Time to step up to the plate
By David Gergen • Editor-at-large
US News & World Report
7/29/02
Advisers to George W. Bush say he has done enough to bolster the economic outlook and will resist further actions. Beg your pardon? To protect the country and indeed to protect his presidency, he ought to do just the opposite, asserting the same decisive leadership we saw last September.
While the underlying fundamentals are strong, as Alan Greenspan testified, investors are in a funk, and no one knows where the bottom is. Even as the Dow hit a new post-9/11 low last week, the deputy secretary of the treasury was telling foreign reporters that the market is still overvalued, and some market sages believe it could even skid into the 6000-to-7000 range. Remember Greenspan's "irrational exuberance"? The Dow stood at 6400 then.
There's a case to be made, however, that pessimism has gone too far–that we are in a reverse bubble where exuberance has given way to irrational gloom. Thus, we shouldn't panic. But it's also possible the pessimists are right and that we're in for more rough times unless we take strong, curative medicine. The more average Americans try to figure it out, the more confusing the picture can be.
Which is why we look to our president at moments like this. For 70 years, since Franklin Roosevelt galvanized the nation with his inaugural declaration that "the only thing we have to fear is fear itself," we have expected the president to shepherd us through economic crises. FDR found that he could not dispel the Depression. But he realized that when a leader can't solve a problem, he can at least help people through it. And that's what he did: He built a bridge of hope, helping people hang on until they reached safety.
Across the valley. Sadly, Bush so far has drawn more comparisons to Herbert Hoover than to FDR. For a man who stood so tall after September 11, Bush has been slow and wobbly in tackling the crisis in corporate ethics. In an administration that has had an exquisite sense of the public mood since taking office, it has also been tone deaf in answering questions about the past business careers of both the president and vice president. Two thirds now say his team is too beholden to corporate interests.
If he stays on this course and the markets continue to deteriorate, the damage could be huge. A slide of another 20 percent or more would destroy the dreams of many retirees, further spook consumers, put more pressure on the dollar, and crack the housing market, now the last, best hope of millions. If the Dow is unlikely to see 10,000 anytime soon, as many experts expect, it will bode ill for the Bush presidency. His polls remain high, but members of Congress who stood in awe of the president only a few months ago are now challenging his policies in one area after another–the economy, homeland security, and Iraq.
What to do? Just as FDR couldn't wave a wand and end the Depression, Bush can't order stock prices up. But as Roosevelt did–and as Bush has done in the war on terrorism–he can show people that their government is fighting to protect them and that, however deep and long the valley, we will find safe ground on the other side.
For starters, Bush should stop shilly-shallying about which legislative version of reform he prefers and swing solidly behind the bill sponsored by Democratic Sen. Paul Sarbanes of Maryland, embraced by former Fed Chairman Paul Volcker, and passed by the Senate 97 to 0. Then he should act to shore up his economic team. Fairly or not, his Securities and Exchange Commission chief, Harvey Pitt, is far too compromised now to be effective. Others are good people but do not inspire the same confidence as the president's national security advisers.
To gain public confidence, Bush should ask Volcker to head a new, bipartisan economic advisory council that brings to the White House on a regular basis the most respected economic figures in the country. People like Robert Rubin, Warren Buffett (who has been influential in decisions by Coca-Cola and the Washington Post Co. to properly expense stock options), Lou Gerstner, Pete Peterson, Hank Paulson, Carla Hills, and Martin Feldstein. Invite congressional leaders to join, and after the Sarbanes bill passes, ask for a pause in legislation so that the president and his expanded economic team can figure out what more is needed.
Bush must also act swiftly to lance the boil forming around his own ethics and those of his vice president. Both Bush and Dick Cheney have proven records of honor, so they certainly deserve the benefit of the doubt. But their reluctance to disclose all documents and answer all questions about their past business activities is now hurting them. Full disclosure will put this issue behind them.
In his second fireside chat, FDR confessed that he would make mistakes in economic policy, but if he kept swinging, he said, he would get some hits. He did. Bush has made some missteps early on. But if he steps up to the plate again and starts swinging, they will soon be forgotten.
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