A stark, black and white sign beside U.S. 20 here tells all anyone needs to know about the economy of this small, hard-pressed midwestern city.
"Are You Better Off Today Than Four Years Ago?" asks the sign that was put up by the United Auto Workers union. "Working in 1980: Deere 12,605; Schultz Mfg. 77; Hinson Mfg. 191. Working in 1984: Deere 5,400; Schultz Mfg. 3; Hinson Mfg. Closed."
Waterloo is hurting. Hurting bad. If presidential elections were a referendum on policy -- and if people voted their pocketbooks -- President Reagan would be in deep trouble here.
But he isn't.
A year ago Reagan narrowly trailed Democrat Walter F. Mondale in a Washington Post poll of Waterloo residents. Today Reagan appears to have grown stronger as the economy here has worsened. Hardly anyone -- Republican and Democrat alike -- now believes that the Democratic presidential nominee will carry Blackhawk County Nov. 6 unless the president stumbles badly in Sunday's final televised debate. Perhaps nowhere in America today are Reagan's political strengths more evident and, for the Democrats, more confounding than they are here. Waterloo is exactly the sort of deeply depressed Farm Belt community the Democrats must carry to regain the White House. And this is the kind of territory where they expected to gain support because of Reagan's handling of foreign affairs.
The strong dollar, compounded by the big federal budget deficits and the flow of foreign investments into the United States, has battered the export of farm machinery such as that made at John Deere's once-big factory operation here. Farm conditions are even worse than a year ago when a team of Washington Post reporters interviewed a cross-section of Waterloo citizens and found farmers suffering through the harshest economic conditions since the Great Depression. Then came the shock waves of sudden foreign policy crises in the form of successive war bulletins from Lebanon, where 241 U.S. servicemen died in the bombing of the Marine compound in Beirut, and from the Caribbean, where U.S. forces invaded Grenada.
These events raised concern among citizens here and made it seem likely that the 1984 presidential election would be a referendum not only on Reagan and his economic policies but also on his conduct of foreign affairs.
Now those foreign policy concerns have faded and Reagan gets support from the most unlikely quarters: Farmers. A year ago Jerome and Toni Nies were fighting grimly to keep farming their 140 acres. They lost that battle. They're no longer farming and are selling their machinery. "I don't feel Reagan's helped us," said Toni Nies, "but my husband and I feel a president can't do his job in just four years. We feel it's just like farming: it takes a longer time to get your crops established. So that's how we feel about the president. He needs more time to do the job." Union members. Their leaders have staked their political fortunes with Mondale, and they have posted that billboard message outside of town to remind workers that their economic situation has worsened. "I don't know how we're going to come out in the plant. I don't think we can carry it," said one top official at United Auto Workers Local 838, Iowa's largest and most politically active union. "I think we negotiated our members into the Republican Party. They're not making the connection between politics and bread and butter. I'm not totally convinced the people who have been laid out have made the connection." Unemployed workers. "I'm pro-Reagan a little bit. He looks more like the kind of guy who should be president," Richard Pint said as he looked at the sparse job pickings listed at the state employment office. "As far as unemployment goes, I don't think Mondale could do any better." Longtime Democrats. "He Reagan is the stronger personality," said Ray Apel, an unemployed accountant and Democratic precinct captain. "I liked what he did to hold down inflation. Although it was painful, he took the proper measures to keep it down. I also like his stand on abortion. I guess I've become more conservative as time goes on."
One hears similar comments throughout America this fall. What is different about Waterloo is the economy. Since Post reporters came here a year ago, things have become markedly worse.
The city's spirit and its pocketbooks have suffered. "There's a lot more pessimism than a year ago. You find it now in areas where you normally would not, like among businessmen who generally take a fairly optimistic view. There's more pessimism everywhere, and it's probably not without justification," said Harry Slife, president of Hawkeye Broadcasting. "For the short run things are scary. It's hard to whip up a happy scenario here."
Buffeted by a declining export market and high credit costs, area farmers are facing their grimmest days since the 1930s. The Iowa State University extension service estimates that 10 percent of the farmers in the Waterloo area will go out of business during the next year; 20 percent more face such severe debt problems that their long-term survival is questionable. Land prices have plummeted 35 percent since 1981.
Employment at the John Deere Co. has dropped almost 4,000 in 12 months. A few weeks ago, the company terminated 120 white-collar workers and announced plans to offer early retirement to 190 more.
Rath Packing, the city's second-largest employer, is in bankruptcy. Its work force is down to 688 from 1,300 a year ago, and only workers with 32 years of seniority or more have jobs. Hawkeye Steel Products Inc., which employed 100, recently announced plans to leave town. Waterloo Industries has cut its 500-member work force in half.
The local real-estate market has all but collapsed. More than 1,600 houses are listed for sale in the area. The few houses that are selling go for prices 10 to 20 percent below their market value a few years ago.
"Nationally, of course, things have picked up but the recovery has just leapfrogged over the Midwest, particularly a community like ours that is very farm-dominated," said realtor Bob McAvey. "John Deere's got half their labor force laid off practically. Senior people in management, with 20 to 30 years of service, were terminated two weeks ago. It's devastating. My job right now is a bitch because I'm going to people whose houses are worth 20 percent less than they were in 1980, who don't have jobs, who are in their forties and fifties and have very little hope of getting a job. Definitely not here, and maybe not anywhere."
Democratic leaders are baffled as to why all this has not damaged Reagan. "You'd think this county which has been hit so hard would go overwhelmingly for Mondale," said Blackhawk County Commissioner Rachael Fulton, a Mondale supporter. "I just don't know how Reagan has escaped responsibility for what has happened here."
Until the first presidential debate Oct. 7, Mondale, who has probably campaigned more in Iowa than in any other state, had not even established himself as an alternative here, even among many Democrats.
Mondale's debate performance changed that. At John Deere, workers began asking for Mondale-Ferraro bumper stickers for the first time.
But Blackhawk County Democratic chairman Dan Holm said Mondale's troubles are not over. "He still carries a lot of negatives. He is seen as weak, not a strong leader and too tied to special interests. Mondale conjures up the image of liberalism. Reagan understands what leadership is. It's setting a tune, a sense of direction."
"Part of the problem is the Democratic Party is going through a period of rethinking. The party is struggling for its identity," he added.
Waterloo was the site of Reagan's first campaign visit of the year last February, and Republicans here don't have any trouble explaining his appeal.
"People here are pretty sophisticated," said Blackhawk Republican Party chairman Don Redfern. "They recognize that the forces that have hurt our local economy didn't come overnight. They like the steps he's taken on the national level even if we have yet to see the results here."
"But the big thing he has going for him is leadership," Redfern added. "There is a new feeling and spirit in the country. We feel it here like everyplace else."
Unless the final presidential debate changes that feeling, a remark by one of Waterloo's leading citizens, merchant Burton Field, helps explain the apparent political contradiction between this farm community's support for Reagan in spite of even harder times:
"When Reagan was in China, he was asked by a school child: What does it take to be president of the United States? His answer was: 'You have to know about domestic problems and you have to know about foreign problems.' And, with a little laugh, he said: 'And it doesn't hurt to be an actor.'
"And I think that is true. I think the president of the United States puts out an impression of what he is. He's a father image of this country. We didn't like it when Jimmy Carter sat with a sweater and tried to get down to our level. We didn't like when he would make the bed and carry his suitcase. That's not presidential. I think all the successful presidents, be it Franklin Roosevelt, Dwight Eisenhower or whoever, were really successful because they created a father image and a leadership image. It isn't just where a president stands on issues. It's what image he projects. And I think for that reason Reagan will be able to carry Iowa."