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RealClearPolitics HorseRaceBlog

By Jay Cost

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The McCain Campaign and the Financial Crisis

If Niccolò Machiavelli were to envision an economic crisis that would cripple the Republicans prior to Election Day, he couldn't do much better than one precipitated by the banking industry.

The Republican Party was founded in 1854 as one consequence of the Kansas-Nebraska Act. That measure divided the Whig Party into sectional factions and so destroyed it for good. The GOP was formed mostly from the remnants of the northern Whigs - and, unsurprisingly, the party picked up many Whig principles, which it has retained even after 150 years. The Whig Party stood for expanding American industry (hence its support of protective tariffs, burdensome to American business in 2008 but quite helpful in 1854), individual enterprise, the social utility of wage labor, the "man on the make," and infrastructure improvements.

Above all, the Whigs had a pro-banking reputation. The Whig Party formed partially in response to the actions of President Jackson against the Bank of the United States. Believe it or not, banking was a big issue in the 1830s - and the Whigs were for a strong, central bank. The Republican Party, having inherited much of the pro-business sentiment of the Whig Party, has been pro-banking in spirit for 150 years. Your average voter might not know the historical reasons for why the GOP is a pro-banking party, but s/he understands that it is.

That could be hurting the GOP as much as anything right now. If this were an economic crisis precipitated by a massive labor union strike - akin to what Harry Truman had to put up with after World War II - I'd wager the horse race numbers would be reversed right now. After all, the Democratic Party is identified with labor. But this is a crisis precipitated by the banks. Combine that with the fact that George W. Bush is at the helm, and it's unsurprising that the public has assigned the blame to the GOP.

This has put John McCain in a terrible spot. McCain's key electoral strength (at least relative to GOP also-rans like Mitt Romney) is that he is not an orthodox Republican. His relationship to the GOP is a bit like Diet Pepsi's relationship to Pepsi. That's why he had such stiff competition for the GOP nomination - lots and lots of people in this country are still big fans of the GOP (we call them Republicans), and they weren't tickled with the idea of a Diet Republican winning the nomination. But in the broad middle of the country, there is disaffection with George W. Bush and, by extension, the Republican Party. McCain's maverick label was his best hope for overcoming those sour feelings.

This banking crisis does not diminish McCain's maverick bona fides, but it makes them less relevant. Already uncomfortable with the GOP, the current economic predicament has probably made the public more so. Conservatives have thought for a while that McCain should hit back against the Democrats for their previous stands on Fannie and Freddie. However, McCain might be smart to drop that subject altogether. A Republican who runs against the banks might as well pee into the wind.

So where does McCain go from here? Mike Murphy has this advice:

Palin should drop the braying attacks on Obama's aging hippie bomber pals and start connecting to her cherished hockey moms on the one issue they = (sic) are actually worried about; a quickly slowing economy. Chuck the hacky and ineffective negative ads and switch to man on the street spots with real people voicing their real doubts about Obama; too weak to stand up to Washington's mighty special interest cartel or the newly empowered Democratic bosses of the Congress and Senate, too liberal to know how to fix the economy, too inexperienced to handle a dangerous world. On Tuesday, McCain should look into the camera and connect to the 80 million scared and worried Americans who will be watching him.

McCain is losing. To regain a chance to win, McCain must run as who he truly is; pragmatic, tough, bi-partisan and ready to break some special interest china to get the right things done in Washington. Fix the message, and you will fix the states.

Prior to the collapse of Lehman Brothers, I would have agreed with this wholeheartedly. Today, I think this is nothing more than a way for McCain to lose. Lose with grace and dignity, lose in a way that inspires the good folks over at Swampland, but lose nonetheless.

Average voters do not have anything approaching perfect information. They are probably not keenly aware of how McCain is different from the average Republican. I think they have a sense that he is - and in a vaguely anti-GOP year, that might be enough. However, this banking crisis means we are no longer in a vaguely anti-GOP year. We're in a year when one of the groups the Republicans are thought to stick up for gets the blame for screwing up the economy. That changes things. To return to the soda metaphor - it isn't enough to be Diet Pepsi when the country really wants a Coke.

So, don't expect Mike Murphy to be singing the praises of the McCain-Palin team anytime soon. It is probably not going to follow his advice. Or perhaps better put, it's not going to follow his emphases. "Pagmatic, tough, bi-partisan and ready to break some special interest china to get the right things done in Washington..." That will still be a theme on the Republican side, but don't expect it to be the dominant theme. McCain will keep singing this tune, but most of his surrogates are going to go on the attack.

