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Analysts: As US Economy Improves, Iraq Could Emerge as Defining Issue in 2004 Presidential Campaign - 2003-12-05

The slight drop in the U.S. unemployment rate reported Friday is the latest indication that the domestic economy is strengthening, just as President Bush prepares for his re-election effort in 2004. But the president's decision to lift steel tariffs this week could hurt him in some steel-producing states in next year's election.

The unemployment rate fell to 5.9 percent in November, the fourth month in a row that the improving U.S. economy has added jobs.

It is the latest in a series of indicators, including a surge in economic growth and increased productivity, which suggest the economy is rapidly expanding.

All of that is good political news for the president, and Mr. Bush was quick to make note of it during a speech in Baltimore. "This administration has laid the foundation for greater prosperity and more jobs across America, so every single citizen has a chance to realize the American dream," he said.

The president's decision this week to lift steel tariffs could be politically more problematic. Mr. Bush could lose support in steel-producing states like Pennsylvania, Ohio and West Virginia that are considered crucial to his hopes of winning a second term next November.

On the other hand, cheaper steel will help car and appliance manufacturers in other states like Michigan, Illinois and Wisconsin, which also are expected to be closely contested in the election.

Most of the Democratic presidential candidates were critical of the president's decision to end the steel tariffs.

But with the improving jobs picture, some of the Democrats are now focusing their criticism of the president on the mounting federal budget deficit.

Former Vermont Governor Howard Dean recently highlighted the issue when he spoke to a college audience in the early primary state of New Hampshire. "Half-a-trillion dollars of borrowing, year-after-year. We can't afford that," he said. "Not one Republican president has balanced the budget in 34 years in this country. You want to trust your hard-earned taxpayer dollars to the federal government, you better hire a Democrat, because you can't trust the Republicans with your money."

But the improving economy could rob the Democratic candidates of a key issue in next year's campaign. Historically, presidents are re-elected during good economic times, and many analysts now believe that, if the economy continues to improve, Iraq could emerge as the defining issue in the 2004 campaign.

"The White House political advisers will tell you that there are two things that worry them - one is Iraq, one is the economy," said Tom Defrank, Washington bureau chief for the New York Daily News, a guest on VOA's Issues in the News program. "And they are increasingly beginning to believe that the economy is not going to hurt the president grievously. And they are much more worried about Iraq, although they think that is going to come around, as well."

Meanwhile, some new public opinion polls suggest Howard Dean has solidified his lead among his eight Democratic rivals in the important early primary state of New Hampshire. Two surveys show him leading Massachusetts Senator John Kerry by about 30 points.

The delegate selection process that will determine the Democratic Party's presidential nominee begins January 19 with the Iowa Caucuses. The Democrats will formally nominate a candidate to run against President Bush at their July convention in Boston.