Bush Catch-22: Job Benefits Bill Tests Resolve

JUST as new economic indicators came out this week forecasting a precarious, uninspired recovery, Congress handed President Bush a stark choice.He could soften the hard knocks of the recession by adding a few more months of unemployment benefits for the jobless whose six months of insurance had run out. Or the president could stay his course, riding out these economic doldrums without adding the $6.4 billion cost of the benefits to the deficit. The choice frames what may be the greatest potential vulnerability for Mr. Bush in the 1992 presidential election - doubts over the priority he puts on the pocketbook problems of middle-income American families. His answer on extending unemployment insurance has been clear for weeks. "I am trying to protect the taxpayer as well as the unemployed," he told reporters on Wednesday, reaffirming his decision to veto the benefits. "We are using tons of money to pay unemployment benefits, and what I want to do is to see [a bill] that does not break the budget and further burden a burdened economy." The recession has not been deep, and it has not made a strong imprint on voters' views of the president. Even though twice as many voters disapprove of his handling of the economy as approve, his overall job-approval rating still runs at nearly 70 percent. When asked by the Gallup Organization in September whom they blame for the slow economy, only 15 percent of voters blamed Bush. Congress was blamed by 62 percent. "It just points to how politically inconsequential this recession is," says Karlyn Keene, a public opinion analyst at the American Enterprise Institute. But the sluggishness of the recovery presents a potential drag on Bush's reelection effort in 1992. Fred Steeper, a Republican pollster who sometimes advises the president, sees some political danger. He notes that a slow economy affects large numbers of voters who are not hurting financially but sympathize with those who are. He also notes that voter perception can lag nine to 12 months behind the beginning of a recovery. "Polls are showing now that people don't believe there is a recovery," he says. The recession has been concentrated in the Northeast, a region less important than others for a Republican candidate. But the recovery is especially slow in California, says Mr. Steeper, which is "very important." Bush's vulnerability on the economy reaches beyond the recession and recovery, says Democratic pollster Stanley Greenberg. After a series of focus-group discussions with voters, he sees a growing perception that the past few years have not been good ones for Americans. Average incomes have not risen in constant-dollar terms in a decade, he says. "It has really sunk into the public consciousness, not only that George Bush doesn't have a domestic policy, but that he doesn't care," says Mr. Greenberg, who is working with Arkansas Gov. Bill Clinton on his potential Democratic presidential campaign. Both houses of Congress passed the benefits extension on Tuesday by wide margins, but it was two votes short of a veto-proof majority in the Senate. The cost of the benefits is covered in a $7.7 billion trust fund earmarked for unemployment insurance, but spending from the trust fund would still add to the deficit because the government has, in effect, borrowed that money for other purposes. An argument that Democrats are especially eager to make is that Bush is more interested in keeping food on Soviet tables than American. Sen. Lloyd Bentsen (D) of Texas, a sponsor of the unemployment benefits extension bill, predicts that Bush will raise the deficit this winter to give emergency aid to the Soviet Union. "You watch it," he said at a Monitor breakfast with reporters Wednesday. "The president wasn't ready to do that for the unemployed here." With that attack, says Steeper, "they'll hit a responsive chord with some sectors in the country." Many Democrats seek to shift some tax burden off middle-income families and onto the more affluent to stimulate consumer demand and prime the economy. Business interests are more concerned with promoting investment with tax cuts for capital-gains income, a position Bush shares. However, Larry Hunter, deputy director of economic policy at the US Chamber of Commerce, says that business is increasingly disillusioned over the lack of a Bush recovery policy. "Right now, I think people do not take the Bush administration seriously," he says.