Economic elephantiasis

Hello! The elephant is back in the room. The dramatic shift in presidential poll numbers over the past week is due largely to independent voters and Reagan Democrats suddenly realizing that the McCain-Palin ticket is not leading a new political party called “The Mavericks” but is actually Republican and will probably act that way once in office. John McCain has Treasury Secretary Henry Paulson, Vice President Dick Cheney and President George W. Bush to thank for that.

Oh, and that little meltdown on Wall Street.

Paulson responded to the credit crisis in much the same way he would have handled a major corporate takeover during his glory days as a Wall Street investment banker. After several weeks of proclaiming that things were under control, Paulson released a middle-of-the-night statement saying the economy was teetering but he could save it. He just wanted $700 billion to use as he saw fit to buy up bad mortgages and stabilize the nation’s credit system. There was no oversight, no checks and balances, no judicial or regulatory controls — just a $700 billion blank check.

Paulson argued we had to move fast, that Congress must give him extraordinary powers by the end of the week.

At first, the country breathed a sigh of relief. But after sleeping on it, people began to recall other requests for special authority from this administration. Congress bought a war in Iraq under threat of a mushroom cloud. Now we were being asked to spend the equivalent of a couple of Iraq wars to avoid financial Armageddon. All on the word of Henry Paulson, Federal Reserve Chairman Ben Bernanke and their posse of former Wall Street bankers. (Wait a minute, aren’t those the people who got us in this mess?) The perception was strengthened with President Bush’s “whatever Hank wants” response and his “my way or the highway” stubbornness to consider any other options. Then came the brilliant White House decision to send Vice President Cheney to Capitol Hill to explain to legislators why they had no choice but to go along with the administration.

By Tuesday, members and senators of both parties were in open revolt. Much of their posturing was just that — posturing for the folks back home — but they still gave Paulson and company a rough day. By Friday they may have caved or, more likely, gotten a few homeowner protections in the bill and possibly even some scheme to make sure taxpayers share in any profits, should the plan work. But it is almost certain there will be some legislation and that Paulson and Bush will get most of what they want.

I’ve been traveling as this all played out, and I can tell you it is not making voters feel a lot more confident. Every day we get new polls that show voters all over the country are very, very concerned. Some Wednesday polls showed 80 percent anxious about the economy, six in 10 worried about their personal family finances and over half believing we are in a serious, long-term decline. Read: depression — a word I haven’t heard from real voters in a long time but that has been popping up wherever I go.

Which is why voters have begun to notice the elephant in the room. There is a general, and growing, perception that Republicans let banks, big business and Wall Street run wild. Like children around a birthday cake, each bite of sugar just propelled them to a higher state of hysteria until finally they created financial instruments so complicated that even they couldn’t understand them (and that no one can value now). Well, every high is followed by a crash, and it seems to Middle America that the people running the store are in a state of panic. When those people panic, they make decisions that hurt consumers — tighter credit, declining dollar, lost jobs, lower wages.

So, suddenly, Barack Obama scores 25 points higher on the economy than does John McCain. In states like Florida, Virginia, Colorado, Pennsylvania, Minnesota, Michigan and Wisconsin, Obama seems to be pulling ahead. Independent voters and white women are moving from McCain to Obama. In one poll, 54 percent of whites anxious about the economy now support the Democrat. Unless Paulson’s plan works an overnight miracle or Obama completely messes up his economic message, voters look to be making a partisan decision. The Republicans have done enough damage to the economy. It is time to get the elephants out of the White House.

Goddard is a founding partner of political consultants Goddard Claussen.
E-mail: ben@gcsa.com