Comment: Free Fall

It is hard to believe that the Bush administration
could be in so much trouble on so many fronts. Just in the past few weeks, Bush
has found himself politically isolated on the issues of stem cell research,
offshore oil drilling, prescription benefits under Medicare, patients' rights,
access to the United States for Mexican trucks, new "fast track" trade authority,
taxpayer aid to religious institutions, and Social Security.

When two honest congressmen, Republican Jim Kolbe of Arizona and
Democrat Charlie Stenholm of Texas, translated Bush's Social Security program
into legislation, the consequences became awkwardly palpable. The measure
proposed diverting part of the payroll tax to private accounts. Recognizing the
fiscal consequences of this shift, the bill's drafters also proposed delaying the
retirement age and trimming Social Security checks. Republicans ran for cover by
the dozens. The Republican House Speaker, Dennis Hastert, quickly opposed the
bill. Even the White House press secretary, Ari Fleischer, distanced Bush from
his own approach.

In foreign affairs, the administration may not be frightening U.S.
adversaries, but it is terrifying allies. It has killed a treaty to enforce the
ban on germ warfare, opposed a permanent international criminal court, isolated
itself by threatening to scrap the Anti-Ballistic Missile Treaty, rejected a
convention on children's rights because of a ban on child imprisonment, and
resisted giving poor countries the right to distribute cheap drugs. Bush has
defaulted on so many issues that European leaders, in spite of their chronic
reluctance to lead, are actually moving to fill the vacuum. Europe's decision to
move ahead on the Kyoto initiative on global warming, with or without the United
States, could mark an important turning point in Brussels's usual deference to
Washington.

In a splendid coinage, Richard Haass, chief of policy planning at the State
Department, declared that the administration was pursuing not isolationism but
"à la carte multilateralism." He has a point. The Bushies are not
withdrawing from the world, as their Republican ancestors did in the 1920s.
Rather, they are selectively proposing activist global policies that other
nations reject. This may indeed be internationalism à la carte, but nobody
else likes the menu.

Bush could be a useful bogey. The so-called (and aptly named) Washington
Consensus for the freest possible movement of capital and commerce has been
dominant in the architecture of global capitalism only because Europe follows
Washington's lead. But if European leaders are skeptical about Bush policies on
everything from global warming to drugs for Africa, maybe social-democratic
Europe can imagine a different global economy. Today environmental imperatives,
tomorrow labor standards?

Our president is also getting scant cooperation from the domestic
economy. This was supposed to be a "short, shallow" downturn that didn't even
merit the label recession (two consecutive quarters of negative economic growth).
By late 2001 or early 2002, the recovery was supposed to be nicely on track in
time for the midterm election, with Bush's tax bill taking the credit. But don't
bet the ranch.

Corporate profits are continuing to slide because of massive
overinvestment during the giddy phase of the boom. As orders decline, falling
profits are translating into layoffs. In the second quarter of 2001, the economy
grew at an annual rate of just 0.7 percent, barely averting recession. Private
spending actually contracted; it was only government spending that narrowly kept
us out of recession. Worse is probably coming.

Bushies say this downturn is not really their fault: The slowdown actually
started in mid-2000, and it was exacerbated by one interest rate hike too many by
the Federal Reserve. But this is Bush's recession in two other respects.

First, it is the downside of free market excess. During the late 1990s, fans
of laissez-faire insisted that deregulated markets should get the credit for the
investment boom. But as investors in industries like telecommunications have come
to appreciate, euphoria can be as much of a curse as pessimism. In telecom,
excessive investments are not paying back their costs and phone companies are
devising newly creative ways to soak consumers. Something of the same dynamic is
operating in airlines and electric power. It's no accident that these industries
were regulated in the first place; they oscillate between ruinous competition and
monopoly pricing. Today's investment bust is not directly Bush's doing, but it
reflects the larger ideology that he champions.

This is also Bush's recession because he squandered the tax cut. He emphasized
big breaks for wealthy taxpayers after 2004 and only token tax relief for working
people now. A serious, front-loaded tax cut coupled with public spending would
have compensated for business weakness and put the economy back on track.

Can we count on Bush just to collapse of his own weightlessness? Maybe not.
What keeps him going is the power of the dominant ideology and its business
allies in both parties.

Despite Bush's personal ineptitude, we still suffer from the lack of a serious
opposition program. The broader conservative assumptions of this political era
are unfortunately bipartisan--that public budgets should be balanced, that
private investment is superior to social investment, that markets should run
rampant. It's fortuitous that the current spokesman for conservatism is a fool.
But until the advocates of a more balanced society get serious about politics and
begin taking back the debate, the rightward drift of our public life will
continue.

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