The Wall Street Journal-20080123-Credit Crunch- The Fed Acts- Economy Takes Center Stage in Presidential Race- Clinton- Romney Move To Capitalize on Shift In Focus From Iraq War
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Credit Crunch: The Fed Acts: Economy Takes Center Stage in Presidential Race; Clinton, Romney Move To Capitalize on Shift In Focus From Iraq War
COLUMBIA, S.C. -- While the Federal Reserve's intervention calmed global markets yesterday, continued attention to economic crises is roiling the presidential race and could tilt the field toward the more experienced hands in both parties.
Yesterday, Democratic Sen. Hillary Clinton and Republican Mitt Romney were quick to press what they see as their advantages -- hers stemming from her years in the White House as first lady, and Mr. Romney's from a successful business career -- over rivals who had an edge when the campaign focus was the Iraq war or national security, as it was for much of last year.
All the candidates reacted to the morning's news that U.S. markets were plummeting just as foreign markets had the day before, and of the Fed's emergency cut in its short-term interest-rate target. But the reaction mostly confirmed what had been developing since late last year: The economy has emerged as the top issue for the 2008 presidential election.
Sen. Clinton summoned campaign reporters in Washington for a morning press conference before jetting across the country to campaign in California and Arizona, to address what she called a "global economic crisis." She suggested that President Bush immediately convene the President's Working Group on Financial Markets, if he hadn't already. "That's something that he can ask the secretary of the Treasury to do," she noted.
At the White House, spokesman Tony Fratto responded, "We don't announce meetings or conference calls of the PWG. Everyone should understand that the members stay in regular communication and meet as needed." It "does not require 'convening' by the president," he added, but meets at the Treasury secretary's discretion.
Sen. Clinton and her Democratic rivals, Sen. Barack Obama of Illinois and former North Carolina Sen. John Edwards, called for President Bush to quickly reach a bipartisan agreement with the Democratic-led Congress on a tax-rebate stimulus that would extend relief to the estimated 50 million to 70 million workers and seniors whose incomes are too low to be taxed. Low-income workers, the Democrats argue, would be most likely to spend the rebate to spur the economy.
A new statewide poll in California, the biggest prize of the Super Tuesday primaries on Feb. 5, confirmed the advantage that the economic issue potentially holds for Sen. Clinton, as national polls have shown. In the respected Field Poll, she leads with 39% to 27% for Sen. Obama and 10% for Mr. Edwards. More than 40% of respondents said the economy was their top issue, and that group favored Sen. Clinton by a 2-to-1 margin over Sen. Obama.
Sen. Obama, who has consistently contrasted his opposition to going to war in Iraq with Sen. Clinton's 2002 vote to authorize force, has lately tried to get out front on the economy. His economic-stimulus package last week followed Sen. Clinton's; they both trailed Sen. Edwards, who proposed a spending package in December. But Sen. Obama was first to propose a tax rebate. Sen. Clinton sweetened her package late last week, adding a tax rebate she had initially held in reserve, should economic conditions worsen.
"She changed her plan to look like mine," Sen. Obama charged yesterday, at a campaign event in Greenville, S.C., that he turned into a forum for a speech on the economy. The first-term senator noted that, besides his recent stimulus plan, he had introduced legislation two years ago against mortgage fraud and predatory lending, and tax cuts last September for middle-class families, seniors and homeowners.
Taking a poke at Sen. Clinton's original campaign slogan, he said that in anxious times, "what this country needs most is . . . a president who's not just in it to win it; but in it for you."
Among Republicans, who are competing in Florida for Tuesday's party primary, Mr. Romney's focus on the economy continues the theme he successfully took up in Michigan, where he won his first Republican primary last week. For most of last year, he emphasized social issues, such as opposition to abortion and same-sex marriage.
Now the former venture capitalist, who boasts his business experience separates him from the field, yesterday began airing a television ad promoting his qualifications to deal with a slowing economy: "I know how America works because I've spent my life in the real economy," he says in the ad. "I ran a business, turned around the Olympics, and I led a state." At each Florida stop, Mr. Romney promoted permanent tax cuts for individuals and businesses, not a temporary stimulus.
National security has long been the focus for both Sen. John McCain, a Vietnam hero and the most ardent supporter of the Iraq troop build- up among the candidates, and former New York Mayor Rudolph Giuliani, whose national celebrity stems from his leadership after the Sept. 11, 2001, terrorist attacks. Each is now scrambling to burnish his economic credentials.
In Florida, Mr. Giuliani promised what he calls the biggest tax cuts in history. Sen. McCain likewise is calling for permanent income-tax cuts, not immediate action. His economic adviser, Douglas Holtz-Eakin, yesterday told reporters that short-term downturns are best addressed by the Fed. As for whether Sen. McCain is at a disadvantage given the debate's shift, Mr. Holtz-Eakin replied, "Leadership matters in economics in the same way it does in national security."
Former Arkansas Gov. Mike Huckabee, running as a populist skeptical of Wall Street and free trade, praised the Fed and called for Washington to enact a temporary stimulus. "I have been warning that harder times are coming for a long time now, even when my fellow Republicans were seeing the country through rose-colored glasses," he said. "I know that bad news for Wall Street is even worse news for Main Street."
