WASHINGTON -- Faced with escalating White House criticism, President-elect Bush is defending his pessimistic assessment of the nation's economic outlook. Some Democrats denounced it as an attempt to exaggerate the slowdown to improve chances of passing a $1.3 trillion tax cut.
"I have said that there are some warning signs on the horizon. I think people are going to find out that when I'm sworn in as the president, I'll be a realist," Bush said at an event in Austin, Texas.
"And if there are warning signs on the horizon, we need to pay attention to them, and we need to act in a positive way to make sure that our economy continues to grow so people will be able to find high-paying, high-quality jobs," he added. "One of my responsibilities is to anticipate problems and be prepared to act."
Bush repeated that view Friday but added that tax relief is a key way to improve the consumer confidence end of the economic picture.
"It seems like to me one of the ways to encourage the consumption and enhance consumer confidence would be to let people have some of their own money back," Bush told reporters at an event announcing outgoing Sen. John Ashcroft of Missouri as attorney general.
Bush was responding criticism leveled by Gene Sperling, President Clinton's chief economic adviser, and echoed by other White House officials. They contend that the Republicans' drumbeat of bleak economic forecasts could be calculated to sow "unnecessary fear and anxiety," partly for political effect.
"The next president and his team should not be talking down our economy and potentially hurting confidence just to gain short-term political positioning," Sperling said Thursday.
In their final days, Clinton administration officials consider the long economic boom their greatest accomplishment -- and Republican doubts cast a shadow on that legacy. Many Democrats also believe that Bush, facing skepticism in his own party about the wisdom of a 10-year, $1.3 trillion tax cut, will use the cooling economy to boost support for tax relief as a stimulus to spur growth.
"They've been looking for a reason to do a tax cut for a long time," said Senate Democratic leader Tom Daschle of South Dakota. "They may have seized upon the best one yet. This certainly adds fuel to the fire."
Daschle said many economists favor lower interest rates rather than a tax cut to steady the economy. The Federal Reserve, chaired by Alan Greenspan, signaled this week that interest rate cuts are likely next year.
Republicans, Daschle said, "may still not have the right fiscal policy."
The tax cut, a cornerstone of Bush's campaign, would reduce all income tax rates, ease the tax "marriage penalty" paid by many two-income couples, repeal estate taxes and double the $500 child tax credit, among other things. Some Republicans have counseled caution, preferring to focus on the popular estate and marriage provisions first, but Bush says he will push for the whole package.
Other Bush priorities that could be spurred by an economic downturn include an energy policy with greater emphasis on domestic development and production and continued emphasis on paying down the public debt.
"The Congress as a whole will look to the president-elect's plans more favorably because of a slowdown in the economy," said John Feehery, spokesman for House Speaker Dennis Hastert, R-Ill.
Democrats say they aren't ignoring evidence that the economy is cooling. Indeed, the Commerce Department reported a third-quarter growth rate of 2.2 percent, well below growth in the months before that.
"It looks like it's slowing down a little bit," said Sen. Joseph Lieberman, D-Conn., after a meeting Thursday with Vice President-elect Dick Cheney. "But you've got to look at it in perspective because the economy has been pumping away at an extraordinary rate. In some ways, we're way above the norm."
Sperling, however, said "98 percent" of economic experts are projecting a "soft landing" for the economy -- less-spectacular growth with continued low unemployment and low inflation -- and continued negative assessments from Bush and Cheney could "become a self-fulfilling prophecy where they encourage consumers and investors to have less confidence than is warranted."
"Part of making the transition from a campaign to governing is understanding that your words and signals themselves can have an impact on the economy," Sperling said.
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