Ten months ago, with the Sept. 11 terrorist attacks still a raw wound and the public rallying around President Bush, the best-case scenario for nervous Democrats was that the economic downturn would help them maintain their tenuous, one-seat hold on the Senate and to wrest the House away from Republicans. If only in political terms, they got just what they wanted.
Anemic corporate earnings have sent the swooning Dow Jones industrial average down nearly 40 percent since Bush took office. There are 2 million fewer jobs under Bush's watch and incomes are down, mortgage foreclosures are at record highs, and ballooning government budget deficits have reappeared. Fewer Americans are covered by health insurance, and for the first time in a decade more are living in poverty. And consumer confidence just dropped to a nine-year low.
"Clearly that's not a good sign for the party in power," says Daniel Mitchell, chief economy expert at the conservative Heritage Foundation, a Washington think tank. "My guess is Republicans are vulnerable. But does Iraq or terrorism trump that? I don't pretend to know."
In a reversal of fortune, voters now trust Democrats to do a better job handling economic issues, according to a recent Pew Center for the People and the Press poll. And according to Ed Kilgore, policy director at the centrist Democratic Leadership Council, such a climate calls for a simple strategy: "The single best thing Democrats can do is talk about the economy."
But some evidence suggests it simply may not matter. Most of the headlines over the last six weeks have been dominated by threats of war with Iraq and more recently by the sniper killings outside Washington. Poll after poll shows voters are apprehensive about the economy, that they think it's the most important issue and want President Bush to devote more attention to it -- and less to Iraq. But surveys also show Democrats remain locked in tight races across the country, unable to pull away by blaming Republicans for the weak economy. Most election experts are reluctant to predict which way key races will go, but some say Democrats may fail to close the GOP's six-seat margin in the House and may also lose the Senate.
"It's so razor-thin close, I don't know what's going to take shape," says independent pollster John Zogby, who is tracking races in 18 states. "But if the vote were held today, I think Republicans would pick up one seat in the Senate and two seats in the House."
Democrats clearly have failed to get consistent thrust from the economic issue, and Republicans, led by the White House, are projecting a sense of confidence. Some analysts counter that the voter dissatisfaction may be taking shape underground, undetected by pollsters, and that only on Election Day will it be clear that they blame the Republicans for the bearish stock market, shrinking retirement plans and surging unemployment.
And where political and economic experts note that the unprecedented talk of war on terrorism and on Saddam Hussein has profoundly shifted the landscape, often in favor of Republicans, the topic of war may have peaked for news consumers living in the relentless 24-hour news cycle. Other unique dynamics are at work: Bush's unusually high approval ratings, which remain in the 60s; and a feeling that Democrats, shying away from criticizing Bush's tax cut, have not articulated a clear economic agenda, and that voters in general are less convinced that the White House exerts real control over today's more complicated economy. "The economy is a harder sell and takes a little longer," says Kilgore.
Perhaps nothing is harder than trying to change the topic away from war. "Are you better off than you were two years ago, or 14 months ago? No, but Democrats have not been able to break through the noise of war," says Zogby. "Part of Democrats' difficulty is they stayed in D.C., where all the talk was of war. They should've gone home and gotten local media and held town meetings and been talking about the economy. They got played by Republicans, basically."
But already in the weeks since the congressional resolution on Iraq was passed, and with the U.S. getting bogged down in negotiations at the United Nations over a new Security Council resolution, the rhetoric surrounding the war with Iraq has been ratcheted down considerably, with some experts now predicting no military action will take place until spring. "The timing may not be that bad for Democrats," says Kilgore.
The conventional wisdom for this fall had been that if the public debate centered on war with Iraq, Republican candidates, who are traditionally seen as stronger on security issues, would benefit. If the debates revolved around the faltering economy and sinking stock market, then lunch-bucket Democrats were given the advantage.
