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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (25217)	12/15/2000 1:41:01 AM
From: Dealer	Respond to of 65232

STOLEN STUFF: From: Les Horowitz He watches the Wilshire 5000. He gave the neutral bias tip when the Wilshire had reached the 20% correction area of 11,900.

To: Jim Willie CB who wrote (25217)	12/15/2000 3:26:01 AM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Bush's hidden blessing From the Milwaukee Journal Sentinel Last Updated: Dec. 14, 2000 Bill Clinton's time in office coincides almost perfectly with the longest economic expansion in U.S. history, which is why his stewardship of the economy may rank as the biggest accomplishment of his presidency. But George W. Bush may learn sooner than he wants the truth about the power of the president to affect the currents of America's economic life. The truth is that in an economy approaching $10 trillion in output, the influence of the Oval Office on growth is sharply circumscribed. If the next president doesn't yet understand this, his economic advisers aren't doing their jobs, and he is in for one whale of a surprise on Jan. 20, when he takes the oath of office. If he does and they are, Bush had better prepare himself and the nation for what is ahead. What's ahead is what's already here, except more so. It's called an economic slowdown, and it's unfolding faster and sinking roots deeper than the man most responsible for it - Federal Reserve Chairman Alan Greenspan - probably intended. All the familiar indicators are now in swoon state, or close to it. Retail sales: slowing. Consumer confidence: down. Corporate profits: cramped. Unemployment: starting to rise. Even if the economy's brakes slow the engine gradually, which would mean continuing growth and no recession, two things are bound to occur. Federal spending will tend to rise as certain unemployment-related payments come into play. And federal revenue growth from tax receipts will slacken. First question: More spending and less revenue equals what? Answer: smaller surpluses. Second question: What was the central issue, not counting character, of the presidential campaign? Answer: how to spend growing budget surpluses. For Bush, this apparent bind is a blessing in disguise. The tax-cutting zealots in his party will redouble their efforts, urging him to push hard for the $1.3 trillion in tax cuts he proposed during the campaign on the ground that the fiscal stimulus is needed to boost a faltering economy. But the new president can and should resist. Americans are not clamoring for tax cuts and won't if inflation remains barely perceptible and real earnings continue to expand. In fact, Bush will have the perfect reason to reduce the size of his plan, or perhaps even put it on hold: If the surpluses are smaller, there might not be enough money to fund everything. Priorities need to be set. Education, Social Security reform and other programs take precedence over tax cuts. If stimulus is needed, Bush can plausibly argue, let the Fed do it; Greenspan already has signaled that he may lower interest rates fairly soon. As we have said, with a Congress that has yet to demonstrate it can live within its own spending caps, it's critical to see if the surpluses are real and long-lived before committing to giant tax cuts. Paying down the national debt is not only wise economically, it is the right thing to do. Bush's father got caught flat-footed by a small recession in 1991-'92, and it cost him re-election. The son has much more freedom of movement. He can count on something that hardly existed then - the so-called new economy and its technology-based innovations that have driven strong increases in productivity. And he can count on something else: By the time he faces re-election, today's slowdown - whether it leads to recession or not - will likely be ancient history. Appeared in the Milwaukee Journal Sentinel on Dec. 15, 2000.