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Flashtraffic: Bush's closed door economic meeting

New details are leaking out about President Bush's closed-door White House meeting with 15 conservative economists

Issue: "America's best & worst," Feb. 1, 2003

New details are leaking out about President Bush's closed-door White House meeting with 15 conservative economists, including Harvard's Martin Feldstein, Allan Meltzer, and former Federal Reserve Board member Wayne Angell. Tidbits thus far unreported:

The president forcefully derided the Democrats' class warfare playbook as "a stale, tired debate," WORLD has learned. He said "people in Washington live in a zero-sum world." They think "a Bush victory is Congress' loss" when approving this new $670 billion tax-cut package can be a "win/win" for all Americans and members of Congress willing to help pass it. One participant said "the president was on fire-focused, determined, and showing an attitude of 'no fear' in the political arena."

Iraq, terrorism, and the intersection of homeland security and economic security-not tax-rate and dividend cuts-were actually the first topics the president initiated in the nearly hour-long meeting. The president specifically asked the assembled economists whether they felt the public's uncertainty over war was harming the economy. The consensus: absolutely. The sooner people feel safe-including safe to fly-the sooner the economy will improve.

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One serious concern of the president's: How fast must the U.S. economy grow to foster new job creation? Traditionally, 3 percent annual growth rates have been considered exceptional. No longer. Several experts told the president that with productivity rising so quickly and dramatically, the new American economy now has to grow at least 5 percent annually to create a noticeable increase in net new jobs. If Congress passes the White House package intact, some in the room believe the economy could hit a 5 percent rate by the second half of this year.

The phrase "capital gains" never came up.

"Spending" did come up. The president says he wants to limit federal spending growth to just 4 percent this year. Not everyone believed him, though no one said so out loud. Non-defense spending last year shot up 7 percent over the year before-the fastest increase in 10 years.

Chief architects of the new Bush tax-cut plan and the campaign to sell it: Council of Economic Advisors Chairman R. Glenn Hubbard, newly appointed White House economic aide Stephen Friedman (who replaced Larry Lindsey), and Commerce Secretary Don Evans. All three met with the conservative economists for an hour before the president arrived.

Joel C. Rosenberg
Joel C. Rosenberg


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