As the national conventions wrapped up in early September, popular thought was that national security and continuing America’s prosperity would be the dominant campaign issues. Two topics which Americans tend to feel more comfortable with Republicans at the helm. Senator John McCain still holds a lead in polls on national security on the eve of the election. Furthermore, Americans felt that less government interference with the economy, the better businesses could operate in a fluid international market. Senator Obama’s message of ‘Change’ looked like it was becoming a harder sell to voters.

The election dramatically changed barely two weeks later following McCain’s acceptance speech in Minneapolis, Minnesota. As the bankruptcy filing of investment stalwart, Lehman Brothers, set off a steady chain reaction of market sell-offs that shocked the American economy and the American consumer. The events that surround that date, the spectacular claim that insurance giant AIG could no longer cover its risks, the near failure of mortgage lenders Fannie Mae and Freddie Mac, the bankruptcy and buyouts of major baking institutions and the subsequent enormous government bailouts ripped the mask off the credit based economy and exposed a hideously under-regulated and fragile economy that was on the verge of collapse. Republicans, long the party of deregulation and historically seen as more pro-business, were irrevocably tethered to this quickly sinking boulder. Obama and fellow Democrats were seen as the caped crusaders that could wrestle control of the American economy away from greedy Wall Street barons and return some stability and safety to the financial markets.

Polls from mid-September onward have demonstrated the shift in the focus of the electorate and with it, the faith they put in Democrats to fix the economy. Cultural issues and national security issues have fallen far behind in the political discourse and look to be the driving message to the White House.

John McCain (R)
As the campaign for President began, almost twenty four months ago, the conventional wisdom was the foreign policy and immigration would be the driving issues. Senator John McCain was so convinced of this that he told the Wall Street Journal in late November, "I'm going to be honest: I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated." McCain was considered well poised as a well-thought, nuanced centrist on both issues that could unite Republicans and Independents in the general election.

His well laid plans ran into the perfect storm of near financial meltdown and representing the party that presided over the economy over the last 8 years. Ever the optimist, McCain gave his opponent more ammunition with the now famous line, “the fundamentals of the economy are strong.” McCain’s crusade against government spending and limiting government’s reach took a significant hit when he was forced to defend his support of the massive bailout by explaining, “I didn't want to do that. And I don't think anybody I know wanted to do that. But there are literally millions of people whose retirement, whose investment, whose insurance were at risk."

On September 24, in an unprecedented move, McCain announced he would suspend his campaign to help Congress reach an agreement to shore up the failing banks. In his speech that day McCain exclaimed that, “We must pass legislation to address this crisis. If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes and their life savings will be at stake. Businesses will not have enough money to pay their employees. If we do not act, ever corner of our country will be impacted.” The gamble was dismissed and derided as a carefully orchestrated campaign action, and helped place the Senator from Arizona squarely in the middle of a very unpopular use of taxpayer’s money.

As Americans began to feel the effects of the market collapse, the McCain campaign steadied themselves and began formulating their own economic stimulus plan. McCain focus is on homeownership and stemming the tide of foreclosures that seems to rise every month, “[we] have focused on one of the real catalysts of the problem -- if not the catalyst -- and that is home ownership,".

Still, McCain understands his own strengths and the American people see him as a military hero and an expert in foreign policy. An image that McCain continues to push every chance he gets, “Even if the economy is the, quote, number one issue, the real issue will remain America's security," McCain told reporters on the back of his Straight Talk Express bus. "And if they choose to say, 'Look, I do not want this guy, because he was not as good on home loan mortgages,' or whatever it is, I will accept their verdict. I am running because of the transcendental challenge of the 21st century, which is radical Islamic extremism, as you know.”

Barack Obama (D)

As a political strategy, Senator Obama has been tying his opponent to an incredibly unpopular President Bush.  Nowhere has this become more evident in the attempts to link John McCain to the laissez faire economic policies of the current administration.  Obama accuses McCain and Bush of, jointly, “ignoring economic problems until they spiraled into crises”.  Sensing a change in the voters mood when it comes to pro-business policies, Obama continued to portray Senator McCain as part of the reason for the economic turmoil, “there's only one candidate who's called himself 'fundamentally a deregulator' when deregulation is part of the problem."  Senator Obama has effectively used the Republican mantra of deregulation against his opponent when addressing other campaign issues stating at a campaign rally that, "He [John McCain] wants to run health care like they've been running Wall Street. Well, senator, I know some folks on Main Street who aren't going to think that's a good idea."  

The massive $700 Billion bailout designed to shore up domestic banks and loosen the flow of credit was fraught with political danger for both sides.  While Obama was supportive of the legislative proposal; he said it was, "the culmination of a sorry period in our history, in which reckless speculation and greed on Wall Street and lax oversight from Washington led to a meltdown of our financial markets."

With Senator McCain’s unquestionable experience in the realm of foreign policy, Barack Obama turned his campaign’s focus to the economy since the Democratic primaries.  His message hit home with Americans as they watched massive layoffs, home foreclosures and disappearing retirement nest-eggs roll across their towns and neighborhoods.  "We have to give (people) a way out by lowering costs, putting more money in their pockets and rebuilding a safety net that’s becoming badly frayed over the last few decades." Obama was quoted as saying at a North Carolina rally. 

Continuing his populist message, his own website highlights his plan for jumpstarting the economy through windfall profit taxes on oil companies and rolling back tax cuts to the highest earners, while promising a cut to middle class families.

Read More

Economic woes help give Barack Obama a slight lead over John McCain in poll Janet Hook, Los Angeles Times, September 25

Wall Street Bailout: The McCain Conundrum Jake Tapper, ABC News, September 24

McCain Loses His Head George Will, The Washington Post, September 23