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GOP frets over public’s economic worries

A disconnect between pocketbook concerns of ordinary Americans and the preoccupations of their politicians in Washington, D.C., has helped send President Bush's approval ratings on the economy down, while breeding discontent with Congress.
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Inflation and interest rates are rising, stock values have plunged, a tank of gas induces sticker shock, and for nearly a year, wages have failed to keep up with the cost of living.

Yet in Washington, the political class has been consumed with the death of a brain-damaged woman in Florida, the ethics of the House majority leader, and the fate of the Senate filibuster.

The disconnect between pocketbook concerns of ordinary Americans and the preoccupations of their politicians has helped send President Bush's approval ratings on the economy down, while breeding discontent with Congress. The problem has yet to grow into a political wave that could sweep significant numbers of lawmakers from power next year, but both parties face risks if they fail to pivot their attention to economic issues.

"There is a lot of frustration," said Rep. Vernon Ehlers (R) on Tuesday, as he was returning from his district in western Michigan. Republican leaders "need some seats from the Midwest and Northeast to maintain a majority, and if we continue at the rate we're going, we may well lose a few seats."

Few economists would say the nation is at risk of slipping back into recession, but most believe the United States is back in a "soft patch." Inflation jumped 0.6 percent in March, the Labor Department said yesterday, the biggest price surge in five months. The 115-point plunge that followed the inflation announcement brought the Dow Jones Industrial Average to its lowest level of the year, 842 points below the height it reached in late December, when Wall Street rallied after Bush's reelection. An average gallon of unleaded gasoline cost $2.22 yesterday, 27 cents higher than election week.

Perhaps most important, wages are not keeping up with prices. Adjusted for inflation, average weekly earnings fell by 0.3 percent from February to March, the Labor Department reported yesterday. Inflation-adjusted hourly wages last month were a half-percent lower than a year ago. Real weekly earnings have not risen in four years.

"Pretty much all round, March now looks like a lousy month for the U.S. economy," J.P. Morgan Chase economists warned clients this week.

The Washington Post/ABC News Consumer Comfort Index, released Tuesday, climbed two points from last week's 2005 low, but it is still down seven points over the past month. Nearly half of those polled this month say the economy is getting worse, the most negative rating in two years of monthly polls.

"People feel vulnerable and besieged," said Lawrence Mishel, president of the labor-oriented Economic Policy Institute, "and they don't hear anybody talking about it."

Yet the only economic bills signed into law this year have tilted against the little guy: Legislation that restricts class-action lawsuits, and a major rewrite of the nation's bankruptcy laws, signed yesterday, that will make it harder for debt-ridden Americans to wipe out their obligations.

The Washington area has been insulated from some of the current economic problems. Gasoline prices here have risen as rapidly as elsewhere, but the area has a booming real estate market and strong job growth.

Beyond the Beltway, the real curiosity is why the economy has not become a more significant political issue this spring. One reason may be the media's preoccupation with other news: the deaths of Pope John Paul II and Terri Schiavo, and debates about the future of Social Security and the federal judiciary.

Another may be the degree to which partisanship rather than the actual state of the economy shapes attitudes toward Bush's performance. Republican pollster Bill McInturff said that attitudes about Bush are generally fixed -- with Republicans overwhelmingly supportive and Democrats overwhelmingly opposed -- and affected primarily by terrorism and security. Therefore economic changes have less impact on this administration than past administrations.

Still, there is evidence that the public may be paying closer attention to economic issues, particularly rising gasoline prices, than politicians in Washington realize. The most recent NBC News-Wall Street Journal poll found that gasoline prices ranked second behind Schiavo as the most closely followed story during late March.

Ehlers said he has been getting an earful from constituents, angered by gas prices, frightened by the latest layoff announcement, this one from the Grand Rapids-based office furniture giant Steelcase Inc., and frustrated by Congress's inattention. The negative reaction to Congress's intervention in the Schiavo case was particularly jarring, Ehlers said.

"Many are rather upset at the Terri Schiavo issue," he said, even "moderately pro-life" voters. "I'm getting a lot of the, 'Why are you spending time on that when we don't have jobs?' type of thing."

In Michigan, jobs and the economy have vaulted to the No. 1 concern of 34 percent of voters, with the closest other issues, health care and education, at a distant 15 percent, said Ed Sarpolus, an independent Michigan pollster. "I haven't seen anything like that since the early '90s and crime," he said.

Michigan is not isolated. A Des Moines Register poll released Sunday found Bush's approval rating in Iowa down to 42 percent, the lowest of his presidency. Only 24 percent of Iowans approved of his handling of the federal budget, 26 percent approved of his efforts to change Social Security and 36 percent approved of his handling of the economy.

"There are serious pocketbook issues lurking in America," said Rep. Jim Leach (R- Iowa).

Democratic pollster Peter Hart, who conducted the NBC poll with McInturff, said gas prices and other economic indicators have directly contributed to pessimistic views about the state of the country, which have been generally negative in their survey for almost two years.

If gas prices stay high and the market remains sluggish, the economy could mushroom into a dominant issue in next year's midterm elections. "In terms of what they're looking for out of Washington and the president and Congress, [people] are expecting some policy that will address this issue [gas prices]," said GOP pollster David Winston. "It doesn't have to happen tomorrow, but they expect to see some progress being made."

Bush addressed rising gas prices in a speech yesterday, calling again for Congress to pass his long-stalled energy package. But in an interview with CNBC's Ron Insana earlier this week, he acknowledged he has no short-term fix for energy prices. "It took us a while to get to where we are today, and it's going to take us a while to become less dependent on foreign sources of energy," Bush said. "Even signing an energy bill, you don't have an instant fix."

Democrats have been slow to seize on the economy, focusing on Social Security plan, attacking House Majority Leader Tom DeLay (R-Tex.) and a Senate showdown over filibustering judicial nominations. But they weighed in yesterday, charging that the Energy Department had estimated last year that the GOP energy bill would raise gas prices by an average of 3 cents a gallon.

Democratic strategist Geoffrey Garin said Democrats should be working harder to make the case that Republicans are ignoring pocketbook issues while they pursue changes in the judiciary or try to protect DeLay. "The developing story line is about an arrogant Republican majority that's lost touch with what's important," he said. "For Democrats to convey that point, they have to invest a lot of time and energy."

Winston said the economy -- particularly gas prices and their impact on income -- represents a thorny problem for the GOP, but one with significant dividends if the party rises to the challenge. "It's a unique opportunity for Republicans if we can solve it," he said, "and it can be difficult for Republicans if we can't."