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CNN Sunday Morning

Interview with Ron Brownstein

Aired January 27, 2002 - 11:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: : Though President George W. Bush continues to enjoy strong support from the nation, the weak economy may prove to be his Achilles' heel and give the Democrats the leverage they need in this fall's congressional elections.

CNN's John King looks at the politics of the economy.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): Not the sound or look of your average recession, but look beyond the strength of the housing sector, and it is clear the state of the economy is not so good. And the nation's unemployment rate is 5.8 percent, up from 4.2 percent, when President Bush took office a year ago.

Big layoffs generate big headlines. Ford workers the latest to test the realities of the new economy.

BOB LAPOINT, PRESIDENT, UAW LOCAL 981: You cannot go out and find jobs that will pay you the salary and the hourly rate that you make in the auto industry.

KING: There are no auto plants in Washington, but there is an election year ripple effect. A slower economy also means lower tax receipts. The surplus of a year ago now but a memory, the debate these days over whether Mr. Bush is to blame for the return of deficit spending.

DIANE SWONK, ECONOMIST: We don't know how bad it's going to be yet, because a lot of those decisions will depend -- a lot of those outcomes are dependent on decisions that are made this year.

KING: The president will frame the economy as a major State of the Union challenge. Mr. Bush wants Congress to try again to strike a short-term economic stimulus deal, leave his big 10-year tax cut in place, expand his powers to negotiate trade deals and pass his controversial energy plan.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A national energy plan will help us conserve more and produce more. It will make us less reliant upon foreign sources of energy, and it will help us create more jobs.

KING: So far, the slow economy has not translated into a political problem for the president.

BILL MCINTURFF, GOP POLLSTER: When you ask people what is his job, I mean what should the president do? What they say is, "Look, his job is to make sure we're safe at home, no more tax in this country, and his job is to prosecute the war on terrorism around the world."

KING: And this scene could be a sign the worst is over.

(on camera): In most recessions the housing industry is among the hardest hit sectors of the economy, but one trademark of this slowdown is that while businesses have cut back dramatically on spending, consumers have not shied away from buying big-ticket items like new homes.

(voice-over): Builder Gary Garczynski sees a strong year ahead.

GARY GARCZYNSKI, NATIONAL ASSOCIATION OF HOME BUILDERS: And all of the factors for a continuation of housing leading the economy hopefully out of the recession are in place. We have historically low interest rates. We have great demand because of those rates.

KING: Even those optimistic about the economy's future say the recession has changed the political debate for the worst.

SWONK: Whatever happened to the lock-box talk and talk about social security. Nobody is talking about the real large issues that this economy is going to face over the longer term here, and it's a longer term that's getting closer and closer by the year.

KING: And the unemployment rate is likely to rise in the months ahead, even if business takes a turn for the better. That complicates the politics of the economy.

TOM GALLAGHER, POLITICAL ECONOMIST: So the markets and economists say the recovery is here, but if voters use the unemployment rate as a measure of whether or not the recession is over, they may grow more discontented with the economy over the course of the year.

KING: Democrats view the economy and budget as the major battlegrounds in this year's congressional elections, and Republicans hope Mr. Bush uses his wartime popularity and his State of the Union platform to frame things their way.

John King, CNN, the White House.

(END VIDEOTAPE)

WHITFIELD: And as John King mentioned, the State of the Economy always has a political dimension too. Here to asses the impact of the economy on the Bush presidency is Ron Brownstein, political correspondent for the "Los Angeles Times." He is with us from New York this morning -- hi there, Ron.

RON BROWNSTEIN, "LOS ANGELES TIMES": Good morning. WHITFIELD: Well, the economy is one thing, $38 million more in military spending another, as well as the war effort -- all of these things that are going to be taking priority in Bush's State of the Union address. But where do you think the emphasis will be? Will it be the economy in your view?

BROWNSTEIN: Well, I think that the American people are going to be looking primarily for two things from the president in that State of the Union address. And one would be an update on the war against terrorism, an assessment of how we're doing and what, if anything, comes next. And secondly, a report on the economy, and what his plan is to move the economy forward.

He has given us more indication in the last few days about what some of the themes are going to be on the war side, obviously a big increase in defense spending, as you mentioned, as well as a very large increase in spending on Homeland Security, which I suspect will be a central emphasis in his speech.

What's left here, Fredricka, is whether the president really has ideas that can move out of the impasse we're in between Democrats and Republicans in Washington over what, if anything, to do in terms of additional policy to stimulate the economy at this point.

WHITFIELD: Well, President Bush is enjoying quite the approval rating right now, with 82 percent in part galvanized by the war effort. Is it time now to focus more on domestic issues? Others would argue that increased spending on Homeland Security is, indeed, focusing on the domestic issues, not necessarily international efforts.

BROWNSTEIN: Well, I agree with the, you know, the comment in John's piece, but I think the country, by and large, agrees with the idea that the president's top priority at this point has to be safeguarding the nation against terrorism, whether that's military action abroad or increasing our security home. And, you know, last week in one of his addresses, I believe in West Virginia, the president flat out said, "You know, I come in in the morning, and the first thing I think about is, you know, what do we have to do to protect America from those who would do us harm."

Now, having said that, I think that the people do expect, an administration is big enough and a day is long enough, that it can focus on both fronts at once. And ultimately, there will be some price to pay for the party in power if history is any guide if the economy stays weak through the fall. So the president isn't on the ballot in 2002. Those who have to worry about are more the Republicans in Congress, and I do suspect that you will see, especially with the precedent of his father in mind and the fact that his enormous popularity and success in the Gulf War didn't save him in '92, I think you will see this administration trying to do both things.

WHITFIELD: If I'm one of the 800,000 Americans laid off since September 11, I'm going to be, you know, watching that State of the Union address like this, with my arms folded, wanting to hear from President Bush specifically, How are you going to be able to help me.

BROWNSTEIN: Yes.

WHITFIELD: Do you think that President Bush is going to have some examples, some concrete plans for people in that situation?

BROWNSTEIN: Well, he does have concrete plans. As you know, they have been debating all fall in Washington what kind of stimulus plan we need out of Congress to try to juice the economy a little bit. The problem is, is that we've reached impasse on that. What the administration wants to do essentially is pursue almost a second generation of the tax cut from last spring, some encouragement for investment, some acceleration of the income tax reductions, tax cuts for people who are unemployed to buy health insurance.

And that ran into a dead end in the Senate. There weren't 60 votes, which is what you need in this kind of a situation to do that. There weren't 60 votes for what the Democrats wanted to do either. So we ended up with no stimulus bill, and we ended up with an impasse.

The question is, I think, whether the president is going to go forward and simply resubmit all of that and try to leverage it through, or whether he's going to move in a different direction, acknowledging that there has to be some changes if there is going to be an agreement.

The other thing, Fredricka, I think that he's going to emphasize in terms of jobs is his energy plan, which he has been talking about quite a bit lately, both in the context of national security as a way of decreasing our reliance on foreign oil, but also emphasizing it as a jobs program. And that's also an idea that as written -- it did pass the House -- but as written, doesn't have enough support to get out of the Senate.

So on a lot of issues, the question is does Bush want confrontation, or does he want to compromise and make a deal with the Democrat Senate that doesn't want to go exactly in the same direction he does?

WHITFIELD: All right. Well, there are an awful lot of people in different facets of the community who will be listening and waiting to see exactly what he has to say. All right, thanks very much, Ron Brownstein, for joining us from New York this morning.

BROWNSTEIN: Thanks.

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