Anatomy of a Fumble

• Share

HE ALWAYS PUBLICLY STOOD behind them, but he seldom led them anywhere. For nearly four years, George Bush's economic advisers squabbled and struggled with little positive guidance and woeful political results. Last week Bush gave them their most unequivocal direction so far: he showed them the door. As a political sacrifice play, the beleaguered President put out the word that in a second term he would replace his economic team, including Treasury Secretary Nicholas Brady, Budget Director Richard Darman and chief economist Michael Boskin. To fill the void, Bush said he would appoint chief of staff James Baker as domestic policy boss.

Bush was belatedly struggling to show that he is capable of change, and to mount the defense that his weak economic performance has been the result of bad advice. To be sure, his advisers admit mistakes, particularly in failing (as did most economists) to see that the recession that began in 1990 would fester longer than the average downturn.

But the record makes clear that Bush's economic missteps were less the fault of his advisers than of his own political strategy and economic philosophy, which held that even in the midst of recession, Washington should, in his words, "let the economy right itself." He believed that any attempt at economic stimulation, beyond his proposed tax breaks for certain businesses and investors, would push up interest rates and "make things worse."

The paradox is that Bush undermined his most important goal of all: getting re-elected. Any President who wants a second term needs to have a healthy economy by election year -- or give the public a good reason why not. But Bush's belated and halfhearted attempts to spur economic recovery, and his failure to explain and defend his decisions, largely account for his low standing in the polls. This approach can be seen in several key episodes:

THE "SLIDE-BY BUDGET"

As soon as George Bush won the presidency in 1988, he began planning how and when he would violate his most memorable campaign promise, "Read my lips: no new taxes." Even as he unveiled that pledge in August 1988, Bush knew -- and was reminded by Darman -- that he, like Ronald Reagan, would end up raising taxes to avoid cutting popular middle-class spending programs. In preinaugural interviews, Bush pretended that he was only just discovering the economic time bombs represented by the federal budget deficit and the national debt. "I've started going into the numbers, finally," Bush told TIME in January 1989, "and they're enormous."

Brady, who sometimes seemed unschooled in public finance but had had long experience as head of an old-line investment firm, regularly expressed disdain for excessive public and private debt. Darman, meanwhile, was pressing for a "grand compromise" by which Bush and the Congress would agree to a package of spending restraints and tax hikes to bring the red ink gradually under control.