2002 Election: Terrorism and the Economy

According to a recent opinion poll, America’s biggest concerns going into the 2002 elections are the war on terrorism and the economy.¹ It makes sense, then, that these two issues are taking center stage in political debates leading up to the November vote.

With Democrats trying to capture at least six more seats in the House of Representatives and Republicans hoping to grab at least one more Senate post, races in many states are likely to be heated. The outcome will have a direct impact on the country’s political and economic progress over the next two years.

Winning the War on Terrorism
Two issues in President Bush’s agenda strictly divide members of Congress: war against Iraq and the creation of a homeland security department. The president hopes to establish the new agency and increase military spending by 15 percent in 2003.² Opponents worry about the cost and potential complications of merging 22 federal agencies into a single homeland security department. And many remain uncertain about the best course of action in Iraq. How much of the president’s agenda comes to fruition may depend on the support or opposition he receives from the newly elected Congress.

The United States’ dependence on Middle East energy sources at a time of political upheaval in the region also concerns some voters and legislators. Several alternative solutions — from electric automobiles to domestic drilling — have been heavily debated and could well play a role in the coming election.

Propelling the Economic Recovery
In the past few years, the economic downturn and losses in the financial markets have been felt acutely by investors and lawmakers alike. Between 1999 and 2001, gross domestic product growth fell from over 4% to 0.3%.³ And since 1999, unemployment has risen from 4.2% to 5.7%.⁴

During that time, the economy weathered a recession, terrorism on the homefront, and a spate of corporate accounting scandals that seriously threatened investor confidence. Thanks to remarkable resilience, economic projections for 2003 foresee a rise in productivity, increased economic output, and higher corporate profits, but many fear that progress could be slow and inconsistent.⁵

Some in Washington believe the answer to promoting economic growth is to increase taxes and government programs to help create jobs. But contenders argue that lowering the tax burden on individuals and corporations would boost overall spending and spark growth. The direction legislators take to shore up the economy in 2003 may depend on each side’s success at winning voters’ loyalty in the coming election.

With party majorities up for grabs in both houses of Congress, next month’s vote could cause considerable reshuffling in Washington. Whatever the outcome, those elected will have an influence on your personal finances and the nation’s economic outlook.

1) CBSNews.com, July 17, 2002
2) USA Today, August 28, 2002
3) Bureau of Economic Analysis, 2002
4) Bureau of Labor Statistics, 2002
5) Congressional Budget Office, 2002; Federal Reserve, 2002

© 2002 Emerald Publications

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