Bush economic agenda is strong on rhetoric

Click to follow
PRESIDENT George Bush yesterday promised Americans a dollars 10,000bn (pounds 5,000bn) economy by the beginning of the next century, a one-third cut in the White House operating budget and - maybe - a 1 per cent cut in income taxes if they re-elect him on 3 November.

In what was billed as an important policy speech to the Detroit Economic Club, Mr Bush offered a six-point 'Agenda for American Renewal', which consisted mostly of free-market rhetoric and ideas stolen from other candidates.

His one fresh idea - a promise to negotiate 'interlinked free trade agreements' with Latin American, Eastern European and Pacific nations - implied a reduced commitment to the General Agreement on Tariffs and Trade, and will sound alarm bells in western Europe and Japan.

Mr Bush was speaking amid a deluge of disturbing new figures on the US economy. Business confidence fell last month for the first time since December; demands for unemployment pay rose sharply in the last week of August; and, despite the lowest interest rates in 20 years, US manufacturing industry has chopped back its already modest investment plans.

Some economists fear the US may be heading into the third trough of a triple-dip recession. In terms of comsumer spending, it seems already to have stepped off the edge. The triple debt burden from the 1980s - government, corporate and private - has so far cancelled out the stimulative effects of low interest rates.

The President spent dollars 1m to present a potted version of his speech on prime-time television last night. He tried to distance himself from the economic bad news, and his continued weakness in the polls, with a restatement of his philosophical differences with his Democratic opponent, Governor Bill Clinton. Mr Bush said his opponent stood for 'one size fits all' bureaucracy. He himself stood for 'taxing less, spending less and reducing regulation' - although his administration has increased all three in the past three years.

The President said the US economy could grow from its present dollars 5,700bn to dollars 10,000bn early in the next century with a policy of smaller government and reduced taxes. He promised to reduce the White House costs by 33 per cent, if Congress took a similar cut (Mr Clinton has already suggested equivalent cuts of 25 per cent). Mr Bush proposed a 5 per cent cut in the salaries of highly-paid federal officials (an idea first floated by the failed Democratic candidate Jerry Brown). He also suggested caps on domestic social spending (except pensions), which he said could lead to income tax cuts of 1 per cent.

The Detroit speech was billed as the dawn of a more focused Bush approach to the nation's economic ills - the first evidence of the hand of James Baker since he left the State Department to save his friend's election campaign last month. But much of the effect was fumbled in advance, in precisely the way Mr Baker's return as White House Chief of Staff was supposed to cure.

On the eve of the Detroit appearance, Mr Bush revived his infamous 'no new taxes' pledge of 1988. He told an audience in New Jersey that he had 'gone along' with a 'Democratic tax increase', as part of a deficit-cutting package in 1990. 'And I'm not going to do it again. Ever. Ever.'

Up to now, Mr Bush has carefully avoided such a categorical no-tax-increases pledge, for fear of reminding an already cynical electorate of his broken 'read my lips' promises of four years ago. The White House spent yesterday morning trying to back away from the New Jersey remarks.

Clinton tackles welfare, page 14