"It's the economy, stupid!" read a sign James Carville hung in the 1992 campaign headquarters of candidate Bill Clinton. Though intended for an internal audience of campaign workers, the phrase leaked out into the populace at large and became a sort of unofficial slogan of the Clinton campaign. And it worked. At first, President George H. Bush had been considered unbeatable due to his strengths in foreign policy, but the campaign was able to harness the anxiety of a country in the midst of recession and unseat a sitting president by arguing that he had not done enough to prevent it.
America may or may not be in a recession now in 2008, but it is clear that the economy is again issue number one in the minds of many voters, and all three of the remaining candidates are clamoring to assert themselves as the candidate who has the magic solution for turning our economic fortunes around.
Hillary Clinton repeats often that she'd be the "commander in chief of the economy." Barack Obama criticizes the current President Bush's "ownership society" ideal as the "you're on your own" society. And months later, John McCain continues to be asked about a comment he made in December about the economy not being his strongest area but that he was reading Alan Greenspan's book to learn about it.
Conventional wisdom says that the Democratic candidate, whether it ends up being Obama or Clinton, should have an easier road to the White House during economically troubling times, but Republican candidate McCain is not down for the count yet. All three candidates are working hard to get their message about economic issues out in the public. Their ideas can generally be grouped into four main areas:
- Taxes
- Jobs
- Trade
- Housing crisis
Taxes
All three candidates claim to have plans that would cut taxes for the middle class. Clinton would do this by extending child tax credit and marriage penalty relief, offering new tax cuts for healthcare, college, and retirement, and by expanding the Earned Income Tax Credit (EITC) and the child care tax credit. McCain promises to permanently repeal the Alternative Minimum Tax (AMT), saving an average of $2,700 for a middle class family with children. Obama says he will create a new tax credit of up to $500 per person or $1,000 per working family to offset the payroll tax they pay and a 10% universal mortgage tax credit for homeowners who do not itemize their taxes.
McCain also supports a number of "pro-growth" and "pro-innovation" tax policies. These include cutting the corporate tax rate from 35% to 25% and maintaining the current tax rates on dividends and capital gains (some of which are referred to as the Bush tax cuts). He would also seek a permanent ban on internet taxes and opposes any new cell phone taxes.
Jobs
McCain received quite a bit of attention earlier in the primary season in Michigan when he said that some of the manufacturing jobs lost in the last decade are not going to come back, despite politicians' best efforts. Instead, the focus needs to be on job creation, which the other two candidates have also pushed in their issue statements.
McCain also pledges to overhaul the current unemployment insurance system and make it a program for retraining, relocating, and assisting workers who have lost jobs. He believes that strengthening community colleges and technical training will help displaced workers.
Obama and Clinton point to the climate change crisis as an opportunity for job creation and support increased federal workforce training programs in alternative energies. Both would require 25% of American electricity be derived from renewable sources by 2025 and would provide assistance to the American auto industry to build new fuel-efficient automobiles. They argue that these efforts will require new highly skilled workers in this country.
Trade
Obama promises to fight for fair trade with policies that open up foreign markets to support American jobs and require good labor and environmental standards around the world. He would amend the North American Free Trade Agreement (NAFTA), saying that it was oversold to the American people.
McCain believes that globalization and free trade is an opportunity for American workers since 95% of the world's customers are outside our borders. He wants to reduce barriers to trade and build effective enforcement of global trading rules.
Clinton describes herself as not a free-trader or a fair-trader, but as a "smart, pro-American trader." NAFTA was signed by her husband, President Bill Clinton, and she says it was in principle a "good idea" but that it fails to have any tough enforcement mechanism.
Housing crisis
Clinton and Obama both have detailed and aggressive - though very different - plans for dealing with the current housing crisis. McCain takes a much more hands-off approach, saying that it is "not the duty of the government to bail out and reward those who act irresponsibly."
Clinton's plan calls for a moratorium of home foreclosures for at least 90 days and a freeze on adjustable rate mortgages for at least 5 years or until subprime mortgages have been converted into affordable loans. Obama's plan focuses on fighting mortgage fraud and creating new criminal penalties for predatory lenders. He also proposes creating a system that would make it easier for borrowers to compare various mortgages and understand the full cost of a loan.
McCain looks to the mortgage lenders themselves to help solve the crisis. He wants them to pledge to do everything possible to keep their cash-strapped but creditworthy customers in their homes. General Motors provided 0% financing after September 11 and McCain calls on mortgage lenders to have a similar response to this crisis.
Each of the candidates will argue that he or she is strongest on the economy, and voters have and will continue to weigh this in their decision-making. However, the degree to which a president's ideas about the economy really affect our actual pocketbooks is debatable. Despite this, "It's the economy, stupid!" is certain to be the rallying call in campaign war rooms until the general election in November