Loose Change

Why bad economic news doesn’t hurt McCain, or help Obama, as much as you think.

John McCain

This is the change the Obama campaign has been waiting for. After two weeks of political news dominated by Sarah Palin, bad weather, a reunified GOP, and nervous Democrats, there is suddenly real news: Wall Street banks are collapsing. Everyone is talking about the economy (a pig that can’t be improved by lipstick, or Honeybaked), and the economy is an issue with which Barack Obama has had an advantage with voters. Even better, as luck would have it, he’d already planned to devote the week to addressing the issue and showing America just how out of touch John McCain is.

McCain, for his part, must have felt guilty about his recent wave of attacks, because he immediately chipped in to help Obama, producing just the kind of out-of-touch sound bite his opponent needed. “The fundamentals of the economy are strong,” said McCain at a Florida rally after addressing people’s jittery feelings. Instantly, the Obama team jumped on the remarks. Joe Biden, who has started sharpening his attacks on McCain, poked fun at his Senate colleague while campaigning near Detroit: “Ladies and gentlemen, I could walk from here to Lansing, and I wouldn’t run into a single person who thought our economy was doing well, unless I ran into John McCain.”

All in all, it adds up to a huge win for Obama, right? Not exactly. (At this point in the campaign, the only huge wins are in contests of height or age.) For Obama to take advantage of this moment, he has to convince voters he’s going to change their lives. He can’t use it as merely another opportunity to paint McCain as out of touch.

The McCain team knew its candidate had messed up by suggesting the economy was strong on a day when panic reigned. Only an hour after his initial remarks had bounced around the Internet, McCain aides were releasing excerpts of remarks the candidate was scheduled to make later in the day: When he said “fundamentals,” McCain was referring to “‘American workers’—they’re the ones who are ‘strong.’ ” He was clearly backpedaling, but in a sign of how complicated this issue can be, McCain got an assist from New York Mayor Michael Bloomberg, whom Obama has been courting for months. Bloomberg said that the fundamentals—by which he meant the underlying economy, not the workers—were strong.

One Democrat, a veteran of successful campaigns, pointed out an additional complication. If Obama spends too much time claiming the fundamentals of the American economy are not strong, he risks becoming the candidate of gloom instead of the candidate of hope.

Obama supporters may already be gloomy about the idea that McCain has extricated himself from this gaffe or that Obama has already wrung as much benefit as he can from it. Lord knows, Obama hasn’t been starved for opportunities. Since the start of the general election race, the Obama campaign has been pounding McCain as out of touch. It started with McCain’s admission that he doesn’t know as much about the economy as he does about foreign policy. From there McCain went on to declare the economy strong, claim (jokingly) you were rich only if you had more than $5 million, and forget how many houses he owns. Top McCain economic adviser Phil Gramm said, when talking about the economy, that America had become a “nation of whiners.” McCain recently admitted he was distanced from regular people’s lives, and Obama jumped on that, too.

McCain was already in a tough spot before he opened his mouth. Voters give Democrats a nearly 20-point advantage over Republicans. They are also very upset with the performance of President Bush, who nominally still heads the party McCain now leads. And when it comes to which party voters trust more to handle the economy? You’d think pollsters would almost have to create a new category (as in, 28 percent of respondents doubled over in laughter when asked the question).

And yet voters have been remarkably forgiving of Republican economic stewardship. In mid-July, Obama held a 17-point lead over McCain when voters were asked which candidate they trusted to handle the economy. Now he has only a five-point lead. This tightening has been reflected in the other polls, too.

Why isn’t Obama killing McCain on this issue? Part of the answer may be that polls have narrowed across the board as McCain has solidified his base. (Voters like McCain better, so they like his ability to handle the economy better—even though they may have no idea what his policies are.)

Some portion of the tightening also comes from McCain’s advocacy of oil drilling. High gas prices have been voters’ No. 1 concern for some time, and McCain’s plan for drilling is popular. “Drill, baby, drill!” may be intellectually infuriating, but it’s working for McCain among voters who are looking for some kind of solution.

McCain’s other economic plans also have a similar action-oriented feel. He’s going to cut earmarks! Cutting earmarks isn’t going to do much to improve people’s lives (in fact, if you benefit from them, your life could get worse) because they’re only a small portion of the budget, and it’ll be hard for McCain to cut what’s left. But McCain can sound like he’s going to take action when action is what voters want, and it’s an issue with which he has a record.

What about McCain’s policies on the specific topic of the recent market turmoil? He’s going to clean the mess up, he promises. If voters see him as the action candidate, perhaps they’ll take his word for it. On the specifics, though, he’s not in a very strong position. Though he offered a new ad today touting his “experience” to handle the crisis, he doesn’t have much of a record at all. When McCain talks about eliminating earmarks, his record is a mile long. When he talks about cutting CEO pay and regulating the financial industry, his aides can provide only one amendment to an accounting-reform bill to show his history on the issue. He offered it six years ago.

Still, Obama can be pushed around on the economy because voters don’t know what he’s for. Yes, he’s for change—but what does that mean when it comes to their daily lives? Yes, he’s for a middle-class tax cut—but a July poll showed that nearly 50 percent of the country was unfamiliar with his economic policies. In this vacuum, McCain has been able to mischaracterize Obama’s position on taxes. McCain says Obama will raise taxes, which isn’t true for the majority of Americans. Yet in a recent ABC/Washington Post poll, 51 percent of respondents said Obama would raise their taxes, while only 34 percent said McCain would.

If Obama can’t get anything more out of the McCain-is-out-of-touch strategy, then a day full of lampooning McCain may not do much to help Obama. Voters would miss any programs he was offering to fix the crisis in the blizzard of McCain mocking. Obama has struggled throughout his campaign to show that he has both a plan and the ability to execute it. That’s why last week he was at pains in New Hampshire to walk voters through exactly what his tax-cut plan would deliver for them. It was not his most stirring performance, but it may be one Obama needs to deliver more often.