Now, economy tops war in election

Within the space of a few weeks, economic worries have displaced the Iraq war as the top political issue in the United States, upending the carefully laid plans of presidential candidates and causing Congress and the White House to consider emergency measures intended to prevent – or moderate – a looming recession.

In one sense the rise of pocketbook issues reflects a glimmer of good news. Reduced violence in Baghdad has made Iraq seem a less pressing concern to many US voters.

But the apparent military success of increased US troop levels is only part of the story. Worrisome economic indicators, from spiking oil prices to the sinking stock market, are causing many American workers to fear for their prospects – reinforcing the political truism that in everything but boom times the economy trumps all.

The US as a whole may yet escape a recession. But important individual states – some with upcoming primaries – may already be mired in a slump.

"California, Arizona, Florida, Michigan, Wisconsin: they're in recession. [And] they account for 25 to 30 percent of the nation's GDP," said Mark Zandi, chief economist for Moody's Economy.com, at a Brookings Institution seminar last week.

During much of the long run-up to the first votes of the 2008 presidential campaign it seemed as if foreign policy problems might predominate. As late as last November some polls showed that voters considered Iraq the No. 1 issue facing America by a margin of 2 to 1.

But by the time snow-weary New Hampshire voters went to the polls on Jan. 8 it was clear their chief worries were economic. A CNN New Hampshire exit poll found that 97 percent of Democrats and 80 percent of Republicans expressed anxiety about the economy.

Sen. Hillary Rodham Clinton did well among worried, lower-income voters – part of the explanation for her surprising win. Since then both she and rival Sen. Barack Obama have rushed out new economic stimulus proposals in an effort to address recession concerns.

Senator Clinton's $70 billion package is intended to address housing problems and energy costs. Among other things, it would freeze subprime interest rates for five years and establish a 90-day moratorium on foreclosures.

Senator Obama's plan focuses on the more traditional stimulus tools of tax rates and increased government spending. It proposes, among other things, a $250 tax cut for workers, an extra $250 Social Security payment for seniors, and a $10 billion fund for foreclosure assistance.

"We can't wait for the next president to act. We need that middle-class tax cut now ... not five months from now or five weeks from now," Obama said last weekend.

Meanwhile, Republican candidates focused on their own economic plans as they stumped in troubled Michigan before the crucial Jan. 15 GOP primary.

As former Massachusetts Gov. Mitt Romney, Sen. John McCain, and former Arkansas Gov. Mike Huckabee crisscrossed Michigan – which has the highest unemployment rate in the nation – they sought to appeal to voters like Jane and Larry Hammond, of Marshall.

Both Hammonds have been laid off – Larry from a communications job at McLeodUSA, Jane from her job as a teacher. They've since found new employment, but the experience left them feeling insecure.

"People need to know they've got job security and can buy a house and keep it and not worry what they'll do next week or next year," says Mrs. Hammond.

Mr. Romney reminded voters of his Michigan roots. He grew up here, and his father was a popular three-term governor in the 1960s.

He vowed to bring his private-sector expertise to Washington, and exuded hope about the restoration of lost manufacturing jobs via increased investment in science and technology.

"I see Michigan as the canary in the mineshaft," Romney told the Ottawa County Republicans in a speech on Jan. 11. "We have got to be successful in rebuilding Michigan's economy, or what you see here you'll see across the country."

Senator McCain told Michigan voters that many of those manufacturing jobs may be gone for good. But he offered a plan for job training and education to help people learn new skills and bring the employment rate up.

Mr. Huckabee has emphasized his own blue-collar roots, as the son of a man who worked two jobs: firefighter and a rebuilder of car generators. He also played on the general Michigan dislike of globalization and outsourcing.

"You need someone worried about helping you keep your job, not helping someone halfway around the world keep their jobs," Huckabee shouted to big cheers at a rally in Grand Rapids.

The Hammonds, for their part, say they've decided to back Romney. But other Michigan voters say Huckabee's populism is appealing.

"We've become an entitlement society" says David Walls, a west Michigan service firm owner who attended Huckabee's Grand Rapids rally. "Huckabee seems like he's on the theme of trying to help people move up."

Back in Washington, congressional Democrats are talking about proposing some sort of temporary tax relief package to provide a short-term economic stimulus. When he returns from his Middle East trip, President Bush may well join the economic discussion – most likely via an insistence that long-term tax relief would be the best economic move.

Economists at the Brookings Institution seminar said that in their opinion the US needs a stimulus package that is targeted, timely, and temporary.

Some panelists added a fourth "T": trigger. Congress could enact a stimulus package but delay implementation until there is clear evidence the economy is in recession, said Martin Feldstein, an economics professor at Harvard University. "The key is that they should pass it now," said Dr. Feldstein.