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The economy re-emerges

It’s not bad enough to be led by one of the most unpopular presidents in American history, through the most unpopular war we have ever fought — now the GOP is being hammered by bad economic news that will likely haunt the party through next year’s election.

Along with war and incumbency, the economy is one of the critical factors setting the context for 2008, and every other election. Its re-emergence as a central issue adds one more burden to a Republican Party near collapse from those it already bears.

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The latest Gallup poll reports 64 percent of Americans harbor a negative economic outlook, the highest number since September 1992, when, just before George Bush’s father was defeated in his bid for reelection, 66 percent offered negative evaluations of the economy. Negative assessments today are 21 points higher than they were when the present Bush was reelected in 2004. In addition, 43 percent then saw the economy moving in the wrong direction — today that number has ballooned to 71 percent.

Voters aren’t wrong. The latest Blue Chip consensus forecast of 50 top economists predicts a meager GDP growth rate of just 2 percent this year and 2.8 percent in 2008. If the forecasters are correct, 2008 will sport the 13th worst presidential-year economic growth in the last 16. When Ronald Reagan handed off the White House to Bush’s father for a third consecutive GOP term, GDP grew at 3.5 percent.  

More frightening still, the Blue Chip economists posit a 1-in-3 chance of a full-blown recession during the next 12 months.

Continuing his derisive assessment of GOP policy, Alan Greenspan, the high priest of Republican economics, seemed to concur with other forecasters, telling Tim Russert, “We’re heading towards a slowdown. Whether that actually leads to a recession is dependent on things we can’t forecast at this moment.”

Gallup is far from the only poll to pick up the bad economic vibes emanating from the electorate. The ABC/Washington Post Consumer Index recently witnessed its steepest slide since 1985, with 66 percent now giving the economy a negative rating.

The GOP’s once-vaunted “investor class” provides no relief from the relentlessly pessimistic views of the economy. Investor confidence declined in September for the fourth straight month; 74 percent of those polled in the monthly UBS/Gallup Index of Investor Optimism believe the U.S. economy is now either in a slowdown or a recession, the highest percentage of investors to hold that view since November 2001.  

All this bad news has also increased the salience of economic issues, according to Gallup. While the war in Iraq still dominates — no blessing for the GOP — the gap in those identifying the war and the economy as the nation’s top problem narrowed from about 10 points to just about five. That is not to say voters are less concerned about the war.

They are not. Rather, it suggests that economic insecurity is cutting more deeply into the American psyche than it has in some time.

A world in which Democrats have a 20-point advantage on making “the country prosperous,” a 10-point advantage on Iraq, a five-point advantage on “protecting the country from international terrorism”  and a 30-point lead on healthcare is a world where Republicans have very little room to maneuver.

Only one piece of economic data could bring the slightest smile to GOP faces — 2008 is expected to be better than 2007. Will voters reward Republicans for the “better times” during the election year? Not likely, but I guess it takes some ray of hope for 10 Republican presidential candidates to get out of bed each morning and take to the hustings.

Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the majority leaders of both the House and Senate.