Chicago Tribune

WASHINGTON – President Bush will strive to focus public attention on a growing economy and tax relief in the new year as he struggles to reclaim political capital lost after his most bruising year and revive a stalled domestic agenda.

For Bush, a president under siege early in his second term, the challenge is daunting. It involves drawing the American public’s eye toward the nation’s economic successes – low unemployment and an expanding job market – while overcoming public concern about the continuing death toll of an unpopular war in Iraq.

Yet rising interest rates, the cost of energy and a staggering federal deficit will complicate the positive picture that the president attempts to portray of an economy still vulnerable to trouble. The White House also is bracing for painful cuts in the new budget that the president will propose in February.

Analysts also say American military forces will have to start coming home from Iraq in greater numbers in 2006, if Bush is to regain political clout with the public, and with a fractured Congress, that he lost during the tumultuous first year of his second term.

“To a startling degree, the political capital and momentum that he had at the start of 2005 have been dissipated almost entirely,” said Robert Reischauer, president of the Urban Institute and former head of the Congressional Budget Office. “The administration is reactive and in a defensive posture, really. You have a Congress that is splintering and rebellious. … Republicans are in a survival mode.”

The president plans to focus on economic successes as he tours the Chicago Board of Trade on Friday and addresses a noon luncheon of the Economic Club of Chicago.

The president’s political fortunes also will have a bearing on his party’s ability to withstand challenges in November’s mid-term elections and maintain control of both the House and Senate. Republicans have suffered scandals involving a former leader, Rep. Tom DeLay of Texas, and rank and file members of Congress. Bush’s own chief political adviser, Karl Rove, remains under investigation in the disclosure of a CIA agent’s identity.

Nearly half of all Americans surveyed – 49 percent – would like to see Democrats in control of Congress after November’s elections, according to a recent poll by RT Strategies, a joint venture of Republican Lance Tarrance and Democrat Thom Riehle. Just 38 percent said they want to see Republicans remain in control.

Bush has suffered a precipitous slump, and he enjoyed only a slight “up-tick” in public approval at year’s end, according to the Gallup Poll. His job-approval stood at 42 percent in Gallup’s latest survey in mid-December, after reaching a nadir of 37 percent in November. His approval ratings took a double-digit fall from February 2005.

“It appears that the president’s job approval ratings have stopped their downward slide,” Gallup Editor-in-Chief Frank Newport has written, “but there are no signs of a major up-tick.”

The new year opens with a significant dispute over domestic wiretapping that Bush secretly permitted the National Security Agency to conduct without warrants.

The old year was framed with stunning natural calamity, the tsunami that claimed more than 200,000 lives in Southeast Asia at the end of 2004 and into 2005 and Hurricane Katrina’s summertime toll of more than 1,300 along the Gulf Coast.

In both instances, the Bush administration was faulted for an initially sluggish response. And in New Orleans, the response left Bush vulnerable to criticism for racial insensitivity, undermining years of Republican Party efforts to court black voters.

But most importantly, Republicans and Democrats agree, the president’s trouble is compounded by the rising American casualties in Iraq – now totaling more than 2,100 – as a majority of Americans now deem the war a mistake.

Bush also has lost his strongest hand in his argument for “completing the mission” in Iraq – that the conflict represents the central front in a war against terrorism. A majority of Americans, 55 percent, have told Gallup that the war in Iraq is not part of the war on terror, and 56 percent say Bush has no plan for victory in Iraq.

The president has confronted his challenge, supporters say, by acknowledging more directly the mistakes in intelligence made in the run-up to the U.S.-led invasion of Iraq in 2003. And he has started campaigning more heavily on the strength of the nation’s economy.

“The president will begin the new year very much in the way he left … 2005, which is to discuss the country’s two top priorities – keeping our economy strong and growing stronger and creating jobs, and also winning the war on terrorism,” White House spokesman Trent Duffy said last week in Crawford, Texas, where the president spent the year-end holiday with his family and some books.

The president’s ranch reading was said to include a legacy-minded book by Patricia O’Toole, “When Trumpets Call, Theodore Roosevelt After the White House.”

The framework of Bush’s legacy already is written in his response to 9/11 and the invasion of Iraq, as well as in the tax cuts and education reform he won during his first year in office.

But a 25-state, five-month campaign for Social Security reform with which he launched his second term, claiming his re-election had given him new capital and he intended to spend it, ended in failure.

If Bush can regain some of his lost leverage, he still hopes to make permanent his first-term tax cuts. Administration officials privately acknowledge, however, that any hope of broad tax reform – making good on Bush’s long-stated promise to simplify an arcane federal tax code – will be lost in a year of tough budget-cutting.

Bush, some say, has lost any standing to swing for the fences.

“People judge you on whether you won or lost the last game,” said Kevin Hassett, director of economic studies at the American Enterprise Institute, a conservative think tank. “I think that’s why he will play small ball in the coming year.”

Dan Mitchell, chief expert on taxes for the conservative Heritage Foundation, envisions Bush continuing to make a case for tax reform without pressing Congress for a vote in 2006.

“They have to have an agenda,” Mitchell said. “Politics abhors a vacuum, and they are going to have to talk about something.”

And as much as Bush touts the economy, it still will “play second fiddle” to foreign policy, Mitchell said. Despite problems in Iraq, Republicans are confident that they can counter Democrats as soft on terrorism. “They think that is their trump card,’ he said.

Yet Scott Reed, a Republican strategist in Washington, suggested Bush will have a chance to “break-through” the shroud that Iraq has placed over his presidency with his State of the Union address at the end of January, an opportunity to focus on economic successes.

“The president has regrouped and has begun to set a new direction,” Reed said. “It’s talking about the economy, the real backbone of his strength, and recognizing some of the real shortcomings in Iraq, which everyone recognizes.”

Grover Norquist, a prominent Washington conservative close to the White House, said he is optimistic that Bush’s standing will rise in 2006. Many of the problems the president faced toward the end of 2005 – such as Iraq, gasoline prices, and investigations of administration officials – will improve over the year and enable the GOP to maintain control of Congress, Norquist said.

The president’s weakness has created an opening for other leaders. Sen. John McCain of Arizona, one of the party’s favorites for the 2008 presidential nomination, already has claimed a signal victory with a ban against torture that the White House resisted.

And the campaigns of such Democratic presidential hopefuls as former Sen. John Edwards of North Carolina and Sen. Hillary Rodham Clinton of New York will likely start soon after the dust has settled from the midterm elections.

“This environment is tailor-made for John McCain,” said Doug Schoen, a Democratic pollster for former President Bill Clinton. “But if it’s good news for McCain, it’s even better news for Hillary Clinton. … If Bush is at or near 40 percent (in ‘08), we will have a Democratic president.”

Any rebound will not come easily for Bush.

“There is nothing overnight that the White House can do,” said Neil Newhouse, a Republican pollster. “It’s not like a football game where you make that Hail Mary pass. It’s a long battle back.”

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