The U.S. economy will be an important issue in this year's presidential election. Republican strategists believe an improving economy will help President Bush in the vote November 2. Democrats hope the issue will help their election chances.
To hear Democrats tell the story, the economic recovery is no recovery at all because it's producing too few jobs to replace the three million manufacturing jobs lost under President Bush. That has been Mr. Kerry's message in so-called rust belt states, stagnant manufacturing centers like Ohio and Michigan.
Moreover, critics say the president is leaving a growing debt to future generations because of his tax cuts. Economist Greg Mankiw rejects the argument. Mr. Mankiw, who is chairman of the White House Council of Economic Advisers, spoke at a recent conference on the global economy sponsored by the Milken Institute of California.
He says the president's tax cuts have spurred the economy and will boost the government's income, while wise action by the U.S. Federal Reserve has averted inflation. He tells VOA that the deficit of hundreds of billions of dollars is unwelcome, but manageable.
"It's a reasonable policy response to the recession and the war on terrorism that we've been fighting," says Mr. Mankiw. "In the medium run, by which I mean about five years, the president has put forward a budget that will reduce the budget deficit in half. As a percentage of the economy, the deficit will be shrinking."
And the economy, he says, is growing "robustly." U.S. treasury secretary John Snow says 300,000 U.S. jobs were created in March alone.
Democrats complain that this year's budget deficit has passed $500 billion and they are skeptical about Republican plans to reduce it. They also worry about the trade deficit, which last year jumped to a record $500 billion, spurred by outsourcing, the moving of American jobs overseas, and increased imports from China.
Both parties see trouble with the economy in the long run. They say Americans born after World War II, the so-called "baby boomers," will saddle the country with debt when they reach retirement age and start drawing on public pensions and Medicare health benefits. Both sides agree those costs must be controlled, but disagree how to do it. Generally speaking, Republicans favor partial privatization and reliance on market forces, while Democrats favor more government oversight.
Suzanne Nora Johnson, who directs global research for the investment firm Goldman Sachs, is optimistic in the short term but see problems in the future. "It is likely, because of the entitlements that we've already promised people in this country on the health and welfare side, and because of the probable need to increase our defense spending from where it is today, we will have to grapple with this problem in the longer term," says Ms. Johnson. "And that is where the debate will be, is do you have to raise taxes or do you have to cut spending? It's not going to be a free ride. At that point, we'll have to make a decision." She says neither option, raising taxes or cutting benefits, is attractive to the voters.
Political analyst Sherry Bebitch Jeffe says Americans are worried about the deficit but relieved that the economy seems to be improving. She adds that U.S. security and stability in Iraq are also important issues in this year's election.
"The irony of what is happening now with regard to the upcoming election is that when this all began, the president and his men believed that they would be running as the war president on his record in Iraq because his record on the economy was so bad, because the deficit was building. Now the economy appears to be improving and the real problem is Iraq," says Ms. Jeffe. "So it is possible that the economy will be playing less of a role than the Democrats might like, and quite frankly, now, than the Republicans like might. But you can't have an election without the economy playing a very large role. It is still, quote, "the economy, stupid.""
That's what the former governor of Arkansas used to remind himself when he ran successfully for president in 1992. Ms. Jeffe says Bill Clinton's adage still holds true. She says U.S. security and stability in Iraq will be part of the equation in this year's election, and that voters will also judge candidates by the state of the economy as November approaches.