Bush Economic Team Under Fire

President Bush touts his economic stewardship as a top re-election asset, yet offhand remarks and mixed signals by leading members of his economic team are proving politically embarrassing and handing fresh ammunition to Democrats.

The White House found itself in the awkward position Wednesday of backing away from its earlier prediction that the economy would add 2.6 million new jobs this year.

White House officials already were reeling from the assertion of N. Gregory Mankiw, chairman of the president's Council of Economic Advisers (search), that "outsourcing" American jobs overseas was good for the U.S. economy in the long run. Mankiw later apologized and said he had been misunderstood.

White House spokesman Scott McClellan (search) blamed the optimistic jobs projection on bureaucratic "number crunchers."

McClellan's explanation came after Treasury Secretary John Snow (search) and Commerce Secretary Donald Evans (search) declined to endorse the projection while on a bus trip in the Pacific Northwest to plug the president's economic program.

"My crystal ball is not any clearer than anybody else's," Evans said Wednesday when asked about the projection.

Marc Racicot, national chairman of the Bush-Cheney 2004 re-election campaign, said Thursday he thinks the story has been "elevated beyond what it is."

"It's been mischaracterized," he said on NBC's "Today" show. "This is an economic model. ... Take a look: 112,000 new jobs produced in January."

Racicot called the economic report's references to job-creation "a theoretical discussion by economists. What the report actually produces is every degree of evidence to suggest that this economy is poised for recovery."

The flap comes as Bush is fending off attacks from Democrats over the 2.2 million payroll jobs lost on his watch, the worst job-creation record of any president since Herbert Hoover.

"I think there's a combination of a little bit of tone deafness on the part of some of the economic appointees, coupled with a little economic deafness on the part of others in the administration," said David Wyss, chief economist for Standard and Poor's in New York.

"Even if it's better for the country in the long run, you've got to do something for the people who get run over by the truck on the way," Wyss said.

Bush fired his first treasury secretary, Paul O'Neill, in December 2002 after O'Neill questioned the need for a fresh round of tax cuts.

Lawrence Lindsey was forced out at the same time as director of the president's National Economic Council after suggesting that a war with Iraq could cost $100 billion to $200 billion — which turned out to be close to the mark.

Bush is trying to show that the economy is rebounding and that dramatic job gains are on the way. Yet there have been no clear signs of strong job production, and Bush's economic performance is under daily attack by Democratic presidential candidates John Kerry of Massachusetts and John Edwards of North Carolina, both senators.

Kerry, the front-runner to challenge Bush in the fall, called the president's economic policies "insane."

"What planet do they live on?" Edwards said after Mankiw told reporters that "outsourcing" U.S. jobs to India and elsewhere "is probably a plus for the economy in the long run" because it reduces costs for U.S. consumers and companies.

No matter that many mainstream economists agree with Mankiw — or that he has apologized for seeming to be insensitive to workers who have lost their jobs.

"Economists and non-economists speak very different languages," Mankiw, a Harvard economist, told the National Economist Club this week.

His remarks caused a firestorm that included a rare rebuke from the top House Republican, Speaker Dennis Hastert. Senate Democratic leader Tom Daschle predicted Mankiw would follow O'Neill and Lindsey out the door, although White House officials say the president stands by him. Six Democratic senators also sent Bush a letter lambasting the administration for both episodes.

Bush has tried to calm the dispute by telling audiences, "There are people looking for work because jobs have gone overseas."

On Wednesday, he steered away from specific job projections, saying he was pleased that 366,000 new jobs have been added since August. "I think the economy's growing and I think it's going to get stronger," he said.

But critics suggest a general lack of appreciation by the administration that the current economic recovery is one of the weakest in history for job growth.

Democrats accuse Bush and his advisers of caring more about the stock market than the jobs market. They point to Feb. 6 remarks by Labor Secretary Elaine Chao after a report showing 112,000 jobs were created in January, fewer than the 150,000 that had been forecast. Economists called the report disappointing.

Gene Sperling, a top economic adviser in the Clinton White House, said comments such as Mankiw's on outsourcing "struck a chord of vulnerability and sensitivity about the overall record and attitude of President Bush's economic polices."

"When somebody tells you the market will work it out sooner or later, the one thing you know is that they're talking about somebody else's job," Sperling said.