Relative to past presidential nominees - Barack Obama has little relevant experience. His résumé is comparable to past "phenom" candidates Thomas Dewey and William Jennings Bryan. As a political matter, this means two things for Obama. First, as everybody knows, it is a direct weapon to use against him, which the McCain campaign has been doing for some time with its "Ready to Lead?" attacks.

Second, it means the definition of "Barack Obama" is more open to interpretation than other past nominees. The Obama campaign has used this vagueness to great effect. Simply put, because Obama has a slender record, he can be many things to many people. He can be the prophet of a new age to the chi tea crowd in Hyde Park, and a hardy Jacksonian fighter to the black coffee crowd in Youngstown. Politicians have been doing this dance routine for centuries. The fact that Obama's story is hardly conditioned by a paper trail enables him to do this with more facility than most contemporary politicians.

But this does not mean that Obama "is" only who he says he is. His thin record is potentially a double-edged sword because anybody can try to define him. With the mentioning of William Ayers, the GOP has just now begun the process of offering its alternative definition of the junior senator from Illinois. It waited until October because, as I noted last week, anywhere between 20% and 30% of the electorate is now making up its mind. This is the time to begin this process.

What McCain and the Republicans will try to do is the opposite of what Obama and the Democrats are trying. The Democrats want to fold McCain into the generic Republican because they know that a generic Republican would be hard-pressed to do better than 45% this year. The Republicans, knowing that the country is in a mood to elect a generic Democrat, will speak specifically about Obama, trying to make him seem quite worse.

Can they succeed at this? Perhaps. Again, Obama is less "credentialed" than most major party nominees in a hundred years. Public opinion of him is based largely upon political claims about him, as opposed to an immutable record of accomplishment or even a long history on the national scene. That means that the perception of who Obama is might be alterable.

Obama certainly did himself no favors by associating with people like William Ayers. This gives the Republicans a tactical advantage. They don't need to link Obama to Ayers; rather, they need to give specifity to the vague term "associate."

And if focusing on William Ayers doesn't work, expect to see a return of Jeremiah Wright, the most provocative of all Obama's past "associations." It was not noted at the time, but Wright might have done real if temporary damage to Obama's reputation back in March. The following is a track of Obama's weekly net favorable rating, according to Rasmussen.

Obama's Net Favorability.jpg

Note the dip that his numbers took after March 13th, the day ABC News reported on Wright's "God Damn America" sermon. It lingered at or below zero until March 28th, a full 10 days after Obama gave his "More Perfect Union" speech in Philadelphia. His numbers rebounded a bit in April, only to fall back down in May. Ultimately, it was not Obama's speech on Wright that resurrected his numbers, but his victory over Hillary Clinton on June 3rd. This indicates that, as a political matter, the Wright controversy might not be finished. Even if media types were satisfied with Obama's speech in Philadelphia - there is evidence that the mass public was not.

Ultimately, the GOP might end up using it even if McCain "prefers" it isn't used. The state and national party committees can go forward without his blessing. This is one side effect of the campaign finance "reform" that politicians from both parties have supported (and McCain has championed). Lines of accountability are quite blurry in the current regime. In many respects, the national and state committees are independent of candidate committees. Even though McCain gave a boatload of cash to these outlets immediately prior to his convention, and even though he is allowed to coordinate with them to some degree, he does not have control over the way many of these resources are used.

This means that a candidate can have the best of both worlds: he can enjoy the effectiveness of a negative attack while condemning it at the same time. The end result is therefore similar to what we saw in the early age of American electoral politics when the presidential nominees didn't take an active part in politicking, but their affiliates nevertheless went for the jugular.

I'd bet every dollar I have that this is going to offend the sensibilities of Democrats nationwide. But I'd also bet every dollar that, if the shoe were on the other foot, the Democrats would not hesitate to do likewise. One party's vicious smear is the other's vital truth. That's just the way it is.

I'm again reminded of Old Hickory. During the 1828 campaign, his surrogates accused John Quincy Adams of acting as a pimp for the Czar of Russia. Adams's supporters accused Jackson of murdering his own soldiers during the Creek War. Politicos don't level attacks like that anymore, but that's because such attacks wouldn't work anymore. However, we should always expect them to do what they think will work - the denunciations of their political opponents notwithstanding.

-Jay Cost