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Bush Sees Victory in Calming Market


WASHINGTON — President Bush and his top advisors have decided to take a page from the Vietnam War era in their handling of the current stock market turmoil and economic jitters: They declared victory and went home.

In interviews Wednesday, senior administration officials made clear the White House thinks it has done all it can--and should--to calm the markets and buoy the economy.

All that's left is to convince people the results are a victory, something Bush's economic team fanned out to do in a burst of speeches, interviews and TV appearances.

"Sound policy did the job that needed to be done," declared Lawrence B. Lindsey, the president's chief economic advisor. "Based on the evidence now before us, we've been successful in stabilizing the economy and returning it to growth."

Asked about the recent upheaval in stock prices, which crumbled for four months before rising Wednesday, Lindsey would only say: "The economy is doing well."

The White House decision to highlight the economy's soundness and its role in achieving it follows weeks of fretfulness by senior administration aides and several false starts by the president himself. On Monday, Bush appeared to violate a cardinal rule of economic policymaking by suggesting it was time for Americans to go back to buying stocks. The Dow Jones industrial average promptly dropped 234 points.

Whether the new strategy is up to the job of mending tattered investor confidence and shielding the economy sparked a lively debate, and substantial doubts, Wednesday.

Sympathetic observers said the president should be helped by Congress' speedy action on legislation to tighten oversight of accountants and toughen criminal penalties for fraud, and by the highly publicized arrest Wednesday of cable TV mogul John Rigas and four others on charges of looting Pennsylvania-based Adelphia Communications Corp.

These observers said the White House is probably right to conclude there is little more it can do to calm the markets.

"People are used to [Bush] dealing with issues of national security as the commander in chief," said Robert D. Hormats, vice chairman of Goldman Sachs International and a senior official in both the Carter and Reagan administrations. "But he's not the commander in chief of the economy or the markets. He can't make them do what he wants them to do."

However, in arguing, in effect, that the steps he has already taken are enough, Bush runs the risk of appearing to be headed down the same path as his father, whose sky-high popularity after the Persian Gulf War vanished when the economy soured in the early 1990s, leaving him vulnerable to political attack by Bill Clinton.

"If there's one thing everyone presumed, it was that this White House was smart enough to avoid letting the son repeat the mistakes of the father, but that's what they seem to be doing," said former California congressman and Clinton chief of staff Leon E. Panetta, now a director of the New York Stock Exchange.

Echoing the criticisms of other Democrats and many in the business community, Panetta said that Bush's response to recent market turmoil has been weak and uncertain, in sharp contrast to his decisiveness in answering the Sept. 11 terrorist attacks.

The president called for some modest new pension protections in February and advanced a 10-point investor protection plan in early March that, among other things, required top executives to personally vouch for the accuracy of their companies' financial statements.

Then he largely dropped the issue until earlier this month when, amid rising clamor for action, he called for tough new criminal sanctions on fraud, created the corporate fraud task force and asked for $100 million more for the Securities and Exchange Commission.

The president's pension proposals focused largely on freeing workers from employer-imposed restrictions on selling company stock in their retirement accounts. But many pension experts say this is a comparatively minor problem.

When he finally issued his call for tough new sanctions on fraud, the president confused lawmakers by appearing to embrace provisions in the then-drastically different Senate and House bills.

Panetta and others were particularly critical of Bush's economic team, which is headed by Treasury Secretary Paul H. O'Neill and, besides Lindsey, includes budget director Mitchell E. Daniels Jr. and R. Glenn Hubbard, chairman of the president's Council of Economic Advisors. They are compared unfavorably to Robert E. Rubin, the Treasury secretary in the Clinton administration.

"This team is not highly regarded. [The White House] has to decide whether they are going to get on top of this wave or be drowned by it," Panetta said of the recent market tumble.

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