Educated Guesses for 2003

Published 8:28 pm Tuesday, December 31, 2002

By Staff
The following are articles of educated guesses from University of Alabama staff members concerning topics that will be faced in 2003, as printed in the January 1, 2003 edition of the Atmore Advance.
Riley to face crossroads in 2003
The upcoming year will define Bob Riley's term as governor and may include the Republican governor calling for some sort of tax or fee increase to assist in the state's funding crisis, predicts the chairman of The University of Alabama's political science department.
"My guess is that his attempt to solve the funding crisis by reducing fat is not going to succeed to the point that he wants it to," says UA's Dr. David Lanoue. "It will fail partly because the state budget is fairly lean and because the needs are quite substantial."
One of Riley's specific campaign comments caught Lanoue's eye. "There was one thing he said … if all else failed he would consider calling for a tax increase. I think it was significant that he left that door open." A tax increase will not come in the form of a property tax hike, as some have suggested. Movement might come, Lanoue said, in terms of increased home rule, which could allow counties to raise local taxes without having to petition the state legislature or hold statewide referendums.
"I think this will be the most important first year for an Alabama governor in recent memory," Lanoue said. "It will really define what he's going to do."
Constitutional reform efforts will not see significant movement, Lanoue predicts. "Some politicians want it, certainly universities want it, but I don't see any real grass-roots support for it, thus far," Lanoue said. "I would have thought it a long-shot if Siegelman won, and I think it's an even longer shot with Riley in there."
At the national level, Lanoue says, "I think the Democratic Party will spend 2003 at war with each other. They know they will have to come up with a coherent opposition to President Bush, but there is no coherency in the party. My guess is that we may see a couple of prominent Democrats cross the aisle, especially in the House."
The link between George Bush's popularity as president and the Democrat's next presidential nominee is a direct one, Lanoue says. "The better Bush does, the more other Democrats will be scared off, creating the possibility that a relatively little-known candidate might emerge with the nomination, as Bill Clinton did in 1992." But, Lanoue says Bush's popularity may sink as quickly as did his father's.
"Once the Iraq war is over, there is going to be more demand by the American people for Bush to get the domestic house in order. They were forgiving in 2002, but I expect they will be less forgiving as time goes by … unless things get better."
War against Iraq would cost Bush re-election bid
President George W. Bush will lose his bid for re-election if the United States goes to war in 2003 against Iraq, predicts a University of Alabama expert in military and political affairs.
Dr. Donald Snow, professor of political science at UA, places the likelihood of a 2003 war with Iraq at 2-to-1 in favor of a military strike.
"If we go to war with Iraq, it will cost George W. Bush the election in 2004," Snow said. "Even if the war itself goes well, the post-war will not, and that's what's going to do him in.
"Post-War Iraq is going to be an extraordinarily messy place that we are going to have to occupy for a long time," said Snow. "We will become the recruiting poster for al Qaeda and other terrorist organizations."
Military strikes followed by long-term occupation of the land Muslims hold as sacred will not only destroy the shaky coalition the United States has recently built with others in the Middle East, but it will also further erode the economy, Snow predicts.
"If we invade Iraq, there will be a recession," Snow said. The military effort will result in deficit spending, which will trigger higher interest rates and inflation, Snow said as is typically the case following war. A recent exception was the Gulf War, "because our allies paid for it," he said.
"If the war is short, sweet and glorious, as Don Rumsfeld says it will be, that will help the president in the short term," Snow said. However, if the Iraqis use better battle strategy and drag the battles into the streets and houses of Baghdad, it will be chaotic.
"And, if the Iraqis start losing, Iraqi civilians are going to go after representatives of their own government. And all this is going to be on TV," Snow said.
Don't look for Osama Bin Laden to be captured in 2003, Snow says. "We've given up on finding Bin laden, effectively. We'll only get him as an act of sheer random luck."
War with Iraq will cause drop in stock market, increase market uncertainty
An American attack on Iraq will likely cause a drop in the stock market, a decline that will continue as long as the war goes on or if there is an increase in terrorist attacks on the United States, a University of Alabama finance professor predicts.
"If we have war with Iraq, my opinion is that the market will initially go down slightly, as it did in the Gulf War, and then stay down until the conflict is resolved," says Dr. Robert McLeod, professor of finance at UA's Culverhouse College of Commerce and Business Administration and an authority on financial institutions and markets.
"The longer the conflict, or if there is an increase in terrorist attacks in the U.S., the greater the effects on the economy due to the psychological impact on investors and consumers. Anytime uncertainty is increased in the market place and the economy, stocks usually go down and consumers spend less," McLeod says.
In addition, the United States would have to pay most of the cost and bear the brunt of any oil price shock or other market disruptions, government officials, diplomats and economists say. Eleven years ago, the Persian Gulf War, fought to roll back Iraq's invasion of Kuwait, cost the United States and its allies $60 billion and helped set off an economic recession caused in part by a spike in oil prices.
If consumer and investor confidence remains fragile, military action could have substantial psychological effects on the financial markets, retail spending, business investment, travel and other key elements of the economy, McLeod says.
