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updated 2/7/2008 5:09:01 PM ET 2008-02-07T22:09:01

With fears of recession on the rise and voters in state after state now citing the economy as the most important issue in the election, it's hardly an auspicious time to strike out as the Republican Party's new Presidential nominee.

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That's because elections that take place when the economy has turned sour historically have not gone well for the candidate representing the incumbent party. Think of Ronald Reagan's crushing victory over Jimmy Carter in 1980 or Bill Clinton's ouster of George H.W. Bush following the early 1990s recession.

Rightly or wrongly, "voters tend to assign culpability for the economy's poor performance to the outgoing President, even if there's a split government," says Goldman Sachs senior economist Ed McKelvey. That makes it tough for a potential successor to get a leg up.

Will that pattern continue this year for John McCain, who appeared almost certain to receive his party's nomination after his chief rival, Mitt Romney, withdrew from the race. Certainly, the models created by political scientists and economists to predict electoral winners based on economic conditions suggest problems ahead for the Republican nominee.

The economy calls it
The best-known among them, devised by Yale professor Ray Fair, has reliably picked the winner of the popular vote. This year, Fair's model forecasts that even if the economy shows modest growth of 1.8% for the first three quarters of 2008, the Democratic nominee will win 52% of the popular vote vs. 48% for the Republican nominee. And if the economy does stumble into recession, things will get worse: Assume the economy contracts by 1%, and the Republican share of the vote could fall to around 46%.

So does that mean this year's race for the White House is over before it has even begun? Not so fast. In a year in which few past patterns or political predictions have proven correct, an increasing number of analysts and strategists say the view that a bad economy could doom the Republican candidate also may no longer be so clear-cut.

"Historically, a poor economy helps the challenging party, which in this case is the Democrats," says Jon Delano, a political scientist at Carnegie Mellon University. "But given that the 2008 cycle is turning all other political assumptions upside down, that could be the case here as well."

Delano and others point out that renewed problems in Iraq or some other foreign-policy crisis could easily return national security to front and center. And there's no easy way to anticipate the impact of the fact that the Democratic nominee is likely to be either a woman or an African American.

But even if the electoral debate remains focused on the economy, some analysts and strategists argue that McCain could wriggle free of the bad-economy curse.

Daniel Clifton, a Washington policy analyst at investment-research firm Strategas Research Partners, argues that even as many Democrats assume a general-election campaign waged over the economy would play to their strengths, it still might play more to McCain's than many believe. "If the war is neutralized as an issue, we will have a debate focused more squarely on the economy and the upcoming proposals for tax increases that would be put forth by the Democratic candidate," Clifton argues.

By spotlighting the question of whether it's a good idea to allow the Bush tax cuts to expire or otherwise hike taxes for some taxpayers on capital gains, dividends, or other income at a time when the economy is weak, as both Hillary Clinton and Barack Obama have suggested, he adds, McCain has a potential opening to turn the economic debate to his benefit. "The core message from the Republicans will be that if you go after capital gains or dividends, the stock market and the economy will do even more poorly — that Democratic policies could make things even worse."

Republican pollster Frank Luntz also points out that McCain's anti-Washington image also may offer him more than the usual ability to distance himself from the Bush Administration's current economic record. "He's been so hostile to the Washington system that he has an opportunity most Republicans wouldn't have," says Luntz, who isn't aligned with any of the campaigns. If McCain can emphasize his record of fighting excessive government spending and out-of-control earmarks instead, that could allow him to build enough credibility on the economy to effectively change the debate from its recent poor performance for the GOP.

Looking for a leader
Moreover, even as voters' economic worries are growing, Luntz argues that in that arena, as elsewhere, voters are looking less at specific issues and more at the candidates' leadership abilities in deciding whom to back. "They're not looking for a 10-point plan to fix the economy; they're looking for the leader who can best demonstrate the ability to resolve our economic anxieties," he says.

McCain also could simply get lucky: Washington is moving much faster than it typically has in the past to pump fresh cash into the economy in hopes of forestalling a recession. Thanks to the combination of the Federal Reserve's sharp interest rate cuts and the $150 billion tax rebate package now under negotiation in Congress, enormous amounts of liquidity could soon be sloshing through the economy and helping it to move out of the worst of the crunch by late summer or early fall. "Voters may appreciate and see those efforts by the time they get to the polls," says Goldman's McKelvey.

While he still believes the economy could be a tough hurdle for McCain to overcome, McKelvey offers a caveat: "It's hazardous to assume that because things aren't looking good now, they will look the same by the fall."

Copyright © 2012 Bloomberg L.P.All rights reserved.

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