You would think the likely market meltdown this week, with two of the oldest investment banks in the world about to close their doors, might have a huge effect on the presidential race. Assume the Dow Jones declines by 2,000 or 3,000 points in a week, let’s say. What then?
Obama, it is said, is the candidate who would stand to benefit from parlous economic news, since Democrats are the ones who have talking so much about the damage to the economy over the past eight years. But recent bits of data are confusing on this score. Since the conventions, Obama’s poll numbers on the economy have shrunk and McCain’s have grown, so now Obama enjoys only a three-point advantage in the Gallup poll over his Republican rival.
That may change with the Wall Street calamity. But it may not, and here’s why. If the public views this as a major crisis, a threat to the American way of life, then this becomes a question about crisis management and not about change. Crisis management is a leadership issue. And when people are asked who seems to them to be a strong leader, McCain outdistances Obama by an 11-point margin.
This provides McCain with an opening he might not otherwise have. But an opening is not a victory. He will have to use the opening to demonstrate the strong leadership skills by announcing some kind of plan on stabilizing markets, how they should be overseen and regulated in the future, and how to make sure that what happens isn’t just a bailout of people who took unforgivable risks. Those people have to lose their money. They have to become poor, and they have to lose their jobs and their licenses, so that they are not followed by others who will also believe either that there is no risk in risk or that in the end someone will bear the burden of their folly.
Obama will certainly have a lot to say on this matter, though most of it will probably be in the realm of the trial lawyer — i.e., the big guy on Wall Street doing harm to the little guy, there should be hearings, we must unmask the conspiracy, etc. The problem for him is that these are uncharted waters, and his populist rhetoric may not work the same magic when the people who stand to lose the most aren’t working stiffs but the investor class, which means the American upper middle class, those in the top 20 percent, earning as a household more than $92,000 in a year.
And the problem for both Obama and McCain is that they may not be able to come up with much to say, because these are uncharted waters, and so far, nobody knows what to do about them. You’ve heard about something being “too big to fail”? This may be a private-sector crisis that is just too big to matter when it comes to an election nine weeks from now.
