The President:
The drop in President George W. Bush’s popularity is not cause for either Democratic jubilation or Republican despair, but does connote a mood change in the political scene.
1) Administration officials admit that the dispute about "16 words" in the State of the Union Address goes to Bush’s credibility and has been damaging. With the news media delighting in this kind of story, it is not the kind of news that Republicans are good at managing.
2) This dispute has resulted in a change in Democratic tactics. After the early military victory in Iraq, with Bush’s popularity ascending, the Democratic consensus was to forget about the war and concentrate on the economy. Since the State of the Union flap and the rise of guerrilla warfare, Democrats are hitting hard on Iraq. This has a marked effect on the relative fortunes of Democratic candidates (see below).
3) Bush’s political team welcomes this Democratic shift. "Please throw us in that briar patch!" says one of the President’s strategists. This is based on the belief that, in the long run, Democrats cannot compete politically with Bush on the national security issue. Democrats can neither control nor criticize good news, such as the death of Saddam Hussein’s two sons and the prospect of getting the dictator himself.
4) Many Republicans, however, are not so sure. They are less worried about failing to find weapons of mass destruction than the daily U.S. casualty list from Iraq. This permits Democrats to berate Bush for misleading America into a war that continues to take American lives.
National Security:
While the State vs. Defense public bickering has subsided, there remain deep grievances inside the administration.
1) The front-page story in Sunday’s Washington Post highly critical of National Security Advisor Condoleezza Rice reflects the view of several national security officials. They feel it was her duty to protect the President on the State of the Union Address, and she failed.
2) The speech by Senate Foreign Relations Committee Chairman Richard Lugar (R.-Ind.) harshly criticizing handling of the Iraqi occupation was aimed at the Pentagon and reflected the State Department viewpoint. Defense Secretary Donald Rumsfeld is loath to admit mistakes, still refusing to use the word "guerrilla"-as his generals do-to describe what is going on in Iraq.
3) The old saw in the Washington bureaucracy-that when you mess with the CIA you are asking for trouble-has been confirmed in the last few weeks. While CIA Director George Tenet publicly took a bullet for the President, CIA leaks have savaged Rice. Her comment on television about somebody "in the bowels of the CIA" knowing about the uranium-from-Africa question was rankling to Langley.
Economic:
While the new Bush economic team does not make embarrassing statements, it has not banished worries about the economy.
1) It’s a familiar story. The massive stimulation of the economy, through fiscal and monetary policy, is not going to produce much better than 4% growth next year-at best. That suggests the continuation of the jobless recovery.
2) If so, continued job loss is likely going into the election. This is a serious social and political problem that could be the biggest impediment to President Bush’s re-election.
3) The problem is that nobody has any new solutions. The Federal Reserve is criticized for not making a deeper interest rate cut in its last session, and the tax cut could have been more investment-oriented. But there are no new arrows in the quiver for next year.
Appropriations:
The House is well along the way towards passing all of the Fiscal Year 2004 spending bills by early September.
1) If the current trend continues, Congress might finish the appropriations process on time and on budget-a true rarity. The House has passed 11 of the 13 bills, with the District of Columbia spending bill getting pushed back late Friday to after Labor Day. Only D.C. and Transportation/Treasury remain.
2) The House bills are in line with the budget. While this still represents a sizable increase from last year and is far from fiscal discipline, it is a better show than usual. The Transportation bill, passed out of committee last Thursday, has the possibility to bust the budget (its $89.3-billion price tag exceeds the President’s request by almost $3.4 billion and surpassing the allocation in the budget resolution by $500 million). A few bills undercut the President, though, and the grand total may be matched.
3) The Senate Appropriations Committee has passed nine of 13 bills, and the full Senate has approved four of those nine. At the current pace, the Senate will exceed the President’s request by about $1 billion, which is less than 1%.
