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Economic crisis grips both McCain, Obama campaigns

BY ELIZABETH MOORE | elizabeth.moore@newsday.com

September 21, 2008

Now, suddenly it's real.

The 3 a.m. phone call from Wall Street that kicked the two presidential nominees off the front pages this week also jolted the campaign season to a new level of seriousness, as it becomes clear what a bleak national predicament will be handed over to Barack Obama or John McCain six weeks from now.

The bewildering speed of events that started with Lehman Brothers' failure and ended with the prospect of a rescue plan costing taxpayers hundreds of billions created the kind of test that can decide an election, experts say, casting into sharp relief how adroitly the candidates can pivot and offer leadership in response to the crises that will be a daily routine for them in the Oval Office.

For Obama, the "change" candidate who promises a tax cut for the middle class, this was the week he had been waiting for, one in which his broad call for an end to business as usual in Washington suddenly had a crystal-clear point of reference.

But fellow Democrats waited with growing impatience for him to seize the leadership moment.

By contrast, generally McCain, an advocate of deregulation, struggled through the week, seeking to recover from his Monday-morning assertion that "the fundamentals of the economy are strong."

"It's important to convey steadiness, consistency, that you have a broad framework that is guiding you in your approach to these issues; that you have a wide range of advisers and know how to use them; and that you are capable of being a calming, reassuring presence on TV and other modes where a president has to send signals to the American people," explained former Clinton adviser William Galston of the Brookings Institution on Thursday.

Galston had just published an open letter warning Obama could squander the election unless he sharpened his economic message. And at a time like this, Galston said, any candidate should be using his spotlight to create a "confidence-building" tableau. "When Franklin Roosevelt said 'the only thing we have to fear is fear itself,' he was making a point about the way the economy functions that a lot of economists would support ... He did it with the kind of demeanor that convinced the rest of the country that he wasn't afraid."

McCain instead invoked the spirit of Teddy Roosevelt, promising to reform the "casino culture" on Wall Street and "mismanagement" in Washington. But he often seemed like a man racing to find the head of a parade that keeps changing direction. He proposed a "9/11 commission," opposed and then supported the bailout for AIG, called for firing the head of the Securities and Exchange Commission, and finally announced a proposal to form a rescue trust that sounded much like what federal officials had themselves already decided to seek. He might have spared himself the effort.

"I'm not expecting much out of them, let me be fair," said Steven Malanga, a senior fellow at the Manhattan Institute about midweek. "When your experts don't really know what's going on, what would you expect from your candidates?"

McCain took repeated aim at Obama's status as one of the top recipients of contributions from executives of Fannie Mae and Freddie Mac, the mortgage giants McCain puts at the source of the crisis.

Still, by Friday, without proposing any specific new solutions of his own, Obama had surfed the wave of economic mayhem to a 5-point lead over McCain in the Gallup daily tracking poll. That morning in Florida he appeared before the press with a heavyweight cast of mostly Clinton-era economic advisers, praised the actions by the Federal Reserve and Treasury and promised to refrain from offering his own plan so that they could work "unimpeded."

Yesterday, Obama went after McCain once more on that "fundamentals" blunder.

"America, we cannot afford a president who's that out of touch," Obama said in a radio address. "These are serious times, and they demand serious leadership."

But this was only Week One of the crisis The Wall Street Journal has dubbed Black September. A more serious leadership test is under way now, in the intensive negotiations over details of the emergency bailout that Congress may approve within a week.

Both McCain and Obama must vote on what at best will be an unappetizing choice: Leave American taxpayers holding the bag for the veritable Ponzi scheme that some of Wall Street's leading firms bought in on - or let the nation's economy break down under the strain of it.

And McCain can take comfort from another finding by the Gallup Poll: voters are about evenly divided on which of the two can do a better job of handling Wall Street's problems.

Crisis a wedge in campaign

MONDAY

LEHMAN BANKRUPT;