Bush Seeks To Put Focus On Economy In Iowa Visit

Author: Richard W. Stevenson

Published: April 16, 2004

With the strengthening economy overshadowed for weeks by the insurgency in Iraq and the investigation into the Sept. 11 terrorist attacks, President Bush sought on Thursday to turn the spotlight to his tax cuts and the improving outlook for jobs.

In a two-hour stop in Iowa, a state he lost in 2000 by little more than 4,000 votes, Mr. Bush used the occasion of the April 15 tax-filing deadline to renew his call to make permanent the tax cuts he has championed over the last three years and to assert that the economy is recovering nicely because of them.

"Things are improving," Mr. Bush said, ticking off positive statistics including the creation last month of 308,000 jobs, the best performance in years.

With Mr. Bush struggling to hold on to the political advantage his campaign had assumed he would have this year on national security, the rebounding economy has become all the more important to him in his closely fought race with his Democratic rival in the presidential race, Senator John Kerry of Massachusetts.

Mr. Bush never mentioned Mr. Kerry in his speech, to a symposium on the rural economy. But the White House and the Treasury Department released statistics that they said showed the benefits, to individuals and the economy as a whole, of Mr. Bush's tax cuts, and the Bush campaign continued its effort to portray Mr. Kerry as intent on raising taxes.

Mr. Kerry struck back, trying to turn the tables on Mr. Bush. In a speech at Howard University in Washington, Mr. Kerry said he would provide more tax cuts to the middle class than Mr. Bush would and asserted that the president had undermined the economy's long-term strength by saddling it with huge budget deficits.

"George Bush has made a big deal out of trying to convince America that he's lowered taxes for all Americans and that I'm going to come along and somehow raise taxes on Americans," Mr. Kerry said. "He's misleading Americans one more time. There's a big truth deficit in this administration, and this president is busy trying to run away from his own record and create a phony one for someone else because he doesn't have a record to run on."

Mr. Bush used his appearance in Iowa, a farm state with a keen interest in exports, to reiterate his commitment to trade as an engine of economic growth, and to scoff at the argument being made by some Democrats that the United States should protect jobs by erecting more trade barriers. Yet even as he expressed his faith in the ability of Americans to compete and win on world markets, he acknowledged, more explicitly than he usually does, the anxiety that has come with globalization and outsourcing.

"And there is some uncertainty," he said. "I mean, look, people are worried about finding work. There are families wondering whether or not their loved one can find a job close to home, because this is a changing economy."

Without the tax cuts of the past three years, the White House said, total economic output at the end of last year would have been 3 percent smaller and the unemployment rate would have been more than one percentage point higher, with more than 2 million more people out of work.

The figures were part of an effort by the administration to develop a statistical case for Mr. Bush's tax policies and against those of Mr. Kerry.

Administration officials said the Treasury Department made the calculations on the basis of an economic model owned by Macroeconomic Advisers, a forecasting firm based in St. Louis.

Joel Prakken, president of Macroeconomic Advisers, said his own company's estimates about the impact of the tax cuts were slightly lower than those of the administration but "in the same direction."

"The truth of the matter is that you don't know what would have happened otherwise," Mr. Prakken said. "But I have no doubt that unemployment would have been higher without the tax cuts."

Other economists were more skeptical, noting that job creation in this economic recovery has lagged behind that in any previous rebound, including the so-called jobless recovery of the early 1990's.

"It's natural that people put out information on April 15," said William Gale, a senior fellow at the Brookings Institution, a research organization that has been sharply critical of the Bush tax cuts. "It is not natural to put out a statement that Americans have a choice between tax cuts and higher unemployment."

Outside economists generally agree that the tax cuts have given the economy at least a temporary lift. They are divided along partisan and ideological lines, though, about whether the scale and composition of Mr. Bush's tax reductions will help or hurt the economy in the long run after taking into account factors like the rising budget deficit. And liberal economists have increasingly been making a case that Mr. Bush's tax cuts and their effect on the deficit have constrained the government from putting money into other needs that have economic payoffs, including education and improved health care.

In the end, economics, like politics, is local, and Iowa's economy illustrates both the opportunities and the difficulties facing Mr. Bush.

If the state's job market is measured compared with where it stood when Mr. Bush took office in January 2001, it has lost ground. Since then, the state has lost 31,900 nonfarm jobs, a drop of 2.2 percent. The unemployment rate has gone from 3 percent when Mr. Bush was sworn in to 4.1 percent in February of this year, the latest month for which figures are available.

But the economy in Iowa has turned up in the last year, with the state regaining some of the ground it lost in Mr. Bush's first two years in office. The number of jobs has risen by 5,200 since February 2003, a rounding error in percentage terms but a turnaround after several years of downturns. The unemployment rate has fallen slightly from 4.3 percent in February 2003.