The President's Reelection Ducks Lined Up Jude Wanniski December 16, 2003

In his press conference yesterday, President Bush practically announced that his re-election has now been guaranteed by the capture of Saddam Hussein. With the economy growing stronger by the day, his Medicare reforms in his hip pocket, and Saddam in the clink, all his ducks are in a row. The President can remain above politics for the rest of the campaign season in a "Rose Garden strategy." He will not have to get down in the trenches to slug it out with Howard Dean, who is now assumed to be the Democratic nominee with his growing lead in the polls and the money race. This does not mean no punches will be thrown at the former Vermont governor; only that Mr. Bush will not throw them. Dean is now taking a pounding in television spots paid for not by the Bush team, but by citizens who oppose Dean and have the money to keep him on the defensive. Everything that Dean has ever said is now fair game, even though the TV spots have a way of unfairly characterizing them. He is still tangled up for seemingly asserting that Mr. Bush had advance knowledge of 9/11 and did nothing about it. It does him little good to explain that he heard someone else make that assertion and that the White House owed it to the public to make all its records available to the 9/11 commission in order to put such rumors to rest. 

What about those ducks?

SADDAM ON TRIAL: It would have been better for the President if Saddam had not been taken alive. If he now goes before a credible tribunal facing charges of genocide, the prosecution will have to prove its case that he if fact murdered 200,000 or 300,000 of his own people. That will be hard to do if the mass graves containing those bodies are not found. So far, there have been fewer than 4,000 bodies actually exhumed, and none of them have been traced to genocide, the most recent deaths those of 3,115 Shi’ites who died in the CIA-inspired uprising against the government that followed the Gulf War. It’s hard to see how any court could convict the duly-constituted head of state for putting down an attempt to overthrow the state. It is being widely assumed that the proof of real genocide exists and it will only be a question of getting it into evidence before a tribunal and Saddam will either be sentenced to death or life in prison. The hawks want the Iraqi Governing Council to control the trial, but President Bush yesterday acknowledged, “Whatever justice is meted out needs to stand international scrutiny.” If proof does exist, it has not been revealed yet. Joost Hiltermann of Human Rights Watch this week told me he is frustrated so little effort has been made to find the Kurdish victims of Saddam’s alleged genocide (which Saddam is already denying), but he is certain the effort will now be made in order to make the court case against Saddam. Dr. Stephen Pelletiere, the CIA analyst who led the US intelligence team investigating the genocide charges a decade ago, tells me he is just as certain the mass graves containing 100,000 or 200,000 Kurds will not be found, or they would have been found already. Just imagine if Saddam beats the genocide charges as the President is going toe-to-toe with Howard Dean in his re-election campaign. The White House rationale for pre-emptive war will have further evaporated. This is why there is already so much attention being given to the jurisdiction issue. A tribunal hand-picked by the Governing Council might be less rigorous in its assessment of “evidence” than the court at The Hague that is trying Slobodan Milosevic, and thus is having a hard time connecting him with the atrocities in Bosnia committed by his generals. However, it would not then “stand international scrutiny.”

ECONOMY: This “duck” seems safely aligned in the President’s favor at the moment. The monetary deflation that was such a political headache for the administration in its first 2 ½ years is now behind it, and the tax cuts on capital passed back in May continue to work their supply-side magic. The only dark cloud on the horizon is the potential for the inflation that is becoming embedded in the economy showing up in time to influence the voting next November. We note that Steve Forbes said on CNBC’s “Squawkbox” this morning that the Fed should raise the funds rate immediately to deal with the “inflation virus” before it causes real problems. By indicating he thought the numbers would not show up for 12 to 18 months in the broad price indices, Forbes more or less tells Karl Rove not to worry, as the election will be held in 11 months. The problem does get tougher if there is not sufficient increase in demand for dollar liquidity to keep the price of gold from rising further in the weeks and months ahead. The “inflation virus” would not only deepen, but also show symptoms earlier than 12 to 18 months, forcing the Fed into a series of interest-rate hikes that will jar the Rose Garden strategy. So far Howard Dean is not helping himself with his continued call for a rollback of the Bush tax cuts. The electorate might not get overly upset with a rollback of some of the Bush tax cuts, but it would not respond positively to increases in tax rates on capital formation. It never has. Dean can make up some ground by expanding on his campaign plank to seek a “simpler and fairer” tax system. He could also address domestic and international monetary issues better than the Bush Administration has done to date, under either Paul O’Neill or John Snow. We’ll probably have to wait for him to secure the nomination before these curtains go up, if they do at all. 

MEDICARE AND SOCIAL SECURITY: Mr. Bush let it be known that he had to have prescription drug legislation signed into law this year, and that he would sign practically any bill that could make it through the Republican Congress. That was the one duck that would be safely aligned with him through the 2004 elections, because the key provisions would not take place until 2006. This significant legislative triumph was made possible when he got the backing of the American Association of Retired Persons (AARP) for the compromise worked out between the Senate and House. Liberal Democrats screamed over provisions permitting a foot in the door for privatization and for blocking recycled imports of pharmaceuticals. Conservative Republicans voted for it while holding their noses over the monstrously expensive new drug entitlement. The White House simply told them that if the bill went down, a second version would be worse, pleasing the liberals, but the President would sign it anyway. This “duck” is already wandering off line, with seniors so unhappy with the AARP’s backing of the compromise that the organization has now informed the administration it has been forced to stop working with it on Social Security reform. You can read all about this on this link from the Baltimore Sun:
"Under Fire, AARP Backs Out of Social Security Forums."

Not only will Dr. Howard Dean have the entire Democratic Establishment behind him on this issue, but the President’s real conservative base (as opposed to the neo-conservative hawks) also will not likely back him up. The modest privatization measures had gladdened some conservative hearts, but chances of making much progress on Social Security reforms as part of the 2004 campaign are much reduced with the AARP’s decision not to play.

So what about those ducks? With 11 months to go, it is hardly likely that they will remain safely lined up, even with frequent tweaking by the White House political team. Staying above brass-knuckle politics in the Rose Garden will be a brief interlude for Mr. Bush, made possible by the good news of Saddam’s capture. On the other hand, he still seems a good bet for re-election next November, especially if Dr. Dean lags on the learning curve. As usual, I’ll wait as long as possible before I make my personal choice. 

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