[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/09/15/art.wallst.sign.jpg]John P. Avlon
Author, Independent Nation: How Centrists Can Change American Politics
After a historically bad day on Wall Street, the underlying economic anxiety of this election has taken on new intensity.
Historians will write that the Bush administration went in with Enron and out with Lehman.
Some economists believe that second quarter results form voters' perceptions of the economy – but bad news has dripping out for so long, that it has almost faded into the background, like a movie theme separate from the action on screen.
That should change after today – when the liquidation and sale of two of America's pre-eminent investment banks added urgency to what Allan Greenspan has already called a "once in a century financial crisis."
After yesterday, there is no false comfort to be found in 'dead cat' bounces. The American economy will be fine in the long-run. But right now we are in a seismic financial crisis – and as in every crisis there may be opportunity to be found.
Elections are won by the candidate who connects with moderates and the middle class – and even after a wasted week focused on the manufactured scandal of "lipstick on a pig"— wallet-issues motivate voters like nothing else.
It is in economic hard times that demagogues rise to the top in democracies – and in economic easy times, we elect Warren G. Harding or tolerate a presidential impeachment over an affair with an intern while sustaining 60+ approval ratings.
But one of Bill Clinton's lasting gifts to the Democratic Party is that he removed economics from the Republican column as an area of core competence.
Barack Obama has benefited from the Democrats' newfound perceptional strength on economic issues, consistently polling ahead of John McCain when it comes to the economy.
He should take another page from the Arkansas Traveler's playbook and promise to "focus on the economy like a laser beam." And then convene an economic forum of prominent advisors and supporters from across the spectrum – such as economic advisors Austin Goolsby and Paul Volcker, Alan Greenspan, Robert Rubin, and politically neutral NYC Mayor Bloomberg.
It's a time to trumpet his middle class tax cut – a groundbreaking policy for a Democratic candidate that allows him to avoid the liberal "tax and spend" label while offering real relief for working families. The independent Tax Policy Center estimates that his plan offers greater savings than McCain's plan for families making less than $112,000 a year and would save tax-paying families making less than $66,000 up to three times as much.
And Obama's got to make it clear that he doesn't buy into dictates from the neo-protectionist wing of the Democratic Party, because trying to wall ourselves off from the global economy isn't going to make our situation any better or recovery come any faster – in fact, just the opposite.
McCain has a tougher time because he's got to back up his defense of the economy as "fundamentally strong" while also promising reform. It's an extension of his so-far successful post-convention pivot to be both the Republican nominee and the candidate of change.
And in this case, there is an element of truth. McCain is at heart a Teddy Roosevelt-style trust-buster and regulator. He is a steadfast defender of international free-trade, but has no ideological belief in the inherent morality of unregulated free-markets. At the same time, as some of his conservative detractors during the primary pointed out, McCain has admitted that economics aren't his strong suit. And the Bush administration combined with Tom Delay's unprecedented pork-barrel congress to squander much of the GOPs remaining credibility as responsible stewards of our economy.
The McCain campaign's best move is to put the focus on "who can get us out of this mess?" – not on "how did we get into this mess?"
Obama needs to appear problem-solving and presidential – diagnosing the Bush-era economic mistakes while front-loading pocketbook solutions that will ease the middle-class squeeze which pre-dates this market turmoil.
When the dust settles, we can examine whether this is an economic crisis impacting investment banks or an investment bank crisis impacting the economy. But today, a combination of compassion and action are needed.
2008 has already been a historic high-stakes, high drama election – and with an epic economic tailspin 50 days out, "Issue #1" just got more urgent in even more voters' minds.
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