March 17, 2008 / 6:31 PM / 10 years ago

Bush and economy: In control or in denial?

By Matt Spetalnick - Analysis

WASHINGTON (Reuters) - As a steady drumbeat of alarming economic news raises the specter of global financial meltdown in the twilight of his final term, U.S. President George W. Bush is doing his best to avoid even uttering the word “recession.”

“A lot of uncertainty,” he said as he soft-pedaled the economic situation last month. “A rough patch,” he called it as the crisis deepened last Friday. “Challenging times,” he acknowledged on Monday.

His penchant for understatement in the face of what some on Wall Street see as the worst threat to the world financial system since the Great Depression has again underscored questions about his ability to lead through a major crisis.

Some critics have accused him of being in a state of denial over the severity of the problem, which started last year with an imploding U.S. housing market and quickly spread to credit markets and the broader U.S. and global economy.

“The laissez faire attitude -- don’t be involved attitude -- towards the housing crisis is what’s caused this,” Sen. Chuck Schumer, a New York Democrat, told CNBC, saying he hoped Bush would take it as a “wake-up” call.

Not since Hurricane Katrina devastated New Orleans and other parts of the U.S. Gulf Coast in 2005 has Bush faced so much criticism of a too-little, too-late government response in a national time of need.

The latest shock waves came on Sunday when the U.S. Federal Reserve announced a series of emergency measures in a bid to reverse a rising tide of panic in financial markets.

It backed JPMorgan Chase & Co’s deal to buy stricken investment banking firm Bear Stearns at a fire-sale price while expanding lending to securities firms for the first time since the Great Depression in the 1930s.

The news slammed the dollar to a record low against the euro and pummeled global financial stocks.

Trying to calm fears, Bush insisted on Monday the U.S. government was “on top of the situation” and promised further action, if needed, to keep order in the markets.


Bush’s comments followed a speech to the Economic Club of New York on Friday acknowledging the United States was going through hard times but insisting the long-term outlook was bright.

“I‘m coming to you as an optimistic fellow,” Bush said as he joked and improvised his way through an address to the country’s top bankers and industrialists.

His main message was that the government had to be patient enough to await the impact of an economic stimulus package already in motion and to avoid the temptation to overreact.

But critics accuse Bush of seeing the economy through ideologically tinted glasses and refusing to take decisive action needed to give it a genuine boost.

“There is no sense of urgency or presidential leadership,” Democratic presidential candidate Hillary Clinton said. “We have squandered our position of strategic leadership because of the misguided and failed economic policies as well as the mistakes in Iraq.”

The White House defends Bush’s approach. “The president gets regularly updated,” White House spokeswoman Dana Perino said. “And the president is extremely concerned.”

With his approval ratings near the lows of his presidency, Bush has to be mindful a recession could hurt his Republican party’s chances of keeping the White House in November’s presidential election. Democrats want to paint presumptive Republican nominee John McCain with Bush’s policies.

This wasn’t the way it was supposed to be when Bush took office in 2001. His supporters touted him as the first “MBA president” -- Bush holds a masters of business administration from Harvard University -- who would run the executive branch like a corporate CEO and manage the economy like a business.

But Bush’s Democratic critics contend that billions of dollars have been wasted on the nearly 5-year-old Iraq war and the large tax cuts he engineered have mostly helped the rich while doing little to lift the poor.

He now faces the very real threat of ending his watch in recession.

Adding to U.S. economic woes are record high energy prices, with Bush showing himself all but powerless to coax Arab oil-producing allies to increase production.

Bush’s stewardship of the economy, once seen as a bright spot in a legacy likely to be dominated by Iraq, could now end up as a black mark on his presidential record.

Editing by David Wiessler

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