Friday 12 September 2008

Across The Pond And, Once More, "It's The Economy, Stupid"

On the 28th October 1980, Ronald Reagan struck a nerve when, during the only presidential debate of that election, he asked Americans: "Are you better off now than you were four years ago?" The US had gone through a recession and so the answer for many was a heartfelt “no”. It helped propel Reagan to victory.

Now, after nearly eight years of the Republican's woefully incompetent handling of the US economy, Barack Obama is essentially asking America that same question. The facts speak for themselves: the average, typical American family is actually $2000 worse off than they were eight years earlier; petrol prices have trebled; healthcare charges are up; the banking system is in crisis; homes are being repossessed across the country; the national debt has spiralled; over 5.5million Americans have been driven into poverty; unemployment is at its highest rate in five years and America has experienced the biggest increase in income inequality since the 1920s.

The voting public are concerned. Polls show that the economy is, by far, the number one issue for voters in this election with national security coming a distant second. In particular the economy is a worry for target 'blue collar', 'middle class' voters – key in so many swing states.

McCain’s economic policies mirror Bush and barely stand up to scrutiny. His proposed measures to alleviate the current burdens on American households fall well short of public hopes. For example, McCain promises to double existing child exemption to $7,000 but only a small proportion of Americans would qualify for that scheme. McCain says he will provide a credit to buy health insurance but those workers who already have employer provided health insurance will find the benefits of that scheme offset by a proposed new tax on their employer funded health programme.

Barack Obama has gone much further than his Republican rival. The Democrats would prioritise the provision of new jobs – many in the green energy sector and pledge to get the economy back on track. They promise to improve life for “ordinary Americans” committing to a $500 tax cut for the average worker; senior citizens earning less than $50,000 will cease to pay income tax and there will be lower health insurance cost for all Americans - with a subsidy for those who don’t currently have coverage. An Obama Administration will introduce a $4,000 collage tuition subsidy for students who agree to undertake community service; it will provide mortgage interest credit (valued at $500 for home owners who don’t itemise their tax deduction) and introduce a child tax credit (that could save $1,100 for a single parent of two dependant children who earns $40,000 or less).

So, can McCain prevail without offering more to those being hurt by America’s current economic woes? For the moment, his campaign thinks it can. McCain’s record as a war hero is being used to make a direct pitch to blue collar swing voters on national security issues and the Republicans are urging the US public to believe that both McCain and Palin are "mavericks" that will “change" Washington. Meanwhile, by claiming Barack Obama is an inexperienced "tax and spend liberal" they hope to scare voters into thinking that he’s not in tune with America’s traditional cultural values – a customary claim Republicans make about Democrats. In fact, this week, in fourteen key states (five of them states that voted Democrat in the 2004 presidential election) the Republicans launched an ad with the slogan “ready to tax, ready to spend, but not ready to lead.”.

Following the two conventions, polls show that the race for the White House is currently tied. Yesterday’s Rasmussen daily Presidential Tracking Poll puts Barack Obama and John McCain each on 46% of the vote. When 'leaners' are included, it’s Barack Obama 48% and John McCain 48%.

But, the fact remains that McCain cannot shy away from voters’ concerns on the economy; or that his economic platform broadly shadows that of the deeply unpopular Bush Administration; or that he seems out of touch with voters concerns (commenting recently that he thinks the US economy is “fundamentally strong”); or, indeed, that 84% of Americans think their country is "going in the wrong direction" and that, during the last eight years, McCain has voted for Bush to take the US in its current direction over 90% of the time.

So, as the sign said in Bill Clinton’s War Room during the 1992 election, “It’s the Economy Stupid”. In this election, it’s the solutions Barack Obama proposes that are set to dominate that issue.

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