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If it is the economy, GOP hopefuls may be in trouble

Times Staff Writer

Republican strategists are beginning to fear that a deteriorating economy will pose serious obstacles for their party’s presidential candidates, who may ultimately have to answer for rising gas prices and a slumping housing market.

For most of the year, the campaign has been dominated by dueling positions on the war in Iraq, national security, immigration and healthcare. But with gas prices topping $3 a gallon and home foreclosures a deepening concern, the struggling economy could trump other issues in next year’s general election campaign.

President Bush is in his second term and can’t face reprisal at the polls. So to the extent there is a voter backlash, it would be aimed at the president’s party -- chiefly the Republican candidates vying to succeed him, GOP consultants said.

Economic forecasts are worsening: On Thursday, Federal Reserve Chairman Ben S. Bernanke said he expected a “sluggish” economy in the coming months. With millions of sub-prime mortgages due to be reset over the next 14 months, he said, more homeowners are at risk of default. The stock market has been volatile, dropping more than 393 points over the last two days.

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“Any economic pain comes out of the hide of the Republican Party,” said Don Sipple, a Republican strategist based in California.

“It’s one more advantage for the Democrats.”

Said Bill Whalen, a research fellow at the Hoover Institution and an aide in the unsuccessful 1992 reelection campaign of President George H.W. Bush: “What a weak economy does is, it lets the Democratic nominee go out and ask the Ronald Reagan question: Are you better off today than you were eight years ago?”

When the economy is not doing well, a political truism goes, the economy becomes the issue. Hyperinflation during Jimmy Carter’s administration paved the way for Reagan in 1980. In the 1992 race, “The economy, stupid” became the catchphrase of Democrat Bill Clinton’s successful campaign, reminding staffers to focus on the recession that emerged in 1990-91.

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Now, said Scott Reed, campaign manager for Republican Bob Dole’s failed presidential bid in 1996, “the economy has shot up to the No. 1 issue over the last 30 days, eclipsing Iraq. You have to remember that people vote their pocketbook.”

A dip in the economy that squeezes voters would fit the narrative laid out by the leading Democratic candidates. All have said that middle-class Americans have lost ground under the Republican administration, and they have rolled out plans aimed at making healthcare and education less expensive.

And, more and more, the Democrats are using darkening economic trends to punctuate their campaign message. New York Sen. Hillary Rodham Clinton, for example, released a statement Wednesday morning about the rising price of oil.

“With oil nearing $100 a barrel and gas prices over $3 per gallon, Americans are feeling the pain of seven years of a failed Bush- Cheney energy policy,” she said.

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Illinois Sen. Barack Obama, speaking at a town hall meeting Thursday in Ottumwa, Iowa, also reminded voters of the recent rise in gas prices.

“Three dollars a gallon in November -- that’s never been seen before,” he said.

Washington has ignored the economic pressures facing the working class, he said.

Wages have “flat-lined,” he said, while the costs of gas, college and healthcare have soared.

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On Tuesday, Obama gave a speech in Iowa outlining his economic policy, which is geared to alleviating pressures and opening opportunities for middle- and working-class people.

“Americans are working harder for less and paying more for healthcare and college,” he said.

Among the major Republican candidates, there is not a clear consensus that the economy is in trouble.

Former Massachusetts Gov. Mitt Romney, speaking at a GOP debate last month in Michigan, offered a comparatively sunny portrait, describing Michigan as enduring a “one-state recession” while “the rest of the country is growing and seeing low levels of unemployment.”

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In contrast, Arizona Sen. John McCain, speaking in Detroit last month, said the national economy was “growing more slowly than anyone would like.”

Elaborating, McCain advisor Douglas Holtz-Eakin, the former director of the nonpartisan Congressional Budget Office, said in an interview Thursday: “There’s good reason to be concerned. The probability of a recession has gone up.”

When it comes to remedies, the Republican front-runner, former New York Mayor Rudolph W. Giuliani, is proposing a mix of tax cuts and spending cuts.

“How do you make an economy stronger?” he said in a television interview last week. “You lower taxes; you lower spending, which we’ve talked about; you moderate regulations.”

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In his speech in Detroit, McCain said he would not permit the Democrats to roll back the Bush administration’s tax cuts, which have largely benefited wealthier taxpayers. Clinton, Obama and former Sen. John Edwards (D-N.C.) have all put forward healthcare plans that would be financed in part by repealing those tax cuts.

Analysts differ over whether the GOP’s economic prescriptions will win broad appeal.

Sipple was skeptical: “It’s all the pablum that the Republican Party has been saying for 30 years -- ‘I believe in tax cuts.’ Whoop-de-do. It’s nothing very creative and new, and the electorate is so used to these shopworn cliches that that won’t be sufficient.”

But Susan MacManus, a political science professor at the University of South Florida in Tampa, said that in an uncertain economy, voters may be reluctant to see taxes raised and might embrace a no-new-taxes message.

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“It’s evident that the economy is going to be the issue,” she said. “In our state we’ve had it all -- healthcare cost issues, gas prices. . . . It’s an issue people are screaming about. And the tax issue, at least in Florida, and at least at this moment, does work for the Republicans.”

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peter.nicholas@latimes.com

Times staff writer Janet Hook contributed to this report.

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