Wall Street's Verdict

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This isn't about just short-term market swings. Across the country, people are wondering whether their shrinking retirement nest eggs will force them to extend their careers indefinitely. (See cover story, page 22.) And that angst and anger is starting to find political expression. Only 52% of the participants in a New York Times/CBS News poll last week said they think Bush is doing a good job on the economy, down from 72% in October. Meanwhile, 61% believe that members of the Bush Administration are protecting the interests of business over those of ordinary Americans. It doesn't help that Bush (from his time as a Texas oilman), Cheney and other high-profile members of the Administration have been stained by the accounting scandals. Says an Administration official: "Wall Street looks at the Administration as CEOs who don't know how the markets work, and the public looks at them as just a bunch of CEOs--a group in bad odor. They lose on both scores."

In what is becoming a political war over the economy, Bush's army is filled with pacifists. His chief economist, Larry Lindsey, is a laissez-faire purist who views most government regulation of the marketplace as futile, even harmful. Bush's Veep is mute in public and argues vehemently inside the White House against any overreaction to the recent series of corporate scandals. The Secretary of the Treasury, the gaffe-a-minute Paul O'Neill, was off in Ukraine last week. No matter. Wall Street has not found any solace in O'Neill, a former CEO without a gut feel for what makes markets go.

The economy, on paper at least, is chugging along. "Wages, employment, housing, retail sales--they all suggest a very solid economy," Lindsey told TIME. Why get in the way of that? It's a view Greenspan also articulated last week. But the Bush team's inaction is drawing unfavorable comparisons with President Clinton's team of Treasury Secretary Robert Rubin, a Wall Street star, and Larry Summers, the high-wattage Harvard economist. Yet, as a Bush adviser notes, Rubin didn't meddle either and got help from a bull market: "When people were getting 25% return on their investments, all Bob Rubin had to do was breathe."

That said, the White House knows it must do something, because the Democrats are getting saucer-eyed over November's congressional elections. According to Roll Call, House minority leader Dick Gephardt recently spoke with senior Dems about the corporate crookery, saying that "if this thing plays out right, we could pick up 30 to 40 seats." Bush is desperate to show voters that he is not deaf to their concerns, but he has not found the message. "He wrapped his arms around this market," laments a senior Administration official. "Now he owns it."

Bush is at least saying many of the right things. In his Alabama speech he stressed the underlying strength of the economy and pledged to lock up the crooks: "I'm willing to work with Congress to make sure that we've got the necessary law in place that will hold people accountable without stifling the entrepreneurial spirit of America."