Happy New Year, George W. Bush. You enjoyed an Election Day blowout. Your popularity ratings are holding up nicely. But 2003 may not be as happy a year for you as 2002.
For starters, there's the economy. It looks like the new year will bring a "jobless recovery," if not a recession. Consumer spending, which has been keeping the economy out of recession, is faltering. Retailers had their worst Christmas in more than a decade. Housing prices are on the decline. Unemployment is up. The stock market can't gain any traction.
The fallout from the market collapse has been partly contained because low interest rates and cheap home equity loans kept personal consumption humming through most of 2002. But the Federal Reserve will not likely lower rates further, and consumers are turning jittery.
State and local governments are in fiscal free fall. Their increased taxes and reduced services will also be a drag on the economy. The administration seems oblivious. The reason may be that only three Republican governors are up for reelection in 2004, and the Bush administration would rather take the credit for federal tax cuts than share resources with the states, Republican rhetoric about federalism notwithstanding.
So the economic outlook for 2003 is anything but robust. The Bush administration's latest estimate for the cost of war with Iraq is $50 billion to $60 billion -- half of 1 percent of GDP. That's not much of a stimulus.
Then, of course, there's the war itself. For all the talk of a quick, decisive victory, ousting Saddam is the easy part. In some respects, Saddam Hussein is comparable to Yugoslavia's Marshal Tito -- a nasty dictator who keeps the lid on a cauldron of ethnic and tribal enmities. Post-Saddam Iraq will likely bring either a prolonged occupation or a civil war, and possibly both.
Moreover, the administration's homeland security program is still a mess. Under Attorney General John Ashcroft, we needlessly sacrificed a lot of our privacy and civil liberty without much progress in decreasing the risk of terrorism. Bush actually cut funding for local law enforcement.
The administration has also proclaimed something close to a state of permanent warfare without asking anything of its citizens -- other than to spy on neighbors. This is the first war in American history accompanied by a large tax cut. The slogan might as well be: Uncle Sam Wants You . . . to go out and shop.
The latest news from Korea suggests administration incompetence of stunning proportions. Basically, the Clinton administration managed to contain North Korea as a nuclear threat with sticks and carrots -- by warning of dire consequences while providing humanitarian economic aid and working closely with the South Koreans on their policy of constructive engagement with the North. The policy worked.
The Bush people discarded this approach as Clintonian and wimpy. North Korea responded by tossing out the arms inspectors and resuming their nuclear weapons program. Now the South Koreans and Japanese are furious at this bungling, and the Bush administration wants the public to believe, first, that North Korea is less of a menace than Iraq and, second, that it can fight two wars simultaneously if need be.
The administration is ever more isolated and alienated from its allies. If we do make war on Iraq, it will likely be over the objections of most of NATO and much of what remains of the friendly Middle East.
All of these chickens will come home to roost in 2003. But the intriguing question is this: What if there were a failed administration and nobody noticed?
Bush got a free ride in 2002. Men like Dick Cheney and Don Rumsfeld looked competent. They were tough-talking grown-ups, seasoned and tested in the worlds of government, business and making war. They were the kind of people you wanted in a national crisis, and they usefully upstaged comic opera yokels like Ashcroft. Colin Powell, likewise, could paper over the foreign policy extremism and seem reassuring. Karl Rove could master political cross-dressing and simulate support for popular liberal social programs.
Despite all this artifice, at some point the public has to notice the threadbare economy, the assaults on privacy and liberty, the homeland insecurity and the reckless foreign policy. At least you have to hope that it does and that we get through the year intact.
One looks guardedly forward to New Year's Day 2004.
Robert Kuttner is co-editor of the Prospect.
