Morning Political Note: Jan. 21

W A S H I N G T O N, Jan 21 -- Enron continues to dominate the business sections, but as a political story, barring any unforeseen major developments, we expect it to take a back seat this week to the inexorable build-up toward two huge Big Casino events: the State of the Union, just eight days away; and the release of the White House budget in early February, the contours of which Administration sources are beginning to sketch out in the print media.

News Summary

According to the Washington Post, the budget went to the printer last night.

Setting the stage for these events, the Congressional Budget Office will release its revised estimates this week, with the CBO director testifying before the Senate Banking Committee on Wednesday. Fed chief Alan Greenspan will testify before the committee on Thursday.

Still unclear are details on whatever separate economic address(es) the President may intend to give, per the earlier ideas being "kicked around" by the White House for him not to talk about the economy in detail in the State of the Union. Bush will give an economic speech tomorrow in West Virginia, but whether or not he plans to escalate his usual rhetoric remains TBD.

The Washington Post yesterday had this key point about the forthcoming White House budget: "The cost of fighting terrorism at home and abroad will require so much money in 2003 that President Bush plans to propose a budget with little or no growth in most other areas of government, according to administration officials. The budget, which goes to the printer tonight and will be released Feb. 4, is being submitted to Congress at a time when the economy is contracting, leading to heightened demand for social services." http://www.washingtonpost.com/wp-dyn/articles/A8849-2002Jan19.html.

"The White House plans to sell the lean budget as part of a process of bringing rationality to government by eliminating duplication and demanding results."

We wonder when, if ever, Concord Coalition types will start arguing that the Administration should be making harder and more precise choices on program and spending cuts. And of course, as more details leak out on what social programs aren't seeing increased funding, they'll get hit from the other side.

By simultaneously running a deficit, dipping into the Social Security and Medicare trust funds, failing to make substantial cuts in spending programs, and (yet) significantly restraining the rate of growth in spending on many programs beloved by members of both parties — all in one budget! — the White House is just asking to be smacked around.

They clearly are hoping that the President's wartime image will insulate him from this unusual budget vise.

One group who will be watching the budget battle closely and directly incorporating what happens there into their decisions on how to vote will be the elderly — who, as you know, tend to vote in higher numbers than other demographic groups. The New York Times ' Robin Toner gives both parties a front-page reminder that off-year elections see older votes turn out in even greater percentages, and that retirement income security is going to be big this cycle. http://www.nytimes.com/2002/01/21/politics/21ELDE.html

Newly elected Republican National Committee chairman Marc Racicot yesterday arguably gave Democrats their Ted Kennedy opening — their chance to retort to the GOP's attacks on them as tax-hikers — when, presumably in the interests of consistency, he conceded to Tim Russert that Florida Gov. Jeb Bush's scale-back of his promised tax cut essentially amounted to a tax increase.

We'll be watching to see whether Ari Fleischer and the White House economic team can continue to fight off requests for comment with that old Bush campaign stand-by ("The President doesn't comment on state issues," except, of course, when he does), and continue to relentlessly hammer Tom Daschle and the Democrats for supposedly secretly hankering to raise taxes, if not actually calling for that.

As the Washington Times ' Hallow records, "Asked by Tim Russert … whether Florida Gov. Jeb Bush's decision to delay, because of state deficits, a scheduled tax cut amounted to a tax increase, Mr. Racicot answered, 'I think that argument can be made in all fairness, yes.'" http://www.washtimes.com/national/20020121-29425858.htm

"In tacitly criticizing the Republican Florida governor, Mr. Racicot evaded a trap. To have said otherwise would have contradicted President Bush's argument that efforts by Democrats in Congress to delay tax cuts passed last year amounts to a tax increase in the midst of an economic downturn."

We think Racicot fell into a trap (rather than evaded one), and we predict it won't be the last time that the President's hand-picked chairman's plain-speaking ways create some intellectual, if not personal, conflict with the White House.

Elizabeth Bumiller's "White House Letter" in the New York Times says Racicot's comments make him "the first member of [Bush's]inner circle to toss the president's younger brother over the side." The story also points out the White House's anxiousness to make the "Democrats = tax increasers" case again and again. http://www.nytimes.com/2002/01/21/national/21LETT.html

But for the average voter, that guy from Montana's measured remarks don't have quite the same impact as the image of Ted Kennedy pounding the lectern on behalf of what could be interpreted as a tax increase.

As Racicot knows, sometimes governors just have to raise revenue by raising taxes or delaying tax cuts in order to get their budgets balanced. Even so, the state budget shortfalls around the country present a potential ticking time bomb for the Administration if they wind up suffering sweeping losses among the ranks of their governors in November.

As it happens, Jeb Bush will deliver his State of the State tomorrow in Tallahassee. Meanwhile, the Republican governor of Massachusetts will announce another round of emergency spending cuts today, plus the diversion of a scheduled payment to the state employees' pension fund. http://www.boston.com/dailyglobe2/021/metro/Swift_to_cut_programs_by_55m_more+.shtml

President Bush himself will hear major speeches from two would-be Democratic presidential opponents this week, with Sen. John Kerry speaking on energy issues on Tuesday, and House Minority Leader Gephardt speaking on the economy on Thursday (something of a warm-up to his delivery of the Democratic response to the State of the Union a week from Tuesday). A third 2004 wannabe, Sen. Joe Lieberman, will kick off Enron hearings on Thursday in his role as chairman of the Senate Governmental Affairs Committee.

The White House views the actions of these three Democrats and other would-be candidates through a strictly political prism, as do the advisors to the other Democratic potential candidates, all of whom will be watching to see whether any of these guys can gain some political mojo for '04.

Speaking of performance, Gephardt gave a well-received and favorably covered speech at the Democratic National Committee winter meeting on Saturday morning. Senate Majority Leader Daschle had the misfortune of "speaking" after Gephardt via brief pre-taped remarks which did not cover recent events like Karl Rove's comments in Austin, and thus got only polite applause from the crowd.

It's rare for a political adviser to the President, especially this President, to speak so openly about strategy and polling. No, we're not talking about Karl Rove's comments from Friday about the war — we're talking about party pollster Matthew Dowd's Saturday morning presentation at the RNC meeting, which is worth looking at in some depth (in part here, but more below).

Looking at public polling data, Dowd argued that Americans believe the economy is going to get better, which he thinks is more important than feelings about current conditions.

Comparing 43 to 41: President Bush the Elder was dealing with low optimism on the economy during his presidency; people thought things were going to get worse. Whereas this President Bush is in a position more similar to that of President Clinton, with greater optimism about the country's economic future.

The same comparison holds in terms of approval of the President's handling of the economy. Republicans overall today have an advantage on the question of who's better at handling the economy, and have a 30-point advantage on handling terrorism, while the White House continues to tout signs in the polls suggesting that the President has helped the GOP eliminate the gap on handling education.

Democrats are going to need to change the issues matrix to win this election, Dowd argues, bringing Social Security and health care back into play. Republicans are highly unlikely to lose their advantage on terrorism in the next 10 months, he says, so the big issue (no surprise) is going to be the economy. And Democratic efforts to win the message war on that issue are being sorely hampered now because they currently are on the defensive, having to deny they want to raise taxes.

Republican strategists laugh at Senators Daschle and Kennedy for giving high-profile speeches that have put them in the "When did you stop beating your wife?" situation. That's why party chair Terry McAuliffe has been trying to stop the tax debate, and is hoping to have the President's budget — with its cuts/restraints in growth, rosy scenarios, and deficits in the out years — be the organizing document around which the debate is conducted leading up to election day.