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BEDLAM ON WALL STREET : Recession Held a Boon to Democrats' Chances

October 20, 1987|JOHN BALZAR and JAMES RISEN | Times Staff Writers

DES MOINES — For all the confusion swirling around Monday's stock market meltdown, one thing is clear: If Wall Street is ringing in the beginning of a recession, no one will benefit more than the Democrats looking toward the 1988 presidential election.

That was one of the few things nearly everyone could agree upon Monday.

"If we are heading for a serious recession, it's very hard to see how the Democrats can lose in 1988," said William Schneider, a fellow at the American Enterprise Institute and a political analyst for The Times. " . . . No way can the Reagan Administration escape blame for this one. (And) one thing people still like about Democrats is they stand for protecting Americans from economic adversity--that holds the whole damn party together."

Indeed, most of the Democratic presidential candidates were quick to charge that the market's plunge was brought on by the Reagan Administration's economic policies, and to warn that the current crop of Republican presidential candidates would only offer the country more of the same.

'Loss of Confidence'

"The voodoo chickens of Reaganomics have come home to roost," said Sen. Albert Gore Jr. (D-Tenn.). "The severe decline in stock market prices reflects a deep loss of confidence here and abroad in the Reagan Administration's economic policies."

"What's at the root of the plunge, as well as many of our other economic problems, is the current Administration's fiscal policy," added Rep. Richard A. Gephardt (D-Mo.). "We've been relying on paper profits and the good will of our allies to finance our twin (trade and budget) deficits. We've got to stop borrowing growth from the future."

But while his rivals were openly blaming the crash on the Reagan Administration's economic policies, Massachusetts Gov. Michael S. Dukakis refused to comment. Dukakis considered Monday's events "too volatile" to discuss, said his press secretary, Patricia O'Brien.

Republicans were likewise restrained. The two front-runners, Vice President George Bush and Kansas Sen. Bob Dole declined comment.

Four days ago, however, Bush said: "I'm a great believer that the economy has a lot to do with who wins the election." After the 100-plus point loss on Wall Street Friday, Bush professed to be unshaken. "The underpinnings of the economy are strong and I expect the American people will see that."

Bush Takes Thumping

On Monday Bush took a thumping from the only candidate in the race who has proposed a major tax increase, Democrat Bruce Babbitt, former governor of Arizona.

"George Bush . . . in one of the most transparently dishonest statements I've ever heard, said that there's nothing wrong that can't be solved by widening the deficit by cutting the taxes on capital gains. What the markets are telling us is that . . . you can't continue that kind of dishonesty," Babbitt said.

But a few Democrats called for a bipartisan show of unity to try to calm the financial markets. "This is not 1929 revisited, but it is serious," said Sen. Paul Simon (D-Ill.). "The shock waves from Wall Street ought to jolt the White House and Congress into an immediate, confidence-restoring show of action against those budget and trade deficits."

"I'm not in favor of our (candidates) doing anything different as a result of today," added Rick Wiener, chairman of the Michigan Democratic Party. "The only difference between today and yesterday is that today everybody understands a little bit better the seriousness of the issues."

There seemed to be agreement that GOP candidates most closely aligned with Reagan would be most hurt in a long-term economic recession. "A serious recession would destroy George Bush and limit the appeal of the Republican right wing," said Schneider.

Underdog candidate Alexander M. Haig Jr. made a point of emphasizing his differences with the Reagan Administration. The stock drop, he said, "only confirms the fundamental flaws in our current monetary and fiscal structure."

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