Economy key to Bush, Gore campaigns

By Michael Kranish, Globe Staff, 3/17/2000

WASHINGTON - For months, Vice President Al Gore has counted on the sizzling economy to help assure his election as president. Even George W. Bush, with his focus on ''prosperity with a purpose,'' has all but conceded that boom times have prevailed during the Clinton-Gore administration. The hottest economic issue has been how to spend the surplus.

But now, as Gore and Bush have wrapped up their party's nominations, a bout of economic jitters threatens to reshape the fall campaign. Gas prices are climbing rapidly to more than $2 per gallon in some areas, prompting Bush to consider calling for a repeal of what he labels the ''Gore gas tax.'' The Dow Jones industrial average, after tripling during the Clinton administration, is down this year, though it bounced up 4 percent yesterday. The NASDAQ index, where many newer technology issues are listed, has trended down in recent days, with traders jumpy about even hints of bad news. Some economic forecasters are warning that a bear market, or even the heightened fear of one, could quickly dampen the positive outlook held by most voters.

''We went into this six months ago believing the economy would be a non-issue,'' said Republican pollster Neil Newhouse of Public Opinion Strategies. ''Now we are awakening to the fact that it may very well be on the front burner in the election.''

If Gore loses his grip on the economic issue over the next eight months, analysts said, the underpinnings of his candidacy could be seriously damaged. But that is a big ''if.'' Wall Street is awash with economic forecasters who for months have been issuing dire warnings, only to be proven wrong - as those who missed the yearlong run-up in the NASDAQ market would attest. But even taking into account the current correction, some analysts view this as an extraordinarily volatile market, built, in large measure, on unrealistic expectations about unproven tech-driven enterprises. Such sentiments have fed concerns that the stock market ''bubble'' will burst, perhaps in the stretch run of the presidential campaign.

Nowhere is the anxiety more pronounced than at the gas pump and among those - especially in New England - who rely on home heating oil. Already, according to the American Automobile Association, gasoline prices have gone up nearly 50 percent in the past year, to an average of $1.58 this week, and the price has skyrocketed to as high as $2.50 per gallon in some areas of California.

Gore has rejected calls for a repeal of the 4.3 cents-per-gallon gas tax increase, which was approved by Congress in 1993 to help reduce the budget deficit. The funds were later redirected for highway construction.

This week, in a move that may be designed partly to help Gore avoid a potentially damaging campaign fight, Energy Secretary Bill Richardson said that repealing the gas tax was ''on the table.'' But Richardson warned that repealing the tax would also remove $600 million in monthly revenue that is used to build highways and bridges and other transportation projects. After an initial flurry of interest in repeal, however, some leading Republicans have indicated they could not support repealing the tax because it would interfere with road projects. Bush economic adviser Lawrence Lindsey said that while the Texas governor is studying the issue, he has not decided whether to call for repeal.

Gore spokesman Chris Lehane ridiculed Republicans who are focusing on the gas tax, noting the levy was an instrumental part of the 1993 budget vote that helped bolster the economic recovery.

''The Republicans call the 4.3 cents per gallon the `Gore gas tax,''' Lehane said, but we call it the `Gore 22 million new jobs vote.'''

Lehane, noting that no Republican supported the measure, added, ''It was that vote on the economic program that helped balance the budget and put the country on the road to economic prosperity.''

In any case, the gas tax is only a small part of the overall gas price, so Bush this week began hammering at Gore for failing to exert enough pressure on the oil-producing nations to boost supplies. Bush contrasted the way his father, former president Bush, dealt with the oil cartel with the way President Clinton has performed in the diplomatic arena.

''These are countries with which we should have an enormous amount of capital,'' Bush said during a campaign appearance. ''These are countries where it wasn't that long ago that a President Bush helped Kuwait, or a United States helped Mexico, and I think the fundamental question is, `Why can't the administration get anything done on the diplomatic side?'''

Bush took a shot at Clinton, and by association, Gore. ''The administration must use its leverage to get something done,'' Bush said. ''And if it can't get something done, it shows how weak we are diplomatically around the world.''

Voters are evenly split about which candidate can best handle the economy, the issue that often determines which candidate wins in November. A new Gallup Poll found that 46 percent of voters said Gore would do a better job, while 45 percent favored Bush.

For now, the economic fundamentals favor Gore, analysts said, as many voters bask in the boom times. But politics is based greatly on perception, as Bush's father, learned in 1992. During that campaign, Bush lost to Bill Clinton despite winning the Gulf War and presiding over the end of the Cold War. The reason was largely economic, as voters perceived that the nation was in recession and came to think that Bush was not doing enough to end it. In fact, as Bush argued during the late stages of the campaign, the recession was over and a period of strong growth was just beginning. - and has continued to this day.

''If George W.'s father learned any lesson in 1992, it was that the spring economy is not the fall economy,'' said former US representative Steve Gunderson, executive director of Republican Main Street Partnership, a coalition of GOP moderates and business executives. ''I think Gore has to be equally concerned whether they can sustain the economy for the next eight months with fuel oil prices ... the interest rates and the repositioning of parts of the stock market.''

If the Bush campaign has its way, every gas station will become the equivalent of a negative campaign advertisement against Gore. The high price hits not only the suburbanites who commute in their sport utility vehicles, but also the poor who drive outdated gas-guzzlers.

''This is a big, big pocketbook issue,'' said former senator Alan Simpson, the Wyoming Republican and frequent Gore critic who is director of Harvard University's Institute of Politics at the Kennedy School of Government. ''Think of the poor guy in the inner city who says, `Who the hell made gas go to $2?' Tell them it was Gore and Clinton, and it could be a very volatile thing in this election. It really affects the guys who are Gore's natural constituency.''

But some analysts said blaming the administration, and Gore, is largely off the mark, given the sources of the current increase and the fact that gas prices are actually low by historical standards.

''There's no question gas prices have gone up a lot and quickly,'' said Daniel Yergin, chairman of Cambridge Energy Research Associates. ''But if you adjust for inflation, they are still lower than they were for the first half of the 1980s.''

So the question is whether voters will blame Gore for the gas prices and other economic factors, or mostly credit him with the good times.

''The economy is Gore's great advantage,'' said Donald Kinder, a professor of political science at the University of Michigan who has studied the impact of the economy on presidential campaigns. ''For economic conditions to make a difference, people have to assign responsibility - credit or blame - to the incumbent,'' Kinder said.