- The Washington Times - Thursday, March 20, 2008

As the economy sours, voters are increasingly demanding immediate government relief — a boost for Democrats who propose just that sort of quick fix, but a problem for Republican Sen. John McCain, whose focus has been on longer-term solutions such as tax and spending cuts and free trade.

Polls show the economy tops voters’ concerns, and those voters blame President Bush and the Democrat-controlled Congress. For now, all three of the presidential candidates score good marks on the economy, but that could change quickly, analysts say, particularly if Democrats succeed in tying Mr. McCain to Mr. Bush.

“McCain really has to differentiate himself and do so fast. His window of opportunity is from now to when Democrats settle on a front-runner,” said Peter Morici, a professor at the University of Maryland. “He needs to pull a Tony Blair. He has to find a third way.”

The Bush administration this weekend helped arranged a $30 billion Federal Reserve bailout for Bear Stearns, but that has only increased criticism from Democrats who say homeowners facing foreclosure deserve the same consideration.

Markets continued to churn yesterday despite a move by regulators to allow Fannie Mae and Freddie Mac to purchase more mortgages. The Dow Jones Industrial Average plunged 293 points only a day after posting a 420-point gain that was its best in five years.

One item triggering the turmoil was a warning from Thornburg Mortgage, one of the only lenders still offering jumbo mortgages, that it may go bankrupt because it has been unable to find buyers for its mortgages.

Those twists and turns have left voters uncertain and looking for “an activist government right now,” Mr. Morici said, which puts pressure on Mr. McCain to find a plan that will help in the short-term while keeping true to his long-term, limited-government principles.

“He needs to talk about why we had a recession, why things are bad for the middle class — because they are perceived to be,” Mr. Morici said.

Douglas Holtz-Eakin, a policy adviser to Mr. McCain and former director of the Congressional Budget Office, said they are confronting an economy that is growing slowly at best, but it’s not uniform: While production jobs — those people that “make stuff” — are doing decently, the financial sector is facing “disastrous conditions.”

He said the challenge is to strike a balance in proposing solutions.

“If you go for quick fixes, my fear is you make mistakes,” Mr. Holtz-Eakin said. “The sad reality is there is no $1,000 tax credit that is going to substitute for a job.”

Mr. Holtz-Eakin said Mr. McCain will work for a pro-growth plan focusing on small-business growth, which means opposing Democrats on tax increases, higher spending, curbing trade agreements and increased government control of health care.

Both Sens. Hillary Rodham Clinton and Barack Obama have staked out more activist stances than Mr. McCain, calling for the government to step in to help homeowners.

“The ordinary person who is in their home partly because of a deceptive loan or because their wages and incomes haven’t gone up over the last seven years that George Bush was in office, those folks need some relief,” Mr. Obama told PBS’ “Newshour With Jim Lehrer” program Monday, saying that meant immediate as well as long-term structural relief.

Pollster John Zogby said the economy is “the mega-issue that’s out there” among voters, even though other issues may at times rise up.

“For the time being, and at least into the foreseeable future, people are in a foul mood about the economy,” he said.

Mr. Zogby said that’s a challenge for Mr. McCain’s free-market approach.

“The notion of ‘the market will straighten things out, be patient’ — that has photos of Herbert Hoover juxtaposed with it,” he said.

Mr. McCain is also handicapped by his admission that “the issue of economics is not something I’ve understood as well as I should.”

As of now, though, that hasn’t hurt him badly. A CNN/Opinion Research poll released earlier this week found 65 percent of voters said he would do a good job on the economy, close to the 69 percent garnered by Mrs. Clinton and the 67 percent Mr. Obama won.

The economy is critically important in key states such as Ohio, which is electorally blessed but economically depressed. Even before the bad economic news, an overwhelming number of voters there cited the economy as the top issue.

Democrats in Congress will press the issue next month when they return from their two-week Easter recess, including a bill to try to get lenders to rework home loans, and hope the government’s bailout this week of Bear Stearns will increase the pressure for government aid to borrowers.

Republicans in Congress said they think if they can last through the next month of debate, the tax-rebate checks, which begin to arrive in May, will help ease pressure for immediate action.

Patrice Hill contributed to this report.

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