Obama and the Economy: Can He Connect?

While McCain woos voters with a national security pitch, Obama must win on the economy—a key campaign tenet. So far, he's short on details

By Jane Sasseen

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Back in 2004, senatorial candidate Barack Obama gave the speech of his life at the Democratic National Convention in Boston, in the process hurtling himself onto the supercharged path that has brought him to within days of being crowned as his party's new Presidential nominee.

The question now, as he and newly named Vice-Presidential pick Senator Joseph Biden move through a final round of campaigning before arriving in Denver, is: Can Obama repeat the feat? Can he use a fired-up speech at this year's party gathering to help propel himself all the way to the White House?

No doubt, the crowd of 75,000 expected to show up at Invesco Field, home of the Denver Broncos football team, to hear him accept the nomination Thursday night will be jazzed. But for the much larger audience watching back home on TV or just beginning to tune in to the Presidential race as the candidates head into the final sprint, the senator from Illinois faces some bigger challenges (BusinessWeek, 8/21/08).

No Cakewalk For the Dems

By all rights, he should be far ahead of Republican rival John McCain. With the economy in the tank, continued frustration over the Iraq war, and President George Bush's popularity at near historic lows, even many Republicans thought this year would be a virtual cakewalk for the Democratic nominee. One ominous sign for the Republicans: A fall in real incomes in the months leading up to the election almost always leads to a loss for the party in power, pointed out Nigel Gault, head of North American macroeconomics for Global Insight, in a recent conference call with investors. "The incumbents tend to take the blame," he said. "This should be an uphill battle for McCain."

But on the eve of what Obama and the Democrats hope will be their own Rocky Mountain high, that's not proving to be the case. Despite rising unemployment, soaring energy prices, a deepening slump in the housing and credit markets, and growing fears that the U.S. economy is already well into a recession, Obama has not been able to capitalize on the economic woes (BusinessWeek, 8/7/08) to build an electoral lead. "It's an absolute mystery that Obama has not been able to exploit this issue more aggressively," says Greg Valliere, the Washington (D.C.)-based political analyst for the Stanford Financial Group.

Indeed, even as voters have increasingly said the economy is far and away the No. 1 issue for them, the race has tightened. While Obama held a 48% to 42% lead over McCain earlier in August, according to a daily poll done by Gallup, he will enter the Democratic convention in a statistical dead heat, leading by just 46% to 44% in a poll dated Aug 23.

Working Class Not Convinced

Moreover, Obama isn't benefiting from the view of many Americans who say that in general they have more faith in the Democrats' ability to handle the economy than that of the Republicans. In an August tally by independent pollster Rasmussen Reports, 51% of respondents said they trusted the Democrats more on the economy, vs. 39% for the GOP. But when the two candidates were compared head-on, says Scott Rasmussen, 45% said they trusted Obama more, while 45% favored McCain. "There's no evidence that either candidate has really connected on this issue," says Rasmussen.

That's a much more critical problem for Obama than McCain. Convincing voters that he has what it takes to help the struggling economy and combat the squeeze on middle-class voters is a central tenet of his campaign, while McCain has largely based his candidacy on his leadership on national security issues. "If he is going to win, Obama will have to win on the economy," says Thomas Riehle, a Democratic strategist and pollster who heads Washington-based RT Strategies.

Riehle and others point to a number of reasons why that hasn't happened so far.