McCain Must Get a Grip on the Economy
Security is important, but again in 2008 it's the economy, stupid. John McCain needs to recognize this if he wants to win.
Phil Gramm, former Senator and a prominent conservative surrogate for John McCain, set off a firestorm last week with a Washington Times interview. The Times reported:
You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.” “We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said. “We’ve never been more dominant; we’ve never had more natural advantages than we have today. You’ve heard of mental depression; this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”
The reaction was swift and furious: how dare McCain’s advisor tell voters it was all in their heads. By week’s end McCain was forced to dump Gramm, letting it be known that he wouldn’t be speaking for McCain, (When word later came that Gramm might not be tossed out of the McCain camp permanently, the Obama camp pounced and Gramm resigned as Co-Chair of the McCain campaign.)
On a political level, Gramm had certainly stepped on McCain’s lines. In April Barack Obama had quoted him out of context and accused of ignoring economic woes when McCain correctly noted that we had enjoyed macro-economic growth over the last seven years. Since then, McCain has been careful to emphasize that he “gets” that Americans are going through tough economic times. At every turn he notes that Americans “are hurting.”
Nevertheless, Gramm may have been right on the facts. Gregg Easterbrook similarly observed last month in the Wall Street Journal that Americans attitudes don’t match the real state of the economy:
The case that things are basically pretty good? Unemployment is 5.5%, low by historical standards; income is rising slightly ahead of inflation; housing prices are down, but the typical house is still worth a third more than in 2000; 94% of Americans do not have threatened mortgages, and of those who do, most will keep their homes. Inflation was up in 2007, but this stands out because the 16 previous years were close to inflation-free; living standards are the highest they have ever been, including living standards for the middle class and for the poor. . . Sure, gas prices are up, the dollar is weak and credit is tight — but these are complaints at the margin of a mainly healthy society.
Easterbrook noted that the nostalgia for the Clinton years is misplaced:
Campaigning in Pennsylvania in April, Hillary Clinton said “We need to go back to the prosperity of the 1990s,” a comment that drew loud, enthusiastic applause. Converted to today’s dollars, per-capita income in the Keystone State is 23% higher than in 1990. People may think Pennsylvania was more prosperous in the past, but the state is better off today. The same can be said for most (needless to say, not all) parts of the country and most demographics. Most are, right now, the best-off they have ever been.
Yet clearly Americans are in panic — or depression — about the economy. And the rash of proposed government bailouts, most recently for Fannie Mae and Freddie Mac, have roiled the markets. Last week’s bump in consumer prices (the largest increase in more than a quarter century) reignited a real concern. While the Federal Reserve has been busy with bailouts, trying to cushion an economic downturn and proposing ways to expand its regulatory reach, inflation now looms.
In the presidential race, the economy is indisputably the number one issue for voters. And that creates problems, at least according to many pundits, for John McCain. Certainly history is not on his side.
The incumbent party does not have a track record of retaining the White House when the economy is heading, or perceived as heading, south. In 1980 Ronald Reagan capitalized on Americans’ legitimate angst about the Jimmy Carter economy and the deeper sense that America was losing its economic vibrancy. In 1992 Bill Clinton magnified and took advantage of economic woes to unseat George H.W. Bush.
Larry J. Sabato says bluntly: “There simply is no example of a party getting a third White House term with a bad economy and an unpopular President.”
The challenge is great for McCain. Polling shows that voters have greater confidence in Obama’s ability to manage the economy. And, in some sense, it is easy to see the appeal of Obama’s promises to guarantee health care, subsidize college education, shore up social security and bailout homeowners — all without raising taxes on the middle class. McCain has yet to challenge his opponent on how he will pay for all this. He has not begun to drive home the argument that the result of such an approach would be to worsen our debt problems, or more likely, force Obama to increase taxes on many non-wealthy voters.
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Jennifer Rubin is PJM's Washington, DC, editor. She also blogs at Commentary’s Contentions.
