This year is shaping up to be a "Super Economic Year" in presidential politics. While most presidential elections focus on the state of the nation's economy, few feature such a combination of current and looming economic crises.
With unemployment on the rise, inflation raising its ugly head, high energy costs, a housing crisis, auto industry financial woes, an airline industry teetering on the brink, two expensive wars, natural disasters hammering our southern states, costly healthcare, a credit crisis that is roiling Wall Street, and an electorate increasingly negative and uncertain, 2008 shapes up to be an election that will ultimately turn on the economy.
John McCain can navigate the politics of the economic crises with a little help from Ronald Reagan and a little from Sarah Palin.
The last time so many economic factors converged, Ronald Reagan was making his first successful presidential bid, in 1980. The Carter years had left an America where gas was expensive and in short supply. Gas lines seemed to stretch from New York to Los Angeles. Double-digit interest rates put home ownership out of the range of many Americans, and those who could afford a home paid rates that by today's standards seem usurious. Inflation caused commodity prices to soar, and unemployment fueled the Carter malaise. It was a "Super Economic Year." It was all about the economy, and the Reagan agenda was the change for which people were desperate.
The contrast between the contenders of 1980 was as clear as between the candidates facing off today. Reagan preached that we must keep taxes low to grow our way to prosperity. Carter believed that keeping taxes status quo or even raising them would allow government to direct "relief" from Washington. Well, we all know what happened. The 1980 election was a year of change. Reagan won. He cut taxes, restored our military, reduced interest rates, and invested borrowed spending that he knew would be repaid through growth, and it was.
Today, we face the same sort of economic convergence. The question then becomes whom will the American people trust in 2008 to get us back on the road to economic prosperity? Barack Obama is correct when he states that 2008 is truly a historic year of change. Not since 1952 has there not been an heir apparent to the White House. And regardless of which candidate wins in November, the first black president or first female vice president will be sworn in in January. Both candidates can therefore claim change.
With the president's low approval ratings, Obama is desperately trying to paint McCain as the third coming of George W. Bush. McCain, on the other hand, needs to paint himself as a maverick to distance himself not only from the administration but also from a Congress that has substantially lower approval ratings than the president.
The candidates' economic stances this year are as stark as those of 1980. McCain, like Reagan, believes that cutting, even eliminating, taxes in tough economic times will allow America to grow its way to economic recovery. He also believes in cutting wasteful spending and eliminating earmarks that amount to nothing more than pet projects for members of Congress.
Obama, on the other hand, believes in the Robin Hood theory of economics: Take from the rich, and give to the poor—or in this case the government. Obama believes that a redistribution of wealth is the key to our economic prosperity. He doesn't stop at income tax increases. He wants to continue high capital-gains rates that make it cost prohibitive to freely transfer property. He also seeks to continue the high "death tax" rates, thereby forcing many Americans to sell their business so they can pay off Uncle Sam. McCain wants to eliminate the estate tax and reduce capital gains to allow people to freely transfer property and thus stimulate the economy.
For Obama to win, he must fight on many fronts. He must fight the battle of experience, which McCain does not have to do. McCain is accepted as a fit commander in chief; Obama is not. The months-long drumbeat from the Obama camp of "Bush-McCain" has not moved the needle. However, the McCain camp could get real traction by positioning Obama's economic message as "trust me, I know what's best for you." Based on Obama's promise to raise taxes, his inexperience, and his liberal senatorial voting record, McCain should fare very well focusing on the economy.