President-elect George W. Bush and Vice President-elect Richard Cheney have taken heat for their public comments on the nation’s economy, with critics claiming they are raising bogus concerns to justify an across-the-board tax cut.
The fact is their concerns are valid, and their position was vindicated by a surprise half-point cut in short-term interest rates by the Federal Reserve designed to revive an economy hamstrung by soft sales, poor earnings and spreading layoffs. (Witness the recent closing of Montgomery Ward.)
Vindicating Bush, the Fed attacked accumulating signs of economic weakness with a dramatic pre-emptive strike, bringing down interest rates for the first time in two years.
The concerns of Bush and Cheney regarding a slowing economy are valid.
The Index of Leading Economic Indicators, the federal government’s main forecasting measure, has fallen in six of the last 11 months through November, rising in only three. The Federal Reserve has raised interest rates six times since June 1999. Oil and natural gas prices have risen sharply over the past year. All major stock markets are down, especially the tech-heavy NASDAQ. Employment growth is almost half what it was in 1999.
Bush’s concerns are real. The economy is slowing in part because we are overtaxed. The Fed’s move justifies, not lessens, Bush’s call for an across-the-board tax cut.