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14 Comments
1. Menorah:Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney Romney
Jul 21, 2008 - 1:33 am 2. njcommuter:When McCain takes the initiative on issues, he has a great advantage on Obama: He has common sense and can say it. All Obama can do is recite Broad Themes over and over again. The ideal candidate can do both, but in a long campaign during troubled times, common sense will probably win, especially when the positions are as extreme as they are now.
Jul 21, 2008 - 3:22 am 3. CaptDMO:I’m still having trouble with a discord between fury over what Mr. Gramm said, and the adoration bestowed upon “Ask NOT what your country can do for YOU, ask what you can do for your country.”
I guess it’s a progressive thing.
Jul 21, 2008 - 6:18 am 4. Chris:Great points. One question regarding the following:
“…Cook says that he has “seen a one-dimensional presidential election yet. . . Elections have many moving parts.”
The quote is somewhat ambiguous. Was it “Not seen…”? Just curious.
As for Gramm, what can you say? Tone deaf? Tin-ear? The guy is out of touch in his ivory IB tower. Good riddance. For Gramm to opine on the plight of average Americans paying $4.50 for gas and 30% more for staples is ridiculous, seeing as how he blames the citizen and not the government which is in large part responsible.
Jul 21, 2008 - 6:51 am 5. cedarford:CaptDMO:
I’m still having trouble with a discord between fury over what Mr. Gramm said, and the adoration bestowed upon “Ask NOT what your country can do for YOU, ask what you can do for your country.”
I guess it’s a progressive thing.
Except that JFK asked people to contribute and sacrifice for The Country
While Gramm called middle and lower class working people upset at 30 years of stagnant wages, half of their jobs menaced in globalisation to fuel the wealth of a small number of Ruling Elites who never had it so good, exploding debt and trade deficits as supply side voodoo has finally been seen to fail, 4.60 a gallon gas, 20-30% inflation in basic food items – as whiners.
People perturbed about failure of Government to work competently in the Presidency or Congress, about unchecked illegal immigration, transportation infrastructure rotting away, growing numbers lacking adequate health care and who have pensions at risk from the old industrial firms now destroyed as competitors by cheap 3rd World labor….as crybabies???
People now saying at a 75% level that they believe their children will not have the standard of living of their parents or grandparents and seeing their vote and wishes ignored by both Parties for the special interests of the Elites – being told to stop complaining because when the money going to the richest 2-3% is averaged in, the average American income is doing quite well, we are not in a recession but good economic times, with plenty of low wage, no benefit menial jobs just begging to be filled.
No, McCain could not have gotten rid of voodoo economics guru Gramm and his Enron Board wife fast enough.
McCain’s problem, though, as Rubin writes, is he has had 6 months to build an economic and domestic reform candidacy – but aside from drilling – McCain has failed to create such a candidacy – preferring instead to talk 80-90% of the time about Iraq and foreign policy. All while voter’s minds are being firmed up by the week since 2006 that Democrats only have plans for working the nations domestic and economic problems.
Jul 21, 2008 - 7:31 am 6. Ten:If McCain thinks he can wait until mid-Fall for his team to come up with a VP pick and a rival platform to challenge the Democrats, that goes beyond smugly and complacently praising and sticking with the Reagan domestic and economic Plan of 30 years ago – he is wrong.
And failing to come out of denial after the 2006 bloodletting showed voters wanted major change and reforms – may have meant it was too late for the old Senator even if he had a coherent post-Reagan Plan offered to the public last spring…
The next realistic economic analysis PJM publishes will be its first:
…income is rising slightly ahead of inflation;
You haven’t even estimated inflation realistically, author, which is in the 5% range and has been for years. The non-core CPI is some thirteen percent! http://themessthatgreenspanmade.blogspot.com/2008/07/non-core-inflation-at-three-year-high.html
housing prices are down,
Housing prices are down forty percent in some markets and the Case-Shiller is going down the backside of this collapse curve in a mirror image for the bubble’s front side, a bubble built by the Fed. This isn’t even close to over.
but the typical house is still worth a third more than in 2000;
Unbelievable. This is because the crash is still going on and the big systemic ARM reset of next Spring isn’t here yet! You’d trumpet an artificial bubble as proof of economic health?
