The Economy: Number One Issue

In the past couple of months I've been trying to tell anyone who would listen that the biggest issue for voters next year may not be the ongoing occupation of Iraq, but the increasingly worrisome U.S. economy.

The Seattle Times today ran an article originally printed in the Chicago Tribune a few days earlier:

Not long ago it was the issue that dominated every campaign event and speech. Now the war in Iraq has dramatically receded as a campaign topic, giving way to preoccupations closer to home - the price of heating oil, the collapse of the real estate market and the high cost of health care.

The AP also ran a similar article:

Republican pollster David Winston's frequent surveys show the electorate was split almost evenly on the future of the economy through the first half of the year. Beginning in July or August, though, the percentage of those saying it was headed on the wrong track took a jump. By October, 63 per cent said the economy was moving on the wrong track, compared with 32 per cent who said it was headed in the right direction.

Gallup, the polling organization, reported 78 per cent of Americans surveyed in November said the economy is worse. Only 13 per cent said they expect improvement, a disparity the organization called "the most negative responses" since it began asking the question in 1991.

The widely watched Conference Board's Consumer Confidence Index has plummetted in recent months, as well. Lynn Franco, the organization's director of consumer research, said it is not clear whether the trend will reverse itself quickly.

Two recent polls found the economy has supplanted the war in Iraq as the No. 1 issue in the campaign, although that does not appear to be the case in early voting states such as Iowa and New Hampshire.

Still, worry about the economy is evident in those states, as well.

Last month CNN ran a survey that indicated the economy was the top issue:

The state of the economy is the number-one issue on the minds of Americans as the presidential election approaches, according to a CNN/Opinion Research Corporation poll released Wednesday morning.

Eighty-two percent of Americans said the economy will be extremely or very important to their vote for president. Economic conditions edged out Iraq by two points, with 80 percent of those surveyed saying that the war is 'extremely or very important' to their vote.

Also, among the top five issues on the public's mind when contemplating their next vote for president are health care (76 percent), terrorism (76 percent), and Iran (73 percent).

The state of the overall economy weighed more heavily on the minds of voters than specific economic issues such as gas prices (67 percent), poverty (65 percent), taxes (63 percent) and immigration (61 percent).

It seems clear to me that nationally the economy is, if not the top, one of the top issues that concerns us right now. The question is will it be in 10 months? I strongly believe so, and actually believe it will be even more so.

The fact of the matter is the mortgage crisis isn't going to go away any time soon, and Bush's band-aid solution isn't going to solve it either. Paul Krugman puts it this way:

What's going on in the markets isn't an irrational panic. It's a wholly rational panic, because there's a lot of bad debt out there, and you don't know how much of that bad debt is held by the guy who wants to borrow your money.

How will it all end? Markets won't start functioning normally until investors are reasonably sure that they know where the bodies - I mean, the bad debts - are buried. And that probably won't happen until house prices have finished falling and financial institutions have come clean about all their losses. All of this will probably take years.

Meanwhile, anyone who expects the Fed or anyone else to come up with a plan that makes this financial crisis just go away will be sorely disappointed.

The dollar continues to be weak. Our debt continues to grow. The financial markets have been taking investors for a very wild ride due to all the uncertainty, and the Fed has been scrambling to figure out the recipe needed to stave off a recession.

Inflation numbers have been a concern. Job numbers have been lackluster. Oil prices are at an all time high, and gas prices in 2008 will likely top $4/gallon in much of the country.

When you add to that the lower number of casualties in recent months in Iraq, and the National Intelligence Estimate on Iran refuting Bush's claim that a military solution in Iran is necessary, the focus on Middle East issues tends to recede slightly, especially as compared to each of our own financial concerns regarding our ability to pay the bills and feed our family.

While I think some politicians are starting to get this, it is clear not everyone is 100% on board the notion that campaigning on the economy matters as much as campaigning on Iraq. However, I'm not suggesting Iraq isn't an important issue. No one knows how a war zone might evolve. Over the next 10 months a whole lot can happen that could change the equation. Yet, when you read the tea leaves regarding the economy, all indications are we are not likely to be in a better place during the next 10 months, and it is highly likely that more and more people will be affected financially and looking for leadership that can help right the good ship America.

Our political leaders and candidates will ignore the signs at their peril.