For Bill Clinton in 1992, it was the economy, stupid. For John McCain in 2008, it was the stupid economy. Exit polls showed that 62 percent of the electorate said the economy was the most important issue.
But when, precisely, did John McCain lose the narrative on the economy? Was it last July, when economic adviser Phil Gramm, discussing the "mental recession," noted that "we've sort of become a nation of whiners"? Perhaps it was back in December 2007, when McCain said, "The issue of economics is not something I've understood as well as I should." Or was McCain's economic goose cooked long before the campaigns started? Ray Fair, the Yale professor who plugs macroeconomic data into an election-predicting model, said that "since November 2006, the model has consistently been predicting that the Democratic candidate would get about 52 percent of the two-party vote."
McCain managed to give Obama a run for the money through mid-September. The polls began to turn (decisively, it turns out) against him when the global financial system suffered a run on the money. And with the acuity bestowed by six weeks of hindsight, I think it's possible to pinpoint three dates—Sept. 15, Sept. 24, and Oct. 15—that mark crucial turning points in the campaign.
On Sept. 15, Lehman Bros., having failed to convince the government it was worthy of a bailout, filed for bankruptcy. The same day, McCain proclaimed: "I think, still, the fundamentals of our economy are strong." A twin killer. Lehman's failure triggered a ferocious and unpredictable series of events—the freezing of money-market funds, a global credit seizure—that made it clear that 1) the fundamentals of our economy were anything but strong and 2) volatility was here to stay. McCain's ill-timed line, a longtime presidential staple, showed he had no intuitive feel for how to talk about the economy at large or about the crisis at hand.
On Sept. 24, as talks about a Washington bailout intensified, McCain announced he would suspend his campaign and fly to Washington. The theory: McCain would put country first, force Obama off the campaign trail, forge a bipartisan compromise, and alter the dynamics of the race. But McCain didn't have a game plan to triangulate effectively between the Republican gentry (the Bush administration, Wall Street, corporate America), who ardently demanded a bailout, and the pitchfork-toting peasants (House Republicans), who opposed it. He ended up leaving town and resuming campaigning without an agreement in place.
While McCain seemed detached, Obama caucused with financial graybeards and kept his campaign plane on the tarmac to get updates from his new speed-dialing buddy, Treasury Secretary Henry Paulson. Self-serving? You betcha. But doggone successful. And the passage of the bailout bill, which McCain grudgingly supported, neutered the increasingly ideological economic warfare McCain waged in the closing weeks. At a time when the Bush administration was nationalizing big portions of the (grateful) financial services sector, charges that Obama was a socialist, the redistributor-in-chief, the second coming of Eugene V. Debs, failed to gain traction.
The third fatal date? Oct. 15, when the third debate took place. Throughout the fall, Obama had rounded up financial icons such as former Federal Reserve Chairman Paul Volcker and Warren Buffett to serve as surrogates. They could reassure Wall Street and Main Street that Obama could steer the nation through treacherous financial waters. Rather than enlist a respected businessperson such as Mitt Romney or former eBay CEO Meg Whitman as his chief economic surrogate, McCain turned to an unlicensed plumber from Ohio. McCain mentioned "Joe the Plumber" seven times in the Oct. 15 debate. In the ensuing weeks, McCain routinely trotted out Samuel J. Wurzelbacher's economic folk wisdom as gospel.
Warren the Investor and Paul the Central Banker vs. Joe the Plumber was never going to be much of a fair fight. Given the macroeconomic backdrop of recent years and the microeconomic disasters of recent weeks, neither was the presidential campaign, which is why Obama has won the White House.
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