94% of Americans do not have threatened mortgages,
Meaning some 5,000,000 are defaulting by your estimates, and we’re maybe halfway through the collapse? Great news!
and of those who do, most will keep their homes.
Most? Do you really approve of socializing one point six trillion dollars in market losses by way of statist control of the banking system?
Inflation was up in 2007, but this stands out because the 16 previous years were close to inflation-free;
How can you possibly make such an irresponsible statement? June’s annualized rate was 13.2% alone, and that’s using the govt’s bogus CPI manipulations.
Sure, gas prices are up, the dollar is weak and credit is tight — but these are complaints at the margin of a mainly healthy society.
What a spectacular level of denial. Oil prices are doubling annually, author, and the monetary system is in panic.
What am I getting to? This: When the Oval Office changes hands and an overt Socialist takes power, maybe then the “right” side of the political divide will shake off this willful blindness and finally take a look at the simple fact that petty L v R politics isn’t the problem with this country.
Losing control of government is. And what better way to cost us control than by no longer owning our own financial system.
Jul 21, 2008 - 7:35 am 7. B Dubya:In the democrat dominated (I can’t characterize what is going on there as any form of leadership with which I am familiar)Congress, the Pelosi/Reed team are doing everything they can to tank the economy between now and November, in the course of getting Mr. Hopey Change elected. It is similar to the tactic used when Bill Clinton ran the first time; of course the 5% unemployment that GHWB presented was was a disaster, from the left view, while 3 years later 7.5% unemployment was “full employment” from the same people.
Jul 21, 2008 - 7:54 am 8. reb shlomo:As unfeeling as many of the Republicans appear to be to the left electorate, they don’t generally stoop to sabotage and subversion to get into office. But, let’s forget that and elect the culture of treason one last time.
McCAIN winning? I believe in miracles. Obama could be struck by lightning! REB SHLOMO
Jul 21, 2008 - 8:23 am 9. Jay:The center of American politics has cracked. Obama is a candidate from the left wing of the Dem party. McCain is a centrist but he is not good as articulating centrist positions.
Jul 21, 2008 - 12:08 pm 10. bncthor:Blacks are going to vote in record numbers and demand policies that will benefit them or at least their leaders at the expense of the white middle class and old folks.
The Green hysteria will doom our weakened economy.
…”McCain is a centrist but he is not good as articulating centrist positions.”
Perhaps, Sentor McCain will seek the assistance of his Senate colleague from Idaho to help him articulate these difficult positions.
Jul 21, 2008 - 12:37 pm 11. The Recession Is In Our Heads « Tai-Chi Policy:[...] in Capitalism and Economics, Democrats, Politics. trackback Even if McCain’s campaign won’t be able to get that point across. Actually, the sluggishness of the economy and the perceived troubles may be one of the reasons why [...]
Jul 21, 2008 - 12:45 pm 12. RuleTopia:McCain needs to do what liberals have done for years: talk about the benefits of his economic programs. For example, the benefit of choice in healthcare is lower cost and better service. The benefit of lower taxes and less government spending is more pay-raises and promotions for Americans and fewer firings. The benefit of drilling is lower gas prices. The benefit of freetrade is lower prices on products and food.
The difference between McCain and liberals in this regard is that the benefits McCain would promise are actually true.
Jul 21, 2008 - 7:22 pm 13. exDemocrat:To McCain’s credit, he WAS going to be on an oil rig today until the tropical storm perked up in the gulf.
That said, I’m giving Carly Fiorina another look-see as veep….I know she had some HP issure but label those as misogyny and we’ll have the Hillary voters.
Jul 23, 2008 - 12:54 pm 14. mwl:One thing McCain should do is to point out that if the Democrat-controlled Congress ends its resistance to domestic oil exploration, then hundreds (if not thousands) of American jobs would be created.
Jul 24, 2008 - 3:39 pm