Feeling Bubbly
A last-minute merger frenzy and cheery CEOs augur well for the economy in 2005
Good tidings
America's bonhomie was center stage at the recent White House economic conference. The mostly corporate executives and pro-administration economists in attendance cheered the current state of the economy loudly and in lockstep. "We are actually very hopeful and positive on the economy as measured by technology spending, since technology has become a large portion of overall capital expenditures and correlates very nicely with GDP," said Dell CEO Kevin Rollins.
The president got full credit for the happy days that are here again, winning praise for his tax cuts, including the one that lowered the take on dividend income. "We expect dividends to be up about 12 percent this year and an additional 18 percent next year. So it's a wonderful example of how enlightened tax policy can achieve great results," added Mary Farrell, chief investment strategist at UBS Wealth Management.
Earlier in the same week, chief economic soothsayer Alan Green-span and his colleagues at the Federal Reserve signaled their own sanguineness with another quarter-point hike in short-term interest rates, part of a gradual tightening of the money supply intended to prolong the low-inflation expansion.
Greenspan, due to retire as Fed chief in 2006, was also rumored to have declined a feeler from prominent Republicans to replace John Snow as treasury secretary. For now, Snow will remain in his job, one that will be critical to pushing Bush's second-term economic agenda, which includes reining in trial lawyers, overhauling the tax code to shift the burden toward consumption and away from investment, and partially privatizing Social Security.
"Now is the time to confront problems," Bush told the conference. But he also acknowledged that the chief obstacle to his aggressive second-term economic agenda is the Senate. There he may need someone of Greenspan's stature to convince wary legislators that his economic policy is the right one for 2005 and beyond. -Matthew Benjamin
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