The chaos on Wall Street that exploded over the weekend – and caused to Dow to drop by more than 500 points on Monday alone – is, obviously, bad news for just about everyone. But strictly in terms of the looming election, now fewer than 50 days away, the timing may be something of a gift to Barack Obama and the Democrats, who have watched in bafflement since late August as their once-dominant political position has eroded.
Long before this week, the economy had already emerged as the top issue – by far – on the minds of voters. Now, Americans will be inundated with stories about the potentially devastating fallout from the collapse of Lehman Brothers, the sale of Merrill Lynch and the perilous footing of A.I.G. – thereby focusing their attention even more on the economy and their own financial security.
An election driven by economic anxiety generally works to the Democrats’ advantage, simply because more voters tend to identify with the party’s economic message than with the G.O.P.’s. Obviously, this doesn’t hold when tough economic times coincide with Democratic leadership – like in 1980, when a staggering “misery index” helped seal Jimmy Carter’s fate – but it’s the Republicans who have owned the White House for the past eight years; bad economic news should only confirm the public’s assumptions about their agenda. This may bolster Mr. Obama’s frantic effort to make this year’s election a referendum on George W. Bush’s presidency.
Some clumsiness on John McCain’s part also offer Mr. Obama an opportunity in the face of the financial crisis.
First, there is Mr. McCain’s close association with Phil Gramm, his old Senate ally and (until July) one of his favorite campaign surrogates. Largely anonymous before this campaign, Mr. Gramm is now widely known for his statement to the Washington Times over the summer that America is in “a mental recession” and that “we have sort of become a nation of whiners.” Mr. Obama and the Democrats, needless to say, have relentlessly harped on these words. The problem for Mr. McCain is that they reinforce voters’ suspicions about whether Republicans understand and relate to their economic plight.
The financial crisis offers a fresh opening for Mr. Obama to fan the Gramm flames, since it was Mr. Gramm who, back in his Senate days, was one of the prime movers behind the deregulation that has been blamed for ushering in the sub-prime mortgage crisis that led directly to this week’s events.
Mr. McCain, who initially named Mr. Gramm one of his campaign co-chairmen, has distanced himself from his friend’s remark. But Mr. McCain himself has let slip a few comments of his own that also lend themselves to the old caricature of a Republican Party indifferent to economic struggle. During the Republican primaries, he took heat for admitting that “the issue of economics is not something that I’ve understood as well as I should,” and then this Monday – just as Americans were digesting the stunning news from Wall Street – he declared in a Jacksonville, Florida speech that “the fundamentals of our economy are strong.”
This is more than sufficient to provide Mr. Obama with a strong set of talking points on the stump and in the debates. Over and over, he can tie the financial crisis to the Bush administration and to the deregulation efforts of Mr. Gramm, all while invoking Mr. Gramm’s and Mr. McCain’s problematic statements. To voters who are naturally skeptical Republicans when the subject is the economy, this indictment will have the ring of truth.
There are a couple of catches for Mr. Obama, though.
The first is that, for all of his much-discussed oratorical capabilities, he is not a particularly talented communicator when it comes to meat-and-potatoes economic issues. He has forged a powerful connection with a chunk of the electorate, but this is largely the result of his own charisma, compelling biography, and the instinctive sense of many people that he represents “the future.”
This magic doesn’t work nearly as well on swing voters facing economic distress. With these voters, Mr. Obama’s party label is his best – and perhaps only – recommendation. When he talks about the economy, he uses the right words, but he lacks the ability of Bill Clinton, who masterfully capitalized on an economic downturn in 1992, to communicate empathy, understanding and wonkish competence all at the same time.
Another problem is that Mr. McCain has been more effective than expected in distancing himself from Mr. Bush. His own reputation as a maverick, an image beaten into most voters’ heads over the last decade, helps him in this regard, as does his more recent effort to link that maverick streak to his heroic service in Vietnam. And the selection of Sarah Palin has created even more space.
Mr. McCain is portraying the financial crisis as the product of a selfish band of Wall Street insiders not too different from the Washington insiders he and Mrs. Palin bash on the campaign trail every day. It’s not implausible that swing voters will view the G.O.P. candidates as mavericks who happen to be Republicans – and not Republicans masquerading as mavericks.
Fighting an election on the economy against a backdrop of Republican rule and a Wall Street meltdown is, on paper, close to a dream scenario for the Democrats. But it may not be as easy as they think to profit from it.