What's curious is that the war and the economy seem locked in an odd, yin-yang kind of dance. In what supply-side guru Jude Wanniski has dubbed the Saddam stock market, each time the White House rattles war sabers -- an act that should benefit Republican candidates -- the stock market gets the jitters and dips, which emboldens Democrats to complain about the White House's handling of the economy. Conversely, when diplomacy moves to the forefront, as it has recently with the United States, the stock market responded with a week's worth of gains, its first in nearly two months.
"When the news all points in the direction of war, the markets head south in a hurry," says Wanniski. "The market likes peace." That presents Bush with a dilemma in the next 12 days: If he hits the campaign trail with a war cry to galvanize voters, he'll have to hope the stock market does not drop dramatically. And if he emphasizes peace, the topic would recede from the headlines and give Democrats a chance to pound the economy.
Another unforeseen development in the war/economy debate has been the assumption that Republican voters would be most energized by the war talk. Yet according to a recent Gallup poll, voters who think a war with Iraq is the most important issue this fall actually oppose military action by a 2-1 margin. "They're not going to stay home on Election Day," notes Kilgore at the Democratic Leadership Council.
What could keep some Democratic voters home, though, is the candidates' general refusal to criticize Bush's $1.35 trillion tax cut, the centerpiece of the White House economic policy. Democratic economists are convinced the tax cuts have done, and will continue to do, grave damage to the economy. "They restored budget deficits and dampened long-term business investments," says Robert Shapiro, former undersecretary of commerce in the Clinton administration. But for political reasons Democratic candidates, reluctant to conjure up old stereotypes about tax-and-spend liberals, have shied away from calling for the deep tax cuts to be repealed.
"The one thing Bush is known for is the tax cut, and Democrats don't want to touch it because it's a political loser for them, so that puts them in a bind," says Mitchell at the Heritage Foundation.
"The Democrats have not laid out a credible alternative vision," adds Grover Norquist, president of Americans for Tax Reform.
Democrats dismiss the charge, insisting they have articulated an alternative, complete with extended unemployment benefits and some stimulus spending on school construction. And they point out that Democratic Sens. John Edwards of North Carolina, Ted Kennedy of Massachusetts, and Joe Lieberman of Connecticut have recently challenged the Bush tax cuts. Of course, none of them is up for reelection this November. (And Lieberman did call last week for a tax rebate targeted at low-income workers.)
What's being overlooked, says Kilgore, is that the voters' attitude about the government's role in the economy has changed. "Since the 1990s, there's been a slipping sense the federal government and national policy don't have that much to do with the economy, that the economy is much more complicated today," he says. "And that's one reason Bush hasn't gotten much blame, and why Clinton didn't get as much credit as I think he should have."
Bush also benefits from strong post-9/11 approval ratings that effectively shield him from criticism. "If Bill Clinton was the Teflon president, then George Bush is the George Forman grill: The fat just rolls right off him," says pollster Zogby. "Voters like him a lot. He's Joe Six-Pack in the White House. He gives them that feeling, 'Hey, I'm just as smart as the president.'"
Although just 41 percent of those polled by CBS/New York Times this month approve of the way Bush is handling the economy (the lowest rating of his presidency) and 60 percent, according to CNN, think the economy is getting worse, the president appears, for now, politically unscathed.
"People trust him and feel like he's looking out for their best interest," says Matthew Dowd, who was Bush's campaign pollster and is now the party's polling consultant. Dowd notes the last first-term president to enjoy approval ratings in the 60s during a midterm election was Democrat John Kennedy in 1962, when the party out of power picked up just a single seat in Congress. The last time the party out of power lost seats in a new president's first-term midterm election was during the Depression, when Franklin Roosevelt was in office, says Dowd.
But with all the current distractions in the headlines, Democrats might simply need more time to make their case about the economy -- perhaps two more years, some say. "Bush absolutely will be held responsible for the economy's performance," says Shapiro. The bad news for Democrats? "It won't be during the 2002 midterm elections."