As he prepared for his State of the Union address on Jan. 28, President George W. Bush faced perhaps the most daunting set of economic and security issues since the early 1990s. On the economic front, slowing growth was likely to mean weakening consumer confidence and increasing corporate gloom about profits for 2003. The threat of war with Iraq, tensions with North Korea, and the likelihood of future terrorist attacks raised the specter of U.S. military action on multiple fronts.
Beyond these very real problems was a growing sense that the Bush Administration was starting to drift and lose focus. The President's economic plan--highlighted by the proposed elimination of the tax on dividends--was controversial but had the virtue of being a bold move supported by many reputable economists. However, the Administration seemed to be falling short when it came time to sell the program to Congress and ordinary citizens. Similarly, the White House appeared to be missing chances to justify the need for a military operation to disarm Iraq.
In many ways, Bush's speech was designed to deal with these problems. He took great pains to lay out his priorities for the economy, while making his case for the war with Iraq. But he did not fall into the trap of understating the potential difficulties ahead, either militarily or economically.
Still, the State of the Union address is only a starting point. Bush and the other members of his Administration need to build a stronger base of support for his policies. And as the new members of his economic team--John W. Snow as Treasury Secretary and Stephen Friedman as national economic adviser--are approved, they must become more forceful advocates of the President's plan.
At the same time, Bush may have to show some flexibility on the details of his economic stimulus package. BusinessWeek has supported the elimination of the tax on dividends, but there is increasing fear among corporate executives and accountants that the cut as proposed is too complicated to implement effectively. It may be necessary to substantially revise the proposal to take account of the rising chorus of criticism.
Corporate executives, investors, and workers are looking for Bush to provide leadership and direction. In times of trouble, that's the most important thing a President can do.
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