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Get Back On Growth
In the final days, Bush needs to focus on his good economic policies.


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Larry Kudlow

Watching W.’s campaign speech in Dearborne, MI, where he emphasized leadership and character, the thought came to me that I really wish he would talk more about economic growth. The nation is not about to slip into recession, but the bloom is clearly off the prosperity rose.

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Yesterday’s jobs number was a mediocre 118,000, compared to a 224,000 average monthly increase last year. The National Purchasing Manager’s are reporting a mild industrial recession during the past three months. For this, read large parts of Michigan, Pennsylvania, Illinois, Missouri, Ohio, and West Virginia. Same-store chain sales in the run-up to Thanksgiving and Christmas have dropped to 3% growth, way down from 7% earlier this year.

Highly volatile stock markets — on balance — have been flat this year, after huge gains in the mid and late 1990s. At one point between Labor Day and mid-October, the NASDAQ plummeted 30%.

The Federal Reserve has been shrinking money supply growth all year, while the gold price has been dropping. Huge federal budget surpluses, which mirror record personal tax payments, are another slow-down sign, as taxpayers suffering from rising bracket creep are transferring their income to government coffers.

High energy prices amount to another consumer tax hike, as people are pinched between gas pump and home heating-oil bills.

George Bush’s economic plan of lower tax rates and personal retirement accounts is pro-capital-formation and pro-growth — if only he would talk more about capital formation and growth. These are, in fact, recession-insurance plans. If growth slows to 2% in the next year, the growth effects of higher after-tax rewards for work effort and investment risk would move the economy back toward 4% — which is where it should be (if not even greater) in the high-tech economy.

The fiscal purpose of tax cuts and Social Security reform is growth. It is the ultimate goal of growth that should be highlighted.

Lower tax rates are coming in Germany, France, Italy, and Canada, raising their growth competitiveness and challenging U.S. dollar supremacy. George Bush’s growth policies would maintain America’s global lead, and he should be talking about this.

Meanwhile, Al Gore’s regulator-in-chief attacks on drug companies, industrial manufacturers, and energy drillers are anti-growth. His 29 government-planned-and-targeted tax credits have more penalties than incentives for successful work effort. His Kyoto global warming treaty would take 1% off annual growth, and would deny the electricity supplies that are so crucial to the wired-technology economy. Gore’s $2 trillion-plus spending plans would eat up a larger share of the free-enterprise private sector. Even more anti-growth.

Economic growth policies are more important than 24-year-old drinking problems. Rich Lowry, on the campaign trail bus, senses that Bush’s personal transformation story to a sober and spiritual life is more important right now than the campaign emphasis on leadership and character. I agree. But economic-growth transformation is also very important.

In 1976, during another very close election, Jerry Ford lost to Jimmy Carter — in part because he had no supply-side growth plan to solve stagflation. In 1960, the mother of all close elections, it was Jack Kennedy who talked about tax cuts and growth. W. needs to emphasize the growth theme in the final hours. Growth solves prosperity anxieties and Social Security doubts. Free enterprise growth is a Reagan victory message of future optimism and hope that can win this thing.

The Texas challenger needs to climb back on the growth horse in order to nail this one down.



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