DATE=10/31/03

TYPE=BACKGROUND REPORT

TITLE=U-S POL-ECON

NUMBER=5-54482

BYLINE=JIM MALONE

DATELINE=WASHINGTON

CONTENT=

VOICED AT:

INTRO: Encouraging figures on U-S economic growth this week are good news for President Bush and bad news for the Democrats looking to take him on in next year's election. National correspondent Jim Malone has the political fallout on the shifting U-S economy.

TEXT: The Commerce Department says the economy grew at a rate of seven-point-two percent between July and September. That is the largest quarterly gain since Ronald Reagan was president in 1984.

White House officials are breathing a sigh of relief that the long-predicted economic recovery may finally be under way. And the president says his policies, especially his tax cuts, are the reason why.

/// BUSH ACT ///

Investment is rising. Housing construction is growing. The tax relief we passed is working (applause).

/// END ACT ///

As far as the president's political prospects go, the good economic news is tempered by continuing problems in Iraq. But pollster Karlyn Bowman of the American Enterprise Institute predicts that the economy will probably be the overriding issue of concern for voters in next year's election.

/// BOWMAN ACT ///

When the pollsters ask what is more important to you or what is going to be more important to you in casting a vote in 2004, more people say the economy than say the war on terror.

/// END ACT ///

Bush supporters are now hoping the economic growth surge will reverse the trend of job losses that has bedeviled the president since he took office.

Democratic presidential candidates like Missouri Congressman Richard Gephardt remind audiences every chance they get that more than two-point-six million jobs have been lost since Mr. Bush took office in 2001.

/// GEPHARDT ACT ///

This president is a miserable failure. He is a miserable failure (cheers and applause).

/// END ACT ///

Some experts detect a new confidence that the economy is on the upswing, something that could get companies hiring again.

Political analysts, like Thomas Mann of the Brookings Institution, say that would be a huge lift for President Bush's re-election prospects in 2004.

/// MANN ACT ///

If this economy picks up steam and it really reverses the jobs situation so we start adding 100-thousand jobs a month next year, that is going to be very good news for the president and is going to take a lot of steam out of the Democratic critique.

/// END ACT ///

But other analysts are not convinced that the growth surge reported this week will have much impact on the jobs issue.

Tom Defrank is Washington Bureau Chief for the New York Daily News and a guest on V-O-A's 'Issues in the News' program.

/// DEFRANK ACT ///

This was a mixed number. I think they are very worried about this at the White House and I would say the administration has got about six more months in which the economy can improve. I think the economy will improve but the job number is still very important.

/// END ACT ///

The jump in the growth rate could also boost the public's perception of the economy. A USA Today-CNN-Gallup poll taken last week found that 47-percent of those surveyed thought the U-S economy was getting better while 43-percent said it was getting worse. (Signed)

NEB/JBM/RH/FC