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November 6, 2000: 6:31 a.m. ET
Elephant or donkey, voters agree that keeping the economy on track is key
By Staff Writer M. Corey Goldman
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NEW YORK (CNNfn) - If there's one thing that virtually all Americans agree on as they head to the polls Tuesday, it's that the U.S. economy is in great shape and should stay that way. And if there's one thing that Vice President Al Gore and Texas Gov. George W. Bush agree on, it's that the other is trying to destroy it.
As election day arrives, voters are more concerned than ever with keeping the economic status quo -- ensuring that the 10-year-long expansion and all the marvelous trimmings that have come with it aren't messed up by whoever lumbers into the drivers' seat at the White House. According to a recent CNN/USA Today/Gallup poll, six in 10 Americans describe current economic conditions as "good" and another 14 percent as "excellent."
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What isn't as clear is which candidate will ensure that remains the case.
Both Gore and Bush have their own vision of how to make America even more successful than it already is over the next four years. Both want to spend money, one more than the other. Both want to lower taxes, one more than the other. And both want to reform Medicare and Social Security, one in a very different way than the other.
"What each candidate wants to do will have an impact on the economy, there is no question about that," said Robert Heller, executive vice president of Fair Isaac, a San Francisco-based technology credit advisement company and a former Federal Reserve governor. "It's how they are proposing to implement their plans that is so dramatically different."
A good or bad legacy?
In early 1993, when Bill Clinton arrived on the steps of Wall Street with a victory cap strapped to his head, the U.S. economy was in the gutter. Growth was running at a tortoise-like 2.6 percent annual pace, with most demand coming from outside the country. Inflation was at an annual pace of 3 percent. The unemployment rate stood at 7.5 percent and the word "downsizing" was all the corporate rage.
 Eight years and one re-election later, the economy is running at an annual 4 percent rate, inflation is at an annual 2.2 percent pace and the unemployment rate is resting at 3.9 percent, with not enough workers around to fill the number of available jobs. For 13 months in a row, the jobless rate has been at or below 4.1 percent.
"What's happened between now and then is that we've accomplished everything we've set out to achieve," said Ethan Harris, a senior economist with Lehman Brothers. "Then they were trying to get the economy to the state it is in now, so the attitude now is, 'lets not screw anything up.'"
Indeed, it would seem ridiculous to listen to Gore or Bush talk about the need to create jobs when the jobless rate rests at a 30-year low. And it would certainly sound odd to hear the candidates talk about the need to stimulate the economy when the Fed is in the process of trying to rein it in.
How to spend the money
On the contrary, it's the peripheral issues -- the ones that affect the average voter -- that have garnered the attention of analysts and economists: how the $236.7 billion budget surplus will be used, whether federal tax rates will be cut and by how much, whether the government should spend money on social programs or whether it should leave those things to state and municipal governments or even the private sector.
 "What's happening is that you have a conservationist attitude in the public -- they want to preserve what has been achieved rather than blowing it," said Tom Gallagher, an economic strategist with the ISI Group in Washington. "The public really wants to keep the status quo and they are most interested in voting for a candidate who preserves that status quo."
While no politician can physically control the progress of the economy itself, their policies can have a profound impact on how it runs. How much the government spends on programs, how much it collects in taxes, how much it pays in interest on its outstanding debt all influence how much consumers spend and how much businesses produce to meet that demand.
Economists have a few theories on what will happen to the economy should Bush win over Gore, or vice versa. One is the "political business cycle" theory, which argues that politicians "goose" the economy to ensure they can nail down re-election. They do that by boosting spending and encouraging the Fed to ease interest rates and make borrowing cheaper.
Promises, promises
Another is the "partisan" theory, which suggests that each respective party is more than likely to run the country based on their party's principles. Democrats tend to favor easing monetary and fiscal policy while Republicans favor tighter monetary policy and low inflation.
 To boil it all down, each candidate would have a very specific influence on the economy if elected. So where does each one stand?
Gore's promises of spending while keeping the budget surplus cookie jar within easy reach would ensure that the surplus is used to pay down debt -- something that international investors like to see when debating whether to sink their money into investments such as Treasury bonds or dollar-denominated securities.
Bush's pledge of tax relief for Americans -- something that can stimulate growth by giving consumers more disposable income to pay for goods and services -- while keeping the budget surplus cookie jar even higher up on the shelf would encourage consumer spending, something stock investors want to see because it helps fuel growth for companies.
Team leader or leading team?
If the vice president gets his way, Republicans charge, he would stifle American entrepreneurism and set off the greatest expansion of government since the Great Society -- something that would all but ensure economic stagnation by discouraging American capitalism.
 And if the Texas governor gets to implement his plan, Democrats respond, he would ultimately level the unprecedented economic progress of the past eight years, in large part through his recklessly large tax cut that would fuel consumer spending and bring back 1980s-style inflation.
But as the old saying goes, it's not the leaders themselves but who they surround themselves with that holds the most influence.
One of the most influential jobs possibly up for grabs is Treasury Secretary -- the person who controls the government's cash and decides how much in bonds and U.S. dollars belong in public hands. Gore has made clear that he intends to keep Treasury Secretary Lawrence Summers around if he is elected, carrying on the legacy of former Treasury Secretary Robert Rubin, who convinced Clinton that righting the nation's deficit and pursuing a strong dollar policy was crucial for the economy.
Hail to the Chief: Greenspan
Bush has not been as clear about who he would name as Treasury Secretary. Some have speculated that Larry Lindsey, a former Fed governor and an Arthur F. Burns scholar in economics at the American Enterprise Institute for Public Policy, would be one of Bush's top picks. Michael Boskin, who served as chairman of the president's council of economic advisers in the administration of Bush's father, also is said to be a contender.
And while appointments for everything else from Commerce Secretary to Labor Secretary to Economic Adviser to the White House are up for grabs once the ballots are counted, the most important government position of all will not change -- Chairman of the Federal Reserve.
 "Alan Greenspan is not going anywhere for what we expect will be the next four years, which is a strong plus for the economy," said Michael Wallace, a senior economist with Standard & Poor's MMS in San Francisco. While the next president can appoint people of his choice to the two vacant spots on the Fed's board, "Greenspan will be there to advise on fiscal policy and adjust monetary policy based on the administration's policies."
Truth be told, while there are clear-cut differences between Bush and Gore's economic policies, whoever gets to the Oval Office and gets to implement the promises they've made likely won't have much impact on the economy, economists say. Neither party is expected to have a big majority in Congress, leaving whichever administration gets in facing compromises.
"It's simply too difficult to quantify at this stage what kind of economic impact any of these policies will have because who knows if they will ever make it through Congress," Wallace said. "But from both a market point of view and from an economic point of view, the best possible scenario would be gridlock. It means they have to come together and do something more reasonable than more extreme. And that's what everyone out there wants." 
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