The US Presidential Elections: American voters give priority to their purses

AT THE Clinton campaign headquarters in Little Rock, Arkansas, a simple slogan is taped to the wall for staff members to ponder. In large letters, it reads: 'The Economy, Stupid'. That is what will win their man the election. All else is mere distraction.

In poll after poll, interview after interview, the message is confirmed. A recent New York Times survey showed 77 per cent of voters disapproving of George Bush's handling of the economy, with only 17 per cent giving him the benefit of the doubt. And every poll shows that issues such as Bill Clinton's avoidance of the Vietnam draft or the Republican emphasis on family values matter little to voters besides their purses.

For Governor Clinton, President Bush's economic record offers a veritable pick'n'mix of campaign attack lines. As he takes to the stump every day, he recites an unemployment rate that is more than 2 per cent higher than when Mr Bush took office, an economic growth record worse than any during a presidential term since the Second World War and income figures showing most working Americans worse off than they were four years ago.

It could have been different. When the US recession set in, during the summer of 1990, the Republican view was that the normal economic cycle was on Mr Bush's side. Past wisdom suggested that a healthy recovery would have taken over at least by early 1992.

Mr Bush, by misfortune or mismanagement, has a recovery of sorts, but one so feeble that most voters do not acknowledge it. In the second quarter, April-June, the economy expanded a paltry 1.4 per cent and little improvement is expected for the quarter just ended. In some parts of the country the economy appears still to be shrinking.

Most crucially for the President, the weakness of the recovery is showing through in the relentlessly bleak unemployment figures. The last, issued on Friday, showed a tiny improvement, with the rate set at 7.5 per cent for September, compared with 7.6 per cent for August.

But, with these being the last statistics to be released before polling day, he is now saddled with a rate more than two points higher than the 5.4 per cent he opened with in 1988. Meanwhile, retail sales struggle, new house sales fell 6.1 per cent in August and all measures of consumer and business confidence continue to be depressed.

In his favour, the President can point to an inflation rate that has been squeezed down to around

3 per cent and interest rates lower than they have been for 30 years. But both, though welcome, are functions largely of the weakness of the economy and the efforts being made to revive it.

Joseph Duncan, president of the National Association of Business Economists, said last week: 'Basically, the recovery is about four quarters away - and we've been saying that for four years.'

Critics say Mr Bush could have avoided his economic hole had he not depended so completely for salvation on the Federal Reserve and low interest rates.

Mr Bush, then, is in an almost hopeless bind. Whenever he can, he will remind people that the economy is actually growing, at least in most parts of the country. He seeks also to lay part of the blame on the Democrat-led Congress for failing to endorse a recovery package he put forward in January. He is also haunted by his acquiescence in 1990 to tax increases that betrayed his 1988, read-my-lips pledge.

The President's only option, then, was to divert attention away from his record to the future. On 10 September, belatedly perhaps, he presented a coherent economic programme, 'Agenda for American Renewal'. It contains little surprising, but is an expression of his faith in keeping taxation and government spending low as the best path to recovery, with additional incentives such as capital gains tax credits. He promised to cut the White House budget by a third, if Congress would prescribe itself the same medicine.

Since then, Mr Bush has been able to seize on the differences between his economic philosophy and the programme put forward by Mr Clinton - and large differences there are. Governor Clinton is offering a dollars 200bn investment programme over five years to generate new employment with government projects such as road and bridge building coupled with increased job training. He says he will pay for it with tax increases on the top 2 per cent of American earners and increased taxes for foreign companies. That, with greater cuts in defence spending than Mr Bush is contemplating, will also leave enough to cut the federal deficit in half by 1996.

Many economists, while critical of Mr Bush's programme, also question whether Mr Clinton's sums will ever add up. The Bush team is also exploiting these doubts and the battleground is being narrowed again to the issue of taxation. In television advertisements aired this weekend that are very reminiscent of Conservative Party broadcasts in Britain in the spring, the Republicans are attempting to imply that Mr Clinton will only be able to finance his investment programme by extending tax increases to middle-income Americans - exactly the people to whom the Governor has promised some kind of tax alleviation. Mr Bush, meanwhile, is promising again, 'never, ever' to allow another tax increase.

Ross Perot's re-entry into the race last week has been welcomed by some observers to the extent that his radical programme of economic rationalisation - aimed primarily at demolishing the federal deficit entirely in five years - may serve to expose some of the worst fibs and evasions of both the Bush and Clinton platforms. But, so extreme is his vision of what he calls 'fair-shared sacrifice' - such as a 50-cent tax on a gallon of petrol and brutal cuts in government welfare spending - that Mr Perot is likely to find his electoral chances sunk by his economic programme alone.

So far, Mr Clinton's promise of some renewed government intervention - after 12 years of 'hands-off' Republican stewardship - to kick life back into the economy is what the voters seem most keen to hear. Above all, it would represent a change and hope of something better. And while in Britain voters always in the end feel that the Conservatives somehow are better qualified than the Labour Party when it comes to money and business, there is no corollary here.

When asked who is most likely to bring back the good times, most Americans today are answering Bill Clinton - by 52 per cent to 36 per cent in a recent Gallup Poll. That is what may, and probably will, win him the White House.