NEW YORK (CNN) - Election Day 2004 is now 12 months away. And the same question is already consuming the political strategists of both George W. Bush and the candidates for the Democratic presidential nomination: Is our economic recovery strong enough to create an adequate number of jobs to re-elect the incumbent?

The rest of us, whether Democrats or Republicans, simply have our fingers crossed hoping for the best possible economic environment. Partisan politics aside, I believe the 2001 and 2003 tax cuts are helping the economy.

Recently I talked with two top Wall Street economists about the effects of the tax cuts and the resultant federal budget deficit. While they agree that fiscal stimulus was necessary, they differ on the long-term economic impact of the budget deficit.

James Glassman, senior economist at J.P. Morgan, says that the tax cuts have definitely boosted consumer spending. "Consumer spending grew almost 4 percent in the spring quarter, before the tax stimulus package," he says. "In the third quarter it looks like consumer spending is going to be up 6 percent or so."

Bill Dudley, chief economist at Goldman Sachs, credits the tax cuts for the gains in consumer income. "In the last personal income report," he says, "there was a very large increase in disposable income...and almost all of that was due to the tax cuts."

Dudley adds, "I think that you're seeing acceleration in economic activity, in terms of consumer spending and real GDP [gross domestic product]; even the manufacturing sector is picking up a bit."

The tax cuts so far have not helped in the creation of jobs, and at this stage in any economic recovery, that is both curious and frustrating. Dudley believes the tax cuts should have been designed differently to provide maximum stimulus to the economy in the short run.

Dudley suggests the cuts could have been oriented "further down the income distribution and...[increased] the aid to state governments or [proposed] some sort of federal government infrastructure-spending program."

Glassman, however, points out that the lower-income taxpayers are benefiting significantly. "There were lots of provisions in here for people of modest income," he says. The new rules "created a 10 percent tax bracket, they paid child tax credits, they eliminated or reduced the marriage penalty." And Glassman adds that although in absolute dollar terms wealthier taxpayers received more benefit, "the tax program was designed to provide greater proportional relief for those who earn less income than for those who earn more."

Both economists agree that job creation will be the crucial economic factor in the presidential election. "If job growth does not pick up in the next 12 months, I think it's fair to say that President Bush will have a tough time getting re-elected," Dudley says. He believes that it's much too early to give up on job creation.

"The upturn in demand really didn't start in earnest until June, July and August," he says, "so it's probably too soon to expect a significant upturn in job creation."

Glassman adds that the current pickup in the economy suggests that employment prospects are brightening. "We're getting the kind of [economic] growth that should pretty quickly start to generate job growth," he says. "So I think if that happens, it's going to be hard to make a case that the economy is a liability for the President."

Lower taxes on dividend income, in Glassman's view, have already benefited the markets and investors. "[Economists] thought that this would boost the stock market by 5 percent or so," he says. "Well, the market's been up a lot more than that. So I don't think anybody would be uncomfortable with the idea that the President's proposal already has had the expected effect on the market."

Politics, and particularly presidential politics as we enter the campaign in earnest, makes for short-term economic policy. The impact of the 2001 and 2003 tax cuts is driving the federal budget deficit to record levels, and Glassman and Dudley differ on the deficit's long-term impact.

Dudley's position is that the long-term impact all depends on whether the tax cuts are temporary or permanent. He says that the official projections look good "in the sense that the deficits are large now but we return to surplus over the next 10 years, according to the official CBO [Congressional Budget Office] projections."

But, he warns, "I personally think that those projections are looking at the world through rose-colored glasses, because a lot of the things that the CBO is forced to assume in their baseline projections -- for example, that discretionary spending will grow only at the rate of inflation -- are probably not going to happen."

And he notes that while sunset provisions in the stimulus package mean that some of the tax cuts are temporary, Bush administration officials have made it clear that they want to make the cuts permanent. Dudley also cautions, "If they were to do so, then I think the long-term budget outlook would deteriorate very sharply."

Dudley says that Goldman Sachs' Economics Research Group has done some estimates on the long-term budget outlook, building in assumptions of what they believe is actually going to happen.

"We get a cumulative budget deficit over the next 10 years of $5.5 trillion," he says. He adds that if we do run large chronic deficits, the consequences will be "a lower national savings rate, less capital formation, slower productivity growth, and it will come back to have consequences in terms of the improvement in the nation's standard of living."

But Glassman contends that future deficits would likely have been worse if the administration had not acted, "because the economy would have floundered longer, it would have taken longer to get back to full employment, and all the revenues that are lost in that process [add to the deficit] also."

Glassman says that people tend to forget what the alternative would have been if we didn't have this stimulus. "The only really new proposal in the [2003] initiative was the proposal to lower the tax on dividend income and capital gains, and it costs something like $20 billion to $25 billion a year, which is really trivial."

All in all, Glassman says, "the long-run budget impact, despite all the screaming and hand-wringing about this...is really very small, very modest."

As for how the economy and the stimulus package will affect President Bush's bid for re-election, Dudley reiterates that jobs, jobs, jobs will be the crucial issue.

"What I think is going to happen is the labor market is going to pick up," he says, "so I think the situation is going to improve for President Bush in some respects. That said, if the status quo were the same a year from now as it is today...then I would say his re-election campaign is in a lot of trouble."

Glassman disagrees. He believes the economy will support the President's bid for re-election. "Frankly, I think the American public is pretty smart," he says. "They don't blame Presidents when the economy falls into recession; they blame them if they don't take measures to address the recession."

And Glassman says the economy should help Bush next year. "I really think the economic issue is going to play well for the President because we're getting the kind of growth [that will create jobs]."

Between the tax cuts and additional government spending, President Bush could hardly have asked for more economic stimulus. Based on recent performance, the economy seems to be responding. Corporate profits have, indeed, improved over the past year. Now all we need are those jobs. And if President Bush is to keep his, he'd better hope they start appearing soon.