Americans have turned markedly gloomier about the economy in recent months, a shift that is reshaping a presidential campaign long dominated by the war in Iraq and national security concerns.
Higher prices for gasoline and home heating oil, stock market volatility and rising mortgage foreclosures all account for some of the pessimism, in the view of political pollsters.
Significantly, they also cite the recent drop in real estate prices as a major worry for millions who have long viewed their homes as a source of retirement income.
“People feel less secure these days,” and their concerns turn to issues such as education, health care and retirement security as well as the economy, said Sara Taylor, a former White House political director not aligned with any of the Republican presidential hopefuls.
“What you’re going to do is see candidates focus more intensely on those issues because the voters are going to demand it,” she predicted. She acknowledged that voters tend to favor Democrats over Republicans in those areas.
The past several election campaigns have largely played out in reaction to the terror attacks of Sept. 11, 2001, and the war in Iraq. But now, said Democratic pollster Pete Brodnitz, “the war seems more stable, and in the meantime the economic situation seems less stable.”
He added that unlike the war, domestic issues are areas “where a candidate can really be responsible for concrete solutions.”
Recently, the wave of mortgage foreclosures has created a campaign issue where none had existed, particularly among Democrats who are critical of President Bush’s proposal for relief and are offering competing alternatives.
Prompted by turmoil in the credit markets, Bush announced an effort to help some homeowners facing possible foreclosures because they are not able to afford scheduled interest rate increases. The administration hopes to stabilize the housing market and help some homeowners by freezing their mortgage rates so they have time to refinance into more affordable fixed-rate loans.
He drew criticism from some Republicans who accused him of violating conservative principles by injecting the government into the marketplace.
At the same time, several Democratic presidential contenders accused him of a tepid response.
“For most Americans, a home is not just a place to live; it’s their most valuable possession — so preventing a larger crisis in the housing market means providing greater economic security for middle-class families,” Illinois Sen. Barack Obama wrote recently in a Wall Street Journal op-ed article.
Like Obama, Sen. Hillary Rodham Clinton and former Sen. John Edwards proposed more sweeping steps.
Clinton traveled to Wall Street to urge the securities industry and mortgage bankers to agree to a voluntary, 90-day moratorium on further loan foreclosures on owner-occupied homes and an interest-rate freeze of at least five years on subprime loans.
“If we cannot reach a voluntary agreement, I will consider legislation to address the problem,” added the New York Democrat.
Edwards sought to trump Clinton with a seven-year moratorium on interest rates for borrowers with subprime mortgages and a requirement on lenders to offer concessions to try and avoid foreclosure. “We also need a national rescue fund to help these families,” he said, as well as new laws to crack down on predatory lending.
Whatever the impact on the political campaign, the spike in economic pessimism is dramatic.
Republican pollster David Winston’s frequent surveys show the electorate was split almost evenly on the future of the economy through the first half of the year. Beginning in late summer, though, the percentage of those saying it was headed on the wrong track took a jump. By October, 63 percent said the economy was moving on the wrong track, compared with 32 percent who said it was headed in the right direction.
Gallup, the polling organization, reported that 78 percent of Americans surveyed in November said the economy is getting worse. Only 13 percent said they expect improvement, a disparity that the organization called “the most negative responses” since it began asking the question in 1991.
The widely watched Conference Board’s Consumer Confidence Index has plummeted in recent months, and Lynn Franco, the organization’s director of consumer research, said it is not clear whether the trend will quickly reverse itself.
Two recent polls found the economy has supplanted the war in Iraq as the No. 1 issue in the campaign, although that does not appear to be the case in early voting states such as Iowa and New Hampshire.
Still, concern about the economy is evident there, as well.
Margaret Fleming, a single retiree in Wolfeboro, N.H., said the economy is the issue that matters most to her. At 67, she said she has investments and her condo is paid for. Still, she added, “I’m concerned about the economy so I have enough money to live in the style I’m accustomed to.” Her candidate is Sen. John McCain, R-Ariz.
Traditionally, a bad economy and the sour public mood that goes with it spell trouble for an incumbent in the White House. Pessimism in the run-up to the 1992 presidential election campaign was only marginally better than it is at present by Gallup’s numbers. President George H. W. Bush was turned out of office that fall by a Democrat, Bill Clinton, whose strategists made “It’s the economy, stupid,” both a reminder to themselves and a succinct slogan for the campaign.
Taylor said that Democrats “historically have had an advantage” on many domestic issues, including education, health care and retirement. It’s going to be incumbent on Republicans to figure out how to get ahead of it now before we’re in a general election campaign,” she said.
Brodnitz agreed that Democrats have an advantage. “If you ask people who they trust on economic issues Democrats do very well,” he said.