Asia Times: "Close, but Bush will win"

[Pascal L.]

Close, but Bush will win
By Marc Erikson

New Yorkers aren't amused. They'll vote for Democratic presidential candidate John Kerry and well over half of New York City residents in a recent poll regard this week's Madison Square Garden Republican National Convention as an undue imposition that once again could make them a terrorist target and - in a worst-case scenario - could put their lives at risk. Many have left the city to escape the mayhem of a foreign invasion. Of those who stayed, thousands joined a large protest march through midtown Manhattan against President George W Bush's policies. The Republicans promise "A Safer World, a More Hopeful America". New Yorkers don't quite see it that way - not in Harlem, not on Wall Street.

To candidate Bush, however, all this matters little. The Republican convention site wasn't chosen for New York City's voters, but for its victims. A total of 2,800 died there on September 11, 2001. The place is a powerful symbol to showcase George W's leadership in the "war on terrorism". While most of the world may disagree, Bush's performance in that war (and in Iraq) still earn him a high rating among a majority of Americans as commander-in-chief, well ahead of challenger Kerry's qualifications in that regard. He's determined to make the most of it.

In Las Vegas you can bet on most anything - but not on US elections. It's a federal law. British bookmakers, who are not under such restrictions, offer odds of 5/6 for both Kerry and Bush. Most recent US polls project a statistical dead heat. It is nonetheless likely that Bush will eke out a victory on November 2. Americans' basic attitudes on the major issues, the likely course of events over the coming two months, and key economic-demographic factors favor the Republican.

Let's start with the main issues.

1. Iraq/terrorism. A majority of Americans now disapprove of Bush's policies on Iraq; but they distinguish between that and the "war on terrorism" and approve of Bush's handling of the latter by 53% to 42% in the latest NBC/Wall Street Journal voters survey. Moreover, only 30% regard Iraq as the principal issue. That puts Kerry in a bind. While his own most avid supporters are strongly anti-war, most Americans don't think Iraq is that big a deal. Also, Kerry, like Bush, opposes an early pullout from Iraq and merely wants larger involvement of the international community - which matters little to the ordinary American.

When it comes to the "war on terrorism", Bush is seen as the stronger leader. Kerry tried to counteract the perception that he would prove a weaker commander-in-chief by playing up his Vietnam War record during the Democratic National Convention in Boston. But that was probably a mistake and overdone to the point of coming across as opportunistic and disingenuous, not the qualities of character a presidential candidate wants to display. Kerry served in Vietnam for four months and returned as a decorated war hero. He then became a vocal opponent of the war and testified against it before the US Senate. To my mind (I watched his 1971 testimony as a student and strong war opponent), that was the right and honorable position. But who is Kerry now or what does he want to appear to be? The Vietnam hero or the man who castigated the war and alleged atrocities committed by his fellow US soldiers? On this, Bush need not say anything and can just stand by and watch. To numerous Americans, Kerry's present posture and the way he reinvented himself at the Democratic convention smack of dishonesty and opportunism.

2. The economy. When Bush took office in January 2001, he inherited an economy bloated by the Internet bubble and falling into recession. The downturn was made worse by the events of September 11. To cope with it, the administration unleashed a double dose of fiscal stimulus - a record tax cut and greatly increased military spending. As a result, the federal budget went into deficit, but the recession proved shallow and recovery commenced in earnest last year, characterized by record gains in productivity and corporate earnings. But it lagged (and continues to lag) in new-job creation and wage earners' income - and that's Bush's Achilles' heel and Kerry's greatest political asset and opportunity. The problem is that he has failed so far to come up with a convincing economic policy alternative to restore job and income growth. He harps on the (undisputed) fact that the Bush tax cut tends to favor "the rich" (annual income over US$200,000) and should be canceled for the upper income brackets. Money saved should be allocated to education, health care and deficit reduction.

But it is far from clear how such a populist redistributionist policy would create more and better-paying jobs. The Republicans have countered that Kerry in effect wants to raise taxes rather than make cuts permanent, and that strikes a bad chord with pretty much all Americans, who in any case are suspicious of big-spending Democrats.

The new theme Bush will develop in his convention speech on Thursday will be "ownership society", the notion that government through tax and regulatory policies should encourage entrepreneurship (business ownership), facilitate home ownership, and allow families to control their own health-care and social-security benefits. It's likely to play well with the increasing number of Americans who define themselves as "middle class". The crux, however, remains whether US Federal Reserve chairman Alan Greenspan is right in saying that the economy in the second quarter of this year (when it grew at a mere 2.8%) merely hit a temporary "soft patch" and will resume rapid job creation. Only better payroll numbers will allow Bush to sidestep Kerry's "no jobs, lower pay" charges.

The presidential candidates' campaign positions and rhetoric on security and economic policy aside, the course and shape of events in September and October will, of course, substantially influence their electoral fortunes. On present evidence, that should give Bush an edge. With the return of the Grand Ayatollah Ali al-Sistani to Najaf, troubles in Iraq appear to be subsiding. Oil prices have come well down from their $49-plus recent highs, lending support to US stock markets and consumer confidence. Greenspan's economic forecast carries more credibility than Kerry's advisers'. On one key item, we'll know better this coming Friday when the US Labor Department publishes payroll numbers for July. The number of new jobs created in June was shockingly low - 32,000 versus economists' consensus forecasts of 240,000. Anything well below 100,000 for July would be another major disappointment and severe blow to Bush, from which he'd find it hard to recover. But even pessimists now believe that the July figure will come in at 100,000-150,000. Watch the stock market. If it's up in October, then - on near-uniform historical precedent - the incumbent, Bush, will win.

We've left some important economic/demographic indicators for last. They may prove the most important. Contrary to Kerry's contention in his convention speech that the US middle class is shrinking and its income declining, US Internal Revenue Service (the federal tax collector) statistics show that the number of tax returns in the $75,000-$100,000 bracket increased by 8% between 2000 and 2002 while the number of returns in the above-$200,000 categories dropped by anywhere from 10-50%. Incomes of those earning $100,000 or less advanced marginally, while incomes of the big earners above $100,000 declined substantially.

Overall, some 75% of Americans now consider themselves middle-class, 4% are upper-class, and the remainder working- or lower-class. The upper and working/lower classes in 2000 voted overwhelmingly Democratic and are now pro-Kerry. Al Gore, the Democratic candidate in that election, got fully 56% of the upper-class vote. And as the middle class has expanded, it has moved into the suburbs. In 2000, 50% of voters were suburbanites; this year it will be nearly 52% - and upward mobility out to the suburbs from the inner cities generally favors Republicans.

Upper-upper-class members, whether George Soros, Warren Buffet or Steve Jobs, have made no secret of their political preferences. On Wall Street, contrary to popular perception, Bush's support is soft. The rich don't much care about entrepreneurship, wealth creation and new-home ownership. They've got it. They worry about wealth preservation (and hence don't like deficits that drive down bond prices). The middle class does worry about fiscal and regulatory measures designed to create wealth and ownership. It's their principal preoccupation. Bush's "ownership society" will favor them and they'll favor it.

And then, of course, there's the Hollywood-Nashville divide. Nashville's country crooners like Bush; Hollywood's stars hate Bush and will vote Kerry by default. California and New York are solidly in Kerry's camp. But Gore in 2000 lost Tennessee, his own state. Tennessee again will be the better predictor this year.

(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact [email protected] for information on our sales and syndication policies.)
http://www.atimes.com/atimes/Front_Page/FH31Aa04.html