When the Federal Reserve cut interest rates Wednesday afternoon, Wall Street momentarily exulted. At a conference of corporate chieftains in Austin, Texas, however, George W. Bush wasn’t buying. “A lot of folks in this room brought some pretty bad news: that their sales are slowing, that they’re having to trim back their work force,” Bush reported grimly. “We’ve got to be mindful of the warning signs.” The Fed’s action, as Bush saw it, merely confirmed “that measures must be taken to make sure our economy does not go into a tailspin.”
For more than a month, Bush has trumpeted “warning signs,” a “slowdown,” and a “downturn” in the economy. Dick Cheney says we’re “on the front edge of a recession.” Bush says we need a “recovery.” It’s true that economic indicators have declined, but Bush’s rhetoric exceeds them in severity and persistence. Why? One theory is that he doesn’t want to be blamed for a downturn that started on President Clinton’s watch. The other, buttressed by Bush’s routine segue to tax cuts (“Tax relief is part of the prescription for any economic ill that our nation may have”), is that he’s trying to sell us his favorite elixir by convincing us that we’re sick. Instead of brushing off these tactics, opportunistic Democrats and bored journalists are suggesting that Bush may be damaging the economy further by scaring consumers and investors. But that charge is either false or hypocritical. If bleak predictions are self-fulfilling, then the bleak prediction that Bush’s bleak prediction will fulfill itself only makes matters worse.
“Frame Game” has exposed this paradox before. First we saw how the complaint that an opponent is comparing apples to oranges exemplifies the same sleight-of-hand it criticizes: “Your opponent compares two things. You say the comparison is bogus because they’re two different kinds of things. To prove the point, you compare both things to fruit.” Then we noticed the same flaw in charges of hypocrisy: Having switched sides in an argument (you’re now for federal judicial intervention, while I’m for states’ rights), I hypocritically call you a hypocrite. Now we’ve encountered a third self-illustrating complaint. The loud and persistent charge that your opponent is engaging in dire “self-fulfilling prophecy” is equally self-fulfilling.
On Dec. 9, a week after Bush sounded the alarm, Clinton adviser Gene Sperling pointedly criticized tax-cut enthusiasts who “talk down the economy.” Two weeks later, White House Press Secretary Jake Siewert chided Bush, arguing that when policymakers aren’t “measured” in their economic remarks, their “influence over the way in which people think” can undermine the “confidence” on which the economy depends. On Dec. 16, a front-page New York Times story (“Saying Downturn Is Possible, Bush Trumpets Tax Cut”) said presidents usually refrain from statements such as Bush’s to avoid “rattling financial markets.” On Dec. 26, a front-page Los Angeles Times article (“A Bearish Bush Has Economists Worrying“) warned, “Bush’s persistently gloomy assessment of the nation’s economic prospects has a variety of economists and policy experts nervous that [he] is about to make a bad situation worse.” Three days later, a Times editorial predicted that Bush’s comments might “plunge the country into recession.” This morning, a front-pageWashington Postreport asked whether the “pessimistic talk by Bush and the executives” at his conference Wednesday “could become a self-fulfilling blow to consumer confidence.”
It’s true that Bush’s ominous talk is, by his own standards, reckless. In other contexts, he has affirmed that fear and skepticism fulfill themselves through mass psychology. In Florida, Bush’s surrogates accused Democrats and reporters of crippling the presidency by sowing doubts about Bush’s victory. Two weeks ago, Bush said he was naming Paul O’Neill as his treasury secretary because “we must have a steady voice coming out of our administration” that “can calm people’s nerves, calm the markets.” On Jan. 2, Bush spokesman Ari Fleischer told reporters, “When businesses make investment decisions, for example, and people make long-term planning decisions, if they know a permanent tax cut has been enacted that’s going to give them more money in their pockets, it affects what they do.” Economic anticipation, in other words, shapes economic reality.
By hyping a vicious circle of gloom and doom, however, Democrats and journalists have joined it. Siewert’s Dec. 21 press conference, coupled with Sperling’s allegation that Bush was sending “the wrong signal to the markets,” provoked a front-page Post story about whether Bush’s “bearish talk could become a self-fulfilling prophecy.” The Post described how “high-level Clinton administration officials worked the airwaves and telephones, charging that Bush is trying to promote his tax cut at the expense of market confidence.” The next day, under the headline “Consumer Confidence Plunges,” the New York Times reported that Sperling was accusing Republicans of endangering economic “stability” by “creating anxiety.” Three days later, the Los Angeles Times used similar quotes from former Clinton budget director Alice Rivlin—“It’s dangerous for people in high places to talk about recession. … It’s making a steeper downturn more likely”—to support its front-page alarm about Bush’s “self-fulfilling prophecy.”
Having proposed that the prophecy might fulfill itself, the media have proceeded to help fulfill it. “Confidence among both investors and consumers appears to be deteriorating. If left unchecked, that could lead to more concrete economic problems,” the New York Times warned on Dec. 20. “As Consumers Turn Pessimistic, Factory Workers Feel the Chill,” the paper chimed in two days later. “With this pessimism comes the risk that spending will fall further, requiring companies to reduce excess inventories and cut their payrolls—a situation that could potentially snowball into something much worse.” The next day, the Times assisted the snowball along, using quotes from pollsters (“What we are hearing has the potential for weakening consumer confidence”) to project a crippling funk, which according to the story, would infect the public through “pessimistic media reports.”
The echo chamber leads, of course, back to Bush. From the beginning, he has cited comments by others—”people are concerned about the economy … I’ve heard concerns expressed about the automobile sector”—to justify his dark outlook. Now he can wave clips. Bush is “not saying anything that people aren’treadingin theirnewspaperseveryday,” Fleischer told reporters on Dec. 21, three weeks after Bush and Cheney began filling the newspapers with dire forecasts. The next day, after the papers obliged Fleischer with front-page handwringers, Bush submitted their work as evidence of his thesis. “There are some clear warning signs, warning signs that will require what we believe is important action in the halls of Congress, such as tax relief,” said Bush. “There are some headlines, stories today about consumer confidence in some of the major newspapers.”
This was the point—along with massaging contributors—of Bush’s economic conference. To justify his tax cut, he needed deep pessimism. To make that pessimism appear objective, he needed to launder it through newspapers and business leaders. That’s why Bush invited General Electric CEO Jack Welch to the microphone Wednesday to tell reporters that the outlook is “steadily declining … [a]nd we are going to need the bold action that you’re proposing to get this economy back on track.” Rather than take responsibility for spreading the gloom, Bush attributed it to the “folks in this room” whose “unanimity” had made it a “common theme” of the conference. Bush, as promised, will govern by consensus. But first, with the help of his adversaries, he has to invent it.