INSIDE THE BELTWAY: Spinners busily prepare financial analyses in anticipation of the economy's next recession

The economy is tightening. And although it might not reach a deep recession, the leading spinners here are already practicing their analyses. Whose 'recession' is it, and what do we do to moderate, end or avoid it?

The economy is tightening. And although it might not reach a deep recession, the leading spinners here are already practicing their analyses. Whose 'recession' is it, and what do we do to moderate, end or avoid it?

The economy is tightening. And although it might not reach a deep recession, the leading spinners here are already practicing their analyses. Whose 'recession' is it, and what do we do to moderate, end or avoid it?

First of all, just what is a recession? Unlike the words boom, bust, upturn, sag and doldrums, the word recession has a formal definition, duly approved by economists everywhere. Two consecutive quarters of 'negative growth' - the oxymoronic champion - in Gross Domestic Product herald a recession.

A recession seems at least some distance away, with actual growth running in the 2 to 4% range. But increasing layoffs and stock market weakness suggest that a recession could occur later this year.

There is no shortage of experts with ideas and solutions. Alan Greenspan seems committed to monetary policy - more cuts in interest rates - as a stimulant to borrowing and spending. And with the Congressional Budget Office predicting a dollars 5 trillion surplus over the next 10 years, the Bush Administration is promoting a dollars 1.6 trillion (actually dollars 2 trillion-plus when you do the math) retro-active tax cut to jump-start consumer and business spending. The Democrats now claim prudence and wisdom by proposing a cut of 'only' dollars 800 billion. As country singer George Jones has told us so eloquently, 'The race is on.'

Now this is serious PR spinning, and we ought to keep two things in mind.

First, there is as yet no recession, nor is one imminent. Second, if a recession actually happens, it will mean a significant reduction in the surplus, composed as it is largely of swollen tax revenues from increased profits.

In fact, predicting a dollars 5 billion surplus over the next 10 years is akin to predicting sunny weather and mild earthquakes over the same period - possible, even likely, but don't bet the farm on it.

Curiously, even the Democrats seem to have overlooked a traditional recession-breaker and an equalizing alternative to dollars 2 trillion tax cuts. Federal spending is down to 18% of GDP, from 22% in 1992 when the elder Bush was in his last year. That equals between dollars 400- and dollars 500-billion a year.

How about just half-believing the calm seas and prosperous voyage scenario?

How about spending, say, an extra dollars 100 billion on school repairs and construction?

Will anyone propose cutting into the figure of 40-plus million Americans who have no health insurance? Or even trying to cushion the blow to millions of people on welfare who will be thrown from the rolls later this year?

Will anyone try a grass-roots campaign to look in those directions?



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