by John M. Curtis
(310) 204-8700

Copyright December 21, 2000
All Rights Reserved.

onfronted with a slowing economy, plummeting stock markets, and growing pessimism, the President-elect must choose his words wisely now that he’s front and center. Threading an impossible needle to win the White House, former Texas Gov. George W. Bush scaled Mt. Everest but faces the daunting task of preventing an economic avalanche. Barely able to catch his breath, Bush’s running hard trying to fill empty chairs in his Cabinet, while the Federal Reserve Board rained on his parade—at least for now. Hugging Alan Greenspan didn’t translate into instant rate-cuts, plunging the market to its lowest levels since March 1999. Going back to the well, Bush picked the venerable Alcoa CEO Paul H. O’Neill to become the nation’s 72nd treasury secretary, trying to reassure Wall St. that they were going to be in good hands. News of O’Neill’s selection fueled more panic-selling, as the tech-rich Nasdaq viewed the choice as a throwback to the old economy. With images of bauxite and smokestacks replacing semiconductors and fiber optics, the former Wall St. darling and Clinton treasury secretary Robert Rubin seems like a faded mirage.

       Stepping up to the microphones, Bush asserted control touting O’Neill’s appointment as "incredibly important," offering his own appraisal, "Our economy is showing warning signs of a possible slowdown." Proving Wall St.’s need for Prozac, the market took another nosedive, interpreting Bush’s remarks as a prophecy of doom and gloom. With panic stricken investors looking for help, Bush called himself a "realist" and said he must "anticipate" every eventuality, including a possible recession. Finding his words discouraging, the markets continued their downward spiral, leaving only the most incurable optimists to find a silver lining. With economic woes breathing new life in Bush’s controversial tax cut plan, "I look forward to having this good man by my side," said Bush, "I look forward to having him making our case to the Congress, to the American people and to the world." But not only must O’Neill sell a reluctant Congress on the merits of a 1.3 trillion dollar tax cut, Bush will also need to sharpen his persuasion skills. So far he hasn’t sold the Fed chairman or even members within his own party.

       Praising the white-haired O’Neill as a "steady hand who, when he speaks, speaks with authority and conviction and knowledge," Bush needs to swallow a big gulp of optimism from his role model and idol, Ronald Reagan. Oozing eternal optimism, Reagan calmed battered markets and reassured doomsayers, "The economic ills we face today won’t go away in days, weeks or months, but they will go away . . . progress may be measured in inches and feet, but we will progress," reminding beaten-down investors that tomorrow will be a brighter day. Setting the tone, both Bush and his newly appointed treasury secretary missed a golden opportunity to reassure skeptical markets that they will move swiftly to cure today’s economic ills. "I think it is so important for [Congress] to understand that tax relief is all about economic growth and cash flow and accumulation of capital and so is Social Security reform," said Bush whose timing left a lot to be desired. Appearing out of sync with the Federal Reserve also doesn’t reassure disabled markets that help is on the way.

       Reassuring panicky markets, Bush and his treasury secretary needed to emphatically confront negative market sentiment. Talking about "the hand we’ve been dealt" leads to more runaway doubts that a recession is on the horizon. While Alcoa’s a DOW component, Mr. O’Neill needs to calm nervous tech investors that he’s equally committed to the 'new economy,' now responsible, according to Fed chairman Greenspan, for building the efficiencies into the 'old economy,' needed for sustained growth with manageable inflation. Knowing the mood on the street, O’Neill sidestepped substance, preferring small talk, "Perhaps it’s the mark of the capability of the president-elect in convincing people to do things that he wants them to do that I’m here today," said O’Neill, pretending that his decision to end his run at Alcoa had to do with Bush’s persuasive talents. Please. After earning his $32 million dollar salary and considering cashing-in on another $30 million worth of stock options, Mr. O’Neill could afford to take an early retirement.

       Hanging on every word, president-elect Bush or his new Cabinet designee can’t afford to waste primetime media exposure on meaningless happy talk. Markets need to hear boldly confident, emphatic statements that they’ve got the situation under control. Presenting controversial tax cut proposals and plans to reform Social Security don’t give the kinds of reassurance needed to calm chaotic markets. While Greenspan weighs his options, the president-elect and treasury secretary should be reminding Americans that they’re on the same page as the central bank. It’s nice that Mr. O’Neill worked with Mr. Greenspan during the Nixon years, but he must retool his thinking with the Fed’s current philosophy and priorities. With the Fed poised to ease credit, it’s jumping the gun to push whopping tax cuts before the markets can digest the effect of lowered interest rates. Should the Fed’s treatment cure the problem, adding too much stimulation could send the economy right back into the same mess by over-accelerating the wealth effect.

       Bush’s main aim should be to name his Cabinet and reassure the public that better days are coming. Naming Cabinet secretaries without emphatically selling people on how his appointment is going to advance the peoples’ agenda, fails to capitalize on a unique media opportunity. With the economy teetering, it’s unwise to raise more anxiety by leaking that his appointments might be at odds with the Federal Reserve. Clinton didn’t always like the Fed’s every move, but the mutual admiration society assured a great working relationship. Stepping up to the mics, Bush and his Cabinet designees should seize the moment and sell the public on great expectations. Prophecies of doom and gloom should be checked at the door while the media and public get acquainted with new Cabinet appointments. More than any other role, the president-elect must play suave emcee and bubbly cheerleader while the media assimilates key appointments. With the public hanging on every word, abundant optimism must eclipse even the slightest hint of self-doubt. Anymore negativity could spoil an already shaky honeymoon.

About the Author

John M. Curtis is editor of OnlineColumnist.com. He’s also the director of a West Los Angeles think tank specializing in human behavior, health care and political research and media consultation. He’s a seminar trainer, columnist and author of Dodging The Bullet and Operation Charisma.

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