Candidates Vulnerable on Economy Obama and McCain Try to Retool Strategy ELECTIONS 2008

By Adam Nagourney

Not since at least 1980, when the United States was reeling from the oil shocks, inflation and slow growth of the previous decade, has the economy been in worse shape heading into the heart of a presidential campaign.

The crush of bad economic news – six consecutive months of job losses, rising rates of home foreclosure, gasoline prices seemingly headed toward $5 a gallon, or $1.30 a liter – is increasingly setting the contours of the race between Senators Barack Obama and John McCain.

Both candidates plan to spend this week focusing almost entirely on the economy. But both face political problems with the issue.

McCain, the Arizona Republican, has been shadowed by his statements earlier in the campaign that he is not an expert on the economy and by the likelihood that voters will associate him with the economic policies of the administration of President George W. Bush. He has embraced Bush’s stands on central issues like tax cuts and trade policy.

Obama, Democrat of Illinois, has had difficulty connecting with working-class voters, and his more ambitious responses to economic problems like expanding access to health insurance would be paid for in part with tax increases, always a risky proposition politically.

The two campaigns are retooling strategies and preparing for what aides said would be months of economic speeches, town-hall-style meetings on the economy and economic proposals, both new and repackaged – testimony to how the campaigns view the electoral environment.

“We are going to spend the rest of the summer talking about jobs, energy and health care,” said Charlie Black, a senior adviser to McCain. He said McCain would prefer that the campaign focus on national security, given his credentials in that area, “but that’s just not the way the world works.”

It appears likely that activity on both sides will involve appearances notable more for their political symbolism – and attacks against the other side – than any attempt to come up with ideas for dealing with the problems. McCain will probably continue to attack Obama for supporting tax increases, and Obama is likely to portray McCain’s views as an extension of Bush’s economic policies.

According to the text of remarks to be delivered Monday in Charlotte, North Carolina, Obama was to say that the current U.S. economic strategy “hasn’t worked, it won’t work and it’s time to try something new,” according to an Associated Press report. Obama was to say that McCain offered “exactly what George Bush has done for the last eight years.”

McCain, in remarks prepared for a campaign event Monday in Denver, was to repeat his call to build at least 45 new nuclear plants, which he said would “create over 700,000 good jobs to construct and operate them,” The AP reported.

McCain was also set to announce Monday that 300 economists were endorsing his economic proposals, which include tax cuts, expanded trade and a pledge to veto bills with earmarks, or spending inserted by lawmakers to benefit specific projects. His aides said the endorsements, mostly by conservative economists, would help him establish his credentials in this area. McCain will spend the week talking about job creation in hard-pressed battleground states, a contrast with his decision to spend last week in Latin America, which even some of his allies said risked having him seem unconcerned about problems at home.

McCain’s aides said he would talk this week with voters, often in intimate settings, about their economic problems, hoping to appear more empathetic than Obama. He will attack Obama over the Democrat’s support for raising taxes and opposition to lifting the ban on offshore oil drilling and suspending the gasoline tax for the summer, positions also highlighted in an advertisement by the Republican National Committee that started running Sunday in closely contested states.

McCain will also renew his attempt to draw contrasts with Obama on trade by focusing on Obama’s opposition to some trade deals that McCain said would help the economy, as he did in Colombia last week.

McCain has repeatedly argued that raising taxes in a weak economy would have disastrous consequences and asserted that his plan for long-term tax cuts – the centerpiece of his economic program – would solve the short-term economic problems.

But McCain’s aides said he would not offer significant new economic programs or ideas.

Obama has filled his schedule with relatively intimate appearances in which he will talk to voters about the souring economy and how it affects them. Winning the support of working- class voters is a major test for Obama heading into the fall, especially in swing states like Ohio and Pennsylvania.

A bad turn in the Iraq war or another terrorist attack could change the calculus of this election. Obama is planning to spend a week on a trip that will take him to Afghanistan and Iraq, a signal that elections are not either-or propositions. Still, both campaigns agree that for the first time since 1992, the election is likely to focus mostly on the economy.

“The economy is going to be a driving force throughout this campaign,” said David Axelrod, Obama’s chief strategist.

In what is perhaps an unwelcome turn of events for McCain, the Iraq war has faded in the news as the country has seemed to quiet down, putting more emphasis on an issue that McCain would prefer be secondary.

“I don’t think candidates are going to be able to get away without addressing the economy in a systematic, daily basis,” said Matthew Dowd, the chief strategist for Bush’s campaign in 2004. “They have to do two things: They have to demonstrate that they have an understanding of where people are in their lives – have some empathy for the anxiety that is created. And secondly, do they have a prescription for the problems?”

Originally published by The New York Times Media Group.

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