As he drove into work early on Nov. 6, the morning after George Bush's historic midterm election victory, BusinessWeek's Washington bureau chief, Lee Walczak, had two big thoughts on his mind: Besides ratcheting up the pressure on Iraq, how would Bush use his mandate, and how quickly would he act? A few hours later, Alan Greenspan's half-point rate cut brought the U.S. federal funds rate to a 41-year low of 1.25%, proof that the Federal Reserve would take no chances with the softening economy. But instead of rallying, stock markets teetered. Even the one-two punch of a major Republican victory and an outsize rate cut could no longer be enough to cancel out mounting economic worries.
For us, that meant the story is now how boldly Bush will act to energize the weary U.S. consumer and lure business into a little investment spending. Bush's aides are soft-pedaling the need for a big economic package. But "covering this Bush always means being ready for a surprise," says Walczak. "He has proven he'll take risks."
Walczak should know. He's reported on Bush's father and five other U.S. Presidents in his 30-plus years in Washington. Along with Rich Miller, our chief Federal Reserve correspondent, Richard S. Dunham, our White House watcher, tax policy correspondent Howard Gleckman, and Deputy Bureau Chief Paula Dwyer, this Washington policy team is a close-knit bunch. Their view is that Bush and Greenspan are fighting stiff headwinds as they battle a foundering global economy.
After the Fed's rate cut, Miller wrote about "the worry beneath Greenspan's words." He suggested that the Fed's cut was a psychological ploy to coax corporate chieftains into spending more by saying the risks to the economy are now balanced. But U.S. business is also eyeing declining economies overseas. "If the European Central Bank had chipped in with a rate cut, it would have been an important psychological boost for business and the markets," notes Miller. But that didn't happen.
The other two big shadows over economic recovery are of course the impending Iraq war and America's ongoing battle with corporate sleaze. Bush's Iraq war-gaming is Pentagon Correspondent Stan Crock's beat. This week, he teamed up with Middle East Correspondent Stanley Reed, now in Riyadh. They size up Saudi fears as a war deadline looms.
Covering America's corporate accounting scandals is the responsibility of Dwyer and Securities & Exchange Commission Correspondent Mike McNamee. They look at how Bush will address the leadership vacancies atop the SEC and at the new U.S. accounting industry oversight board.
"Election '02 was one for the record books," says Walczak. "But deadline-induced scurrying is pretty typical for us each week." It's all part of trying to stay ahead. We hope you benefit from the results.
By Bob Dowling, Managing Editor, International
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