Economy Becomes New Proving Ground For McCain, Obama

Sen. John McCain discusses the economy during a visit to the Asociación Borinqueña de Florida Central in Orlando. (By Gerardo Mora -- Getty Images)

Obama accused McCain of embracing a philosophy that has opposed tougher regulations -- "one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises." McCain's campaign accused Obama of embracing "pessimism, defeatism and weakness" in questioning the Republican's praise of the ingenuity and vitality of American workers and charged that an Obama administration would mean higher taxes and burdensome regulation just when the economy can least afford it.

"Everything that's been happening in the last week and a half reminds voters what's at stake in this election," Democratic pollster Peter Hart said. "Lehman Brothers, Fannie Mae, Freddie Mac -- they all may sound like arcane terminology to the voters. But in the end they know it's about housing, about the ability to invest in new ideas, and it's about holding on to jobs."

As a result, voters will be looking for more than accusations and boilerplate from the two nominees. "How the candidates respond to this will be critical to Americans' assessment of whether they're ready for the job," Republican pollster Neil Newhouse said in an e-mail. "In the big picture of this campaign, this issue is a 'jump ball.' "

That the issue of the economy is anywhere close to even between the candidates is remarkable. Given that Republicans have controlled the White House for the past eight years and that the normal advantage Democrats hold as the party best able to handle the economy, Obama ought to have a clear edge over McCain.

The Democratic nominee does score higher than his rival on the economy, but not by as much as he should, which is why Democratic strategists have been urging his campaign to refocus its message on the economy and to do so more forcefully.

In a memo issued over the weekend, Democratic pollster Stan Greenberg concluded that by emphasizing a reform message aimed at shaking up Washington, McCain and Palin had managed to draw even with Obama on who would stand up to special interests in Washington, narrow the gap between the two tickets on the economy and diminish the importance of economic issues as the most significant driver of voters' decisions.

Greenberg predicted in a telephone interview that the economy "will soar as a voting issue" because of the huge shocks that have hit Wall Street. "It will force the discussion to a very serious thing -- not that Palin is frivolous -- but I think now people want to know where McCain and Obama are going to take the country."

The challenge for McCain and Obama is to help people understand what has happened. The shocks have come from many directions this year. The mortgage crisis and the wave of foreclosures hit from one direction. Rising world oil prices -- and with them higher prices at the gas pump and for the coming winter's supply of home heating oil -- seemingly came from another.

Added to that is the collapse of financial giants, beginning with the bailout of Bear Stearns and continuing through Sunday's decision not to bail out Lehman Brothers. These financial market meltdowns have both symbolic and real effects on average Americans, even if they cannot understand exactly what has happened or why.

President Bush, Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben Bernanke are on the front lines of this crisis now, but come January, McCain or Obama will be in charge. They have less than 50 days to demonstrate they're capable of dealing with it.

Howard Wolfson, who was communications director for Sen. Hillary Rodham Clinton's Democratic primary campaign, described the financial meltdown as a "3 a.m. moment" for Wall Street. "Will either candidate offer an explanation of the problem and a plan to fix it that will reassure voters and break through the din?" he asked.

After all the uproar and chatter of the past two weeks, the campaign may be heading back to fundamentals.

Barnes, traveling with McCain, reported from Florida. Michael D. Shear in Washington contributed to this report.