Bush will be good news for Thailand

November 10, 2000

WILL George W Bush - if he really takes over the White House - be able to engineer the US economy to a soft landing after President Bill Clinton jumps off with his "golden parachute"?

In a way, the Texas governor is lucky to have inherited a strong US economy. Clinton has been credited with leading the US to its longest post-war period of economic expansion. He has done so by balancing the US budget, which has helped to bring down interest rates. The lower interest rates, coupled with a breakthrough in US productivity growth and a restructuring of US corporations in the early 1990s, has nurtured the exceptionally strong economic performance.

Bush's task will be to ensure that the economy, which is already slowing down, cools to a more manageable growth rate. This year's growth rate has been estimated at 5.1 per cent, compared with 4.1 per cent last year, 4.3 per cent in 1998 and 4.5 per cent in 1997. Given the maturity of the US economy, these growth rates have been exceptionally strong.

High productivity growth and the IT revolution have been the underlying factors driving up stock prices and bringing prosperity to millions more Americans.

Eight years ago Bush's father lost in his re-election bid to Clinton, the comeback kid from Arkansas, who campaigned successfully on economic issues. The elder Bush was portrayed as a president who focused too much on foreign policy at the expense of working American families.

Bush the younger has succeeded, in a way, in vindicating his father's defeat. There is nothing wrong with Vice President Al Gore, who may have lost in a cliffhanger race, except that he has been there too long. Americans need a change, and it appears that Bush might be a better candidate to invigorate America in the 21st century.

Bush has pledged to restore dignity to the White House. His US$1.3-trillion (Bt55.9 trillion) tax-cut plan is appealing to voters who would like to see a smaller federal government. If the US economy is to slow down, the tax cuts, which put money back into the hands of the people, will help stimulate the economy. Gore's spending increases will be less effective in rejuvenating the economy.

However, it will take some years before Bush's tax cuts can be implemented. Given the narrow margin of the Republican control of Congress, it will also be tough for Bush to push through the tax cuts without a big political fight or horse trading.

Ultimately, the one who really will call the shots is the Federal Reserve. And the Fed is more likely to adopt a tougher monetary stance with the Bush presidency.

What is more relevant to Thailand is Bush's trade policy. As a Republican, Bush has been a strong advocate of free trade. Unlike his rival Gore, who is more concerned with environmental and labour standards, Bush won't try to link trade with labour and the environment. This will help boost the Thai small- and medium-size companies exporting to the US market.

After working with Clinton over the past eight years, the Thai leadership will learn to work more with the Republicans. Already, there are comments coming from Thai circles that the country would have no problem working with the new US administration, which should continue to put emphasis on Thailand as an important country in the region.

Thailand is also undergoing a political transition. Whether it will be a Chuan administration, or a Thaksin administration or even a Korn administration, Thailand has no choice but to learn to live with the Bush presidency over the next four years if the final result is in Bush's favour.

BY THANONG KHANTHONG