Online shopping expected to grow in '03
Online Shopping will continue to grow in usage in 2003, predicts Dr. Barrie Jo Price, a University of Alabama professor in the College of Human Environmental Sciences' Institute for Interactive Technology.
Price says several factors will contribute to the increase, including customer service, the economy and gasoline prices.
"Many shoppers prefer buying online because they can 'visit' multiple stores online and quickly compare prices on one or more items, and saving a couple of dollars has taken on more importance in these economic times," Price said. "Also, if online shopping sites continue to enhance customer assistance features, such as good search features, or 'personal shoppers' that use synchronous chat features, then online shopping should be in for a good ride in 2003.
"You can also add in time saved in traffic and the convenience factor, plus what some call 'high' gasoline prices.
"These factors, in combination, will push previously reluctant online shoppers into the Internet checkout lanes."
Budget shortfall, new federal guidelines to hit education hard
The Alabama Legislature will continue to argue over the need for taxes and will remain as indecisive as ever, while new federal legislation will make it difficult for school districts to meet the new standards and to continue funding the number of teacher positions currently financed within the state of Alabama, predicts Dr. John Dolly, dean of The University of Alabama Capstone College of Education.
"The poor budget outlook, the need for changes in in-service and pre-service education, combined with significant threats of proration, will force schools to cut back on hiring during the upcoming year," says Dolly.
"I would expect to see some freeze on hiring as well as the reduction of teacher units, leading to larger class sizes and fewer electives, particularly in high schools."
Also, in 2003, Dolly says the new federal legislation, No Child Left Behind, will have a significant impact on the State Department of Education, colleges and schools of education, as well as local public schools.
"All three agencies will be forced to change rules and regulations for teacher certification as well as the revamping of programs within universities for the preparation of teachers."
"Schools will be forced to spend large sums of money to provide teacher in-service or, in the case of poor schools, teachers will be forced on their own to pay for in-service to upgrade their credentials to meet the standards laid out in the new federal law."
"This, in turn, will place tremendous demands on schools and colleges of education to provide in-service programs in local school districts and to provide coursework and opportunities to pursue master's degrees during the summer months."
Aging 'Boomers' will cause health care changes
With estimates showing the number of Americans 65 and older doubling by the year 2030, changes in health care will have to be made, and we will see some movement in that direction in 2003, predicts Dr. Lucinda Roff, UA professor of social work.
According to Roff, some of those changes include:
Less, but more deadly, terrorist attacks expected
Dr. Walter Enders, whose research into the connection between economic conditions and terrorist activity has garnered national attention, says Americans can expect a reduction in the number of terrorists incident directed against the United States in the coming years, but the attacks that do occur will likely be more deadly.
"My research indicates that from 1990 to 2000, the proportion of transnational incidents with casualties rose from 20 percent to more than 40 percent. This substitution towards fewer, but more deadly, incidents will continue," said Enders, the Lee Bidgood Professor of Economics at The University of Alabama.
"On average, there has been one extremely hideous incident every year. In addition to 9/11, examples include the first attack on the World Trade Center in 1993 and the simultaneous attacks on our embassies in Kenya and Tanzania in 1998. Unfortunately, transnational terrorists have the resources and the motivation to conduct another such attack."
Enders said in addition to the loss of life and property, the attacks on the World Trade Center and the Pentagon on Sept. 11, 2001 resulted in profound economic and social consequences for the United States. With the economy on the brink of recession, the unemployment rate rose from 5 percent to 6 percent and has not returned to its former level. Wall Street closed for a week, the airline industry was temporarily shut down, the tourism industry was especially hard-hit, and several airlines never recovered.
Enders predicts during 2003 the unemployment rate will return to the 5 percent range and that stock prices will remain low relative to their pre-9/11 levels. "It is not very likely that the Dow Jones Industrial Average will close above 10,000," he said. He predicts the consumer confidence index will be close to the pre-9/11 level. He said the airline industry would remain unsettled.
"The worldwide response to fighting terrorism has been dramatic. The U.S.-led coalition known as 'Operation Enduring Freedom' quickly achieved its aim of eliminating the Taliban regime in Afghanistan. Seventeen nations contributed more than 16,500 troops to the initial operation. On Nov. 25, 2002, President Bush signed the 'Homeland Security Act of 2002' into law. The defense bill rose by more than a $37 billion increase from fiscal year 2002. Undoubtedly, a massive anti-terrorist campaign will reduce the overall level of terrorism."
Nevertheless, Enders said, anti-terrorism policies can have an "income effect" or "substitution effect" or both. The income effect involves the overall level of available resources – e.g., freezing terrorists' assets reduces their "war chest" and their overall ability to conduct a campaign of terror. The substitution effect provides an inducement for terrorists to substitute into some less costly operation that achieves a similar outcome at less cost. For example, the installation of screening devices in U.S. airports in January 1973 made skyjackings more difficult, thus encouraging terrorists to substitute into other kinds of hostage missions or to stage a skyjacking from an airport outside of the United States.

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