The mainstream media are carping and whining that the president’s recent economic conference in Washington was comprised of supporters rather than dissenters — as though this is some great surprise. The president, they said, was just preaching to the choir. They called the meeting an exercise in political propaganda that was just paying off big campaign donors. As usual, big media missed the big story: In a master stroke of message communication the president spoke directly to the nation in certain terms about his visionary economic plans for the next four years.
Over two days last week, George W. Bush gave three full-fledged statements on his economic intentions. Reading through his comments one is struck by the clarity of his message. Each of his key points is pro-growth, incentive-based, and investor- and owner-oriented. His economic message favors entrepreneurs, importuning for more saving and capital formation as well as a healthy dose of deregulation.
In short, Bush is prescribing market-oriented measures that will spur prosperity and wealth creation. He’s clearly rejecting government planning and entitlement. This is another dose of cowboy capitalism from the president. It is Schumpeterian capitalism. Entrepreneurial capitalism. Ownership capitalism.
Read through the Texan’s economic laundry list: tax reform, Social Security reform, tort reform, energy reform, budget restraint, and, surprisingly, dollar stability (or even greenback strength).
Worried about budget deficits? The president intends to combine economic growth with intensified federal spending restraint.
Worried about trade deficits? The president argued for more purchases of U.S. goods by foreign customers, which is a rather polite way of saying that Europe and Japan should take measures to grow their economies more rapidly.
Worried about savings? Let’s have more private saving through lower tax rates, expanded and simplified tax-free savings accounts, and shrinking government budget deficits. That’s the Bush way. And remember: Saving fuels capital formation, and capital funds the businesses that create jobs.
Worried about the shrinking dollar? Federal Reserve Chairman Alan Greenspan is slowing money growth in order to stabilize the dollar and maintain domestic price stability. And Bush, for the first time, is clearly linking his fiscal policies with Fed restraint in order to defend the greenback.
Worried about healthcare affordability? Reform of medical malpractice lawsuits will go a long way to lowering healthcare costs, as will health savings accounts and small-business-community group purchasing power. Let’s work through consumers exercising responsible choices, not through benefit explosions from the government that only leverage business and insurance costs.
If you think the U.S. is about to lurch toward a European style economy, think again. There will be no explosion of payroll taxes in the president’s plan. Nor will there be sales or VAT taxes layered on top of income taxes.
Does the president know every detail of every program that will make up his economic reform agenda? Not yet. Will he get absolutely everything he wants from Congress? Never happen. But will this most underrated politician succeed in implementing his broad-based vision? Don’t bet against it. This is the guy who barely won in 2000, yet was able to push through big chunks of reform for education and healthcare — not to mention four significant tax cuts.
Might not international events get in the way of Bush’s domestic agenda? It’s possible. But then again, following free elections in Afghanistan — a miracle in itself — it’s possible that in a little more than a month’s time the world will witness free elections in both Palestine and Iraq. Indeed, Bush’s strong belief in the transformational power of a free economy is nearly equal to his strong belief in the transformational power of international freedom and democracy. Those are two vision things worth fighting for.
One of the best barometers of the health of the political economy and the future outlook for business and economic growth is the U.S. stock market. Since the election, stock indexes have gained 6 percent. Since Bush took the lead in his reelection bid way back in August, the averages are up more than 12 percent.
Question: What does the stock market know that the mainstream media do not? Answer: almost everything.
— Larry Kudlow, NRO’s Economics Editor, is host with Jim Cramer of CNBC’s Kudlow & Cramer and author of the daily web blog, Kudlow’s Money Politic$.