The Subprime Mortgage Crisis meets “Politics 2008”
For most of the past year, pollsters across the country have been tracking two sustained trends within the electorate. First, large majorities of respondents say that the country is “off on the wrong track.” Second, equally large majorities of respondents indicate that they have rising anxiety over the state of the economy. In both cases, veteran pollsters draw parallels between today’s national mood and that of 1992, when the economic concerns of voters brought about an end to twelve years of GOP control of the White House.
Given the above, there’s little wonder that political analysts expect this year’s elections to be dominated by a strong voter desire for “change” at all costs. However, unlike 1992, this year’s electoral mood also has to contend with the affects of an unpopular war and the ever-expanding subprime mortgage crisis. While the war, thanks to a significant decrease in the U.S. death toll, has temporarily been moved to the back-burner of the national consciousness, the subprime crisis has the potential for turning 2008 voter anxiety into 2008 voter anger.
In terms of its cascading impact on individuals, neighborhoods, municipalities, counties, states, and regions, the housing crisis is proving to be a nightmare without limit. Beyond the tragedy of displaced families, home foreclosure clusters have brought ruin and crime to neighborhoods such as Cleveland’s “Slavic Village,” an ethnic bedrock community since the turn of the century that now is an abandoned, crime-ridden disaster area. Declines in home values leads to loss of tax revenue leads to cuts in government services leads to cuts in government employees leads to more unemployed and angry voters. Already, the city of Baltimore is suing for predatory lending practices which it says have led to the foreclosure of 33,000 homes and cost the city tens of millions of dollars in tax revenues. Other cities will likely follow suit.
At the presidential contest level, the candidates from both parties have been forced to address the issue as they campaign through this month’s contests in Nevada, Florida and Michigan, all states where foreclosures have become a big problem. And they need look no further than February 5th’s “Super Tuesday” primary to see the affects of the crisis on the big states – California, New York and New Jersey – where state budget deficits are climbing in the face of plummeting tax bases. Home foreclosures, along with concerns over runaway health care costs and creeping gas prices, have forced even conservative Republican candidates like Mike Huckabee to flirt with populist rhetoric on the campaign trail.
While Ohio has already been ravaged by foreclosures, Florida is high on the list of states where high numbers of subprime mortgage rates will be resetting over the next two years. Further, Florida state and local governments are already in financial chaos over major losses of government monies tied to investments in subprime related debt.
If you don’t recognize the importance of both these states in recent presidential contests, you’ve slept through the last two presidential elections. Ohio and Florida remain at the top of the list of the handful of “ground zero” battleground states. These are the states where both parties will engage in a two-month-long campaign endgame of trench warfare tactics to garner key electoral votes. It doesn’t take that much of a leap to assume that the aftershocks of the mortgage crisis will help move both states to the Democratic column.
This isn’t to say that the foreclosure crisis equals Democratic votes. Rather, it’s just one more (but a potentially defining) factor in an issue environment that is already clearly slanted in favor of the party of “change” versus the party in power. And while the GOP will point to two years of Democratic control of Congress in their defense, the electorate is poised to take out its anger on the party in control of the White House these past seven years.
And the reach of the crisis doesn’t stop at the top of the ballot. Targeted GOP U.S. Senate seats in Virginia, Colorado, New Hampshire, New Mexico, Maine and Minnesota are sitting in states that will all see their share of mortgage crisis pain over the next year. On the Democratic side of the Senate contest roster, only Sen. Mary Landrieu’s Louisiana seat is in any degree of jeopardy this year.
Just a glance at top Democratic House targets for 2008 sees the party gunning for GOP seats in Ohio (4 seats), New York (2 seats), New Jersey (2 seats), and assorted others in states like Florida, Arizona, Illinois and Minnesota where the housing issue will be unavoidable.
At the gubernatorial level, races in Indiana, Missouri and Washington will all have to address shuttered homes and their impact on state revenues.
In short, the political consequences of the crisis this election year will cut just as deep and as wide as its economic impact. And it’s one more political burden the GOP can not afford to bear.
New Hampshire Tea Leaves
The upsets of the New Hampshire primary leave a few key points in their wake.
On the Democratic side, Sen. Hillary Clinton’s victory has cut the momentum of Sen. Barack Obama’s campaign. Make no mistake, he’s still in the fight, but it is a state-by-state fight for convention delegates from here on out.
Second, Clinton’s win has given some backbone to nervous donors who were all but ready to jump ship in the face of last weekend’s polls.
Third, and most importantly, the record turnout in New Hampshire mirrors the record turnout in Iowa. Democratic voters are motivated.
On the Republican side, it’s two contests down and still no frontrunner in sight. Given the roadmap of contests remaining this month, it’s more than likely that when “Super Tuesday” arrives on February 5th the GOP nomination race will still be wide open.
Second, Mitt Romney really needs a significant win. Six months ago the thought that he would be chasing John McCain and Mike Huckabee would have been laughable.
Third, as longtime GOP campaign strategist Mike Murphy put it on “Meet the Press” last Sunday, “Money follows buzz in politics.” Aside from Romney, who has his own money to play with, McCain and Huckabee are going to need to sustain their victory buzz to have the money to compete next month.
Political Observations of the Week:
“After Iowa and New Hampshire, silver rings don’t matter.”
Scott Reed, veteran GOP operative.
“It is after all, New Hampshire. The motto of the state should be: ‘where big mo comes to die.’ Add Senator Obama’s name to the long list [of] other ‘sure New Hampshire winners’ – George H.W. Bush in 1980, Mondale in 1984, and George W. Bush in 2000.”
Democratic pollster Peter Hart, on the outcome of the New Hampshire primary.
“No modern Republican has ever won the presidency without winning South Carolina.”
Bob Wickers, GOP operative, on the importance of the South Carolina presidential primary.
“The greatest comeback since Lazarus.”
Political analyst Charlie Cook, on Sen. John McCain’s win in New Hampshire.
“There’s going to have to be a lot of tarmac campaigning.”
Democratic strategist Bill Carrick, on the challenges the presidential candidates face in campaigning across the twenty-plus states holding contests on February 5th.
“Partisanship is underrated. There is a time and place for it, and more time and place than we realize.”
Rep. Jeff Flake (R., Arizona)