Financial Crisis is A Boon to Obama, Pollster Say

Economy Remains Central Issue in Presidential Race

By Elizabeth Kelleher

WASHINGTON(RUSHPRNEWS)10/01/2008-American voters’ concern about the economy is a boon to Democratic presidential nominee Barack Obama, pollsters say.Obama benefits from voters’ belief that Democrats are best at domestic issues and from the fact that, when things are bad, voters punish the incumbent party.

In a Washington Post-ABC News poll taken before the conventions – and before Wall Street’s meltdown – 50 percent of voters said they trust Obama more than McCain to handle the economy; 39 percent said they trust McCain more.

Larry Jacobs, a polling expert at the Center for the Study of Politics at the University of Minnesota, said that even though voters might not understand the ins and outs of the financial crisis, long-standing biases are coming into play.

“On national security issues, the benefit of the doubt goes to the Republicans, perceived as stronger and meaner,” Jacobs said. “When it comes to economic and social-welfare issues, it is the Democrats who are favored, as more caring and attentive.”

McCain was criticized for saying September 15 that the “fundamentals of our economy are still strong.” But the economy is not in recession, defined as two consecutive quarter of decline in the gross domestic product (GDP).

To some, the pace of the economy feels like recession. Economist David Cross, of Market Outlook LLC in California, said, “We haven’t seen it, but all my clients [consumer-related companies] believe there will be a recession.”

He cited the problems: weak housing, high oil prices, falling household income, weak corporate profits, slow GDP growth, and a Medicare system that will be drained as baby boomers retire.

Cross sees both candidates moving toward a more populist stance – one that sympathizes with the unemployed worker in Michigan or Ohio, for instance.

Those and other Midwestern “swing states” matter, according to Karen Hult, author of several books on the presidency, because they are conservative strongholds that are experiencing harder times than other areas.

ROLE OF GOVERNMENT

Typically, Democrats are portrayed as likely to raise taxes and fix problems through government intervention, and Republicans as likely to lower taxes and choose market solutions.

The stereotypes largely fit in the 2008 presidential campaign.

Obama wants to fix the problem of Americans without health insurance at a cost of $115 billion per year. (He says the cost can be offset with savings elsewhere.) Obama also proposes projects to repair and improve America’s infrastructure.

McCain would take responsibility for health care away from employers and give individuals money to negotiate their own care.

Obama would let several Bush-enacted tax cuts expire in 2010 but lower other taxes, while McCain would extend the Bush cuts and lower rates on corporations.

CBS and NYTimes and other polls show that a large percentage of voters believe Obama would raise taxes, although he says he would lower taxes for some. “It is difficult to get that across,” said Carroll Doherty, of Pew Research Center. “The traditional role for the Democrat is ‘tax raiser,’ and that is how McCain is painting him.”

The nonpartisan Tax Policy Center reports that McCain’s tax plan would reduce government revenues by $3.6 trillion from 2009-2018 and Obama’s, by $2.7 trillion. Even with a $700 billion rescue plan now before Congress, the candidates continue to talk tax cuts.

In a presidential debate September 26, moderator Jim Lehrer pressed them to square their plans with grim budget realities. Before bailouts of the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and insurer AIG, the U.S. federal deficit was on track to rise from $161 billion in 2007 to $407 billion in 2008, or from 1 percent to 3 percent of GDP.

Obama said he could slow his timetable on implementing and paying for alternative energy programs and would end the Iraq war. McCain promised to stop wasteful government spending, but would not commit to an end-date for the war, which has cost more than $600 billion.

REALITY CHECK

The notion that anyone in government can do very much about the economy might be overstated, experts say. “I get frustrated, in presidential elections generally, how both candidates feel others’ pain, say they’ll bring change, that they’ll be the one to solve the problem,” Hult said. To do anything, the future president will need support from Congress.

Presidents, once elected, have been known to deviate from plans put forth during their campaigns. Bill Clinton campaigned on health care reform. Once in office, when it became clear he lacked the support of Congress for his reforms, he focused on reducing the deficit – his inherited deficit was more than 3 percent of GDP – and pushed the North American Free Trade Agreement.

If, as is expected, the newly elected Congress is has a stronger Democratic majority than that elected in 2006, it likely will want to legislate stricter controls on lending practices. McCain, known for his aggressive stance against government controls over the private sector, might have to go along if he is president.

Obama, if elected, might scrap some of his plans, just as Clinton did. He already has softened his opposition to new off-shore drilling – McCain adviser Douglas Holtz-Eakin has called Obama “the Dr. No of energy growth” – and hinted at slower development of alternative energy.

The campaigns’ economic focus is not strictly domestic. One in five U.S. jobs is trade-related, Holtz-Eakin said, and “McCain gets out of bed every morning as a friend of trade.”

The current financial crisis underscores that international relationships are about more than trade. Jared Bernstein, an adviser to Obama from the Economic Policy Institute, said that Obama believes financial regulations should be negotiated with other countries. Both campaigns see repairing the U.S. standing in global capital markets as a top objective.

A year ago, no one would have predicted the economy would overshadow Iraq in the 2008 election. Now the question is whether the economy remains the top voter concern on Election Day?

Jacobs said it could recede in importance. “This campaign is just getting going,” he said.

Source:Newsblaze – U.S. Department of State