By Elana Schor - 04/30/07 08:31 PM EDT
Lawmakers of both parties are pitching last week’s poor economic growth data as a validation of their parties’ entrenched positions on trade, the fate of the Bush tax cuts, and the state of the housing market.
Both parties saw a silver lining in Friday’s numbers for gross domestic product (GDP) growth for the first quarter of 2007. Considered the bellwether of economic health, GDP inched upward at an annual rate of 1.3 percent, its slowest pace since the first days of the war in Iraq.
Yet few on Capitol Hill are openly discussing a possible recession, which would open a political minefield for Republicans and Democrats alike ahead of the presidential campaign season. But each party found a different lesson to take away from the data.
Sen. Charles Schumer (D-N.Y.), chairman of the Joint Economic Committee and the Democrats’ caucus vice chairman, pointed to the housing crisis and the swelling trade deficit as two major drags on growth.
“These body blows to the U.S. economy must be countered by sound economic policy from the Bush administration,” Schumer said. “Their economic, tax and trade policy have been in a tailspin from the start, but it is not too late to shift course.”
Illustrating the new majority’s focus on reining in U.S. imports from China, Schumer contrasted the 1.3 percent GDP growth with China’s whopping 11 percent rise. Just as Democrats have taken a conciliatory approach to negotiations on the war supplemental, Schumer urged President Bush to “work with the Congress … to take control of our economic future.”
Schumer’s Republican counterpart on the economic committee, Sen. Sam Brownback (Kan.), described the GDP report as “moderate” and highlighted economists’ prediction of resurgent growth by year’s end.
“The surest way to guarantee future prosperity is to fight back against the siren call of higher taxes, government intervention and protectionist trade measures,” Brownback said in a statement.
Republicans are eyeing talks on the budget conference report as a sign of how broadly Democrats will take aim at the Bush administration’s tax cuts in coming months. Conferees have struggled over how to retain middle-class tax-cut extensions that Senate Finance Committee Chairman Max Baucus (D-Mont.) added to his chamber’s budget without violating the strict pay-as-you-go rules advocated by House fiscal conservatives.
In past years, Republicans often touted strong economic growth indicators during their time in the majority. These days, Democrats’ internal tension at a time of sluggish growth could present an equally winning issue for Republicans. But one senior GOP aide said his party would stay away from that tack for now.
“A lot of their campaign promises were based on failures and pessimism, rooting for the economy to go down or rooting for the president not to succeed at something,” the aide said.
“We want success in Iraq, we want job indicators to go up. We’re not going to start running on pessimism.”
The trifecta of rising energy costs, anemic job creation and bloated healthcare costs helped fuel the Democratic takeover last year, when the party’s candidates and leaders depicted the war as a mismanaged use of U.S. dollars that could go instead to helping middle-class families. Without ruling out tax-cut extensions, Democratic aides said the party’s policy for an economic resurgence would involve more than just tax relief.
“The Republican answer is always more tax cuts — it’s become kind of a one-trick pony for them,” a Democratic aide said, adding: “You never heard of a Republican senator talking about housing [under GOP control]. It was not on their agenda. Now the Democrats who have jurisdiction over this issue, they really care. It’s a totally different environment.”
And the economic environment is one in which neither party has a monopoly on voters’ trust.
The latest NBC News/Wall Street Journal poll showed a 4 percent drop in Bush’s favorable rating on the economy, with a majority disapproving of the president’s approach. The first-quarter numbers also marked a 22 percent drop in the number of voters believing Democrats have brought “the right kind of change” to the country, according to the survey.