearly doubled, belying McCain's argument that Bush's troop surge is working. Bush talks about a “rough patch” but doesn't come to grips with the inescapable reality that the problems started when Cruise missiles hit Baghdad. No one should bet against the U.S. economy, including those investing in Euros, but Bush tanked the dollar funding an unnecessary war with an unaffordable price tag. Whether the economy gets better or worse before November, the GOP has a lot of explaining to do.

      When Bush's war on terror detoured into Iraq he sabotaged his approval ratings and sacrificed the economy. McCain walks a tightrope embracing Bush's foreign and economic policies. If the war or economy gets worse, McCain suffers. Even if both get better, it makes the Democratic case for fiscal extravagance and mismanagement. Whether the GOP accepts it or not, the way out the current economic mess is to exit Iraq. With the White House running on fumes, it's going to be difficult for McCain to sell a continuation of the Bush policy. McCain can only pray the Hillary and Barack bludgeon each other to death between now and the Aug. 25-28 Democratic National Convention in Denver. More bad news in Iraq and or the economy make McCain's sell that much tougher. Bush has, as Wall Street Opinion Journal columnist Peggy Noonan said, “destroyed the Republican Party.”

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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