Why McCain's "Fundamentals of the Economy Are Strong" Remark Was in Line with His Strategy

John McCain is not as dumb as those of us on the left want to believe. So don't think his comment yesterday that "the fundamentals of the economy are strong" was a gaffe. I don't believe it was. I think he knew exactly what he was saying.

McCain has campaigned using unbelievably transparent lies, making sleazy and wacky assertions that nobody in their right mind would believe. (A list of criticisms of McCain's ads can be found here, and an Obama commercial also did a good job of showing how low McCain has stooped in his attacks.) And yet the strategy gave McCain a bump in the polls. He then picked an unaccomplished, inexperienced, scandal-dominated, less-than-exceptionally-intelligent candidate to be his running mate, even drawing fire from Republican pundits, and it gave him an even bigger bump in the polls.

And now, on the day that Lehman Brothers filed for bankruptcy protection, Merrill Lynch was acquired by Bank of America, and AIG moved to restructure itself, McCain told an audience that "the fundamentals of our economy are strong." (And Barack Obama responded with a well-done television ad that nails McCain for his apparently tone-deaf statement.)

Yes, I understand that, factually, McCain was wrong. The "fundamentals of the economy" are generally accepted to refer to figures like growth, inflation and unemployment, none of which are especially encouraging right now. Growth has been glacial, unemployment is at its highest rate in five years, and the actual buying power of middle-class families has dropped since Bush took office.

No, as much as McCain's claim was incorrect, I believe that like the lie-filled attacks on Obama and the choice of Sarah Palin, McCain's affirmation that things are rosy with the nation's finances was a move that, on the surface, looks ludicrous, but, in practice, helps him accomplish his goal of getting elected to the presidency.

How can that be? Easy. It talks directly, in not-too-subtle terms, to the needs of two audiences he has to mollify. First, it tells financial conservatives that he's their guy. That despite any rhetoric he may have to espouse in the coming weeks, in the end, he will do nothing to rein in the complete freedom and absence of regulation that the financial industry has enjoyed under the administration of George W. Bush. After all, Obama is pointing to the banking crisis as a big problem that will require the government to reinstitute some regulation, the last thing the financial institutions want. By indicating that the current troubles on Wall Street are not such a big deal (since, as McCain is claiming, the "fundamentals of our economy are strong"), he is telling the powers-that-be in the financial industry to relax with the knowledge that he has no intention of changing the (lack of) rules they are currently enjoying.

Second, McCain's statement on the economy was meant to win over undecided voters. As I discussed in my article last week on the behavior of the American electorate, one of the reasons that undecided voters are moving to McCain rather than Obama is because of a change in the culture that no longer has citizens willing to sacrifice. Obama is out there telling the electorate the truth, making the point that the economy isn't working for most working- and middle-class families, and that the energy situation requires changing habits and a large-scale solution rather than stop-gap fixes.

McCain, on the other hand, is the "Don't Worry, Be Happy" candidate. He's telling U.S. citizens that things are fine, we can drill for our own oil, and we really don't have to make any major changes to our way of doing things. Oh, and we're going to win in Iraq, too! So what if nothing McCain is saying is backed up by the facts or based in reality? He's pitching a feel-good message. It's like he's saying, "Don't listen to that pessimistic, America-hating elitist with the Ivy League education telling you America isn't great. You know America is great. We don't have to change anything. Things are fine. Just go about living your life, and I'll take care of everything. After all, I'm a war hero and I was in a POW camp for five years."

If a voter is willing to plunge his or her head into the sand, ostrich style, and ignore the realities of the failing economy, the energy crisis and global warming, well, then McCain's message is very uplifting.

And that is where his statement on the economy comes in. It gives these undecided voters a chance to buy into McCain's "it's all all right" mantra. "Don't worry about the unemployment, foreclosures and failing banks. The fundamentals are strong. We don't need Obama telling us to sacrifice. That guy is a downer. McCain says the fundamentals are strong and we can keep doing what we want."

As long as the culture of the American electorate is such that it is willing to be swayed by outright lies and smears, and as long as voters take a me-first (ironic, given McCain's completely bogus "country first" slogan), I-don't-want-to-change approach to choosing a candidate, McCain's "gaffes" will only help him attract voters.

Considering the GOP's success in the 2000 and 2004 elections, despite everything that was going in favor of the Democrats in both races, and considering that many of the same folks who ran Bush's campaigns are in place for McCain's current run for the White House, it would be foolish to think that McCain's strategies and statements are as dumb as we would like to think. And the Obama campaign should not assume that swing voters will hold McCain accountable for his actions.

Sure it's remarkably out-of-touch to claim that the "fundamentals of the economy are strong." But if it attracts voters, McCain's statement will have done its job.

Comments

[quest44]

I really don't think your giving the majority of the electorates any credit for being intelligent enough to see a lie from the truth ! While I do agree that the powers that be like McCains message while not so much Obama 's ,if the electoral vote is the one that counts the people whole the majority and we have had it with the large corporations running our government !

[Aaror]

I hate to say this (given what it says about the future of this country) but you are giving the voters WAY too much credit...

[larmarch5]

So true. My sister, republican in Louisiana, won't even use a CFL because, "the light isn't instant, is slow and their shape is funny." You think she won't support a man willing to bomb the rest of the world and draft her grandsons if it will keep her Walmart lifestyle intact? You think her husband will ever vote for a black man? Know any young people who haven't registered to vote? They are our only hope to balance the Walmarters blindly following the Wallstreeters.

[UncommonSenz]

Bill Maher once asked "If all it took to eliminate global warming was for us to each give up our TV remote controls, do you think America could do it?"

The reublican message is always "It is un-American to give up anything, ever, no matter the reason". No sacrifice. No taxes. No regulations. They even mock common sense actions, like buying greener products or checking the pressure in your tires.

For the last 8 years we've been promised that we don't have to do a damn thing. That prosperity and indulgence are our god given birthright. Look where that has gotten us.

[canobs]

When will Democrats get through their collective head that we have a FREE-MARKET ECONOMY!
As such it is bound to go through periods of both growth and decline. Ultimately it always corrects itself. The less government intervention there is the better. You cannot enforce an artificial market stability, just ask any post-Communist country.
Right now we're going through a slump because in the free market, just like in the free society, people and institutions make mistakes. That's life. In the sometimes painful process of correcting those mistakes, people and institutions acquire valuable knowledge and experience that will prevent them from making the same mistakes in the future. That doesn't mean that later on they won't make somewhat different missteps. There is nothing the government can do about it.
No matter how messianic, you people think, Obama is, he (or, for that matter, John McCain) cannot lead us out of the current crisis. Our free-market economy will sort itself out.
In the future, however, as life goes on, there will be another growth cycle followed, inevetibly by anoter recession. Live with it.

[DavidK08]

MMMM, I don't think that you are correct. The free market economy that you speak of is not defined as literally as you are making it sound. If there were no regulation at all, this would happen more often. The reason we need "some" regulation, is the lay person would be at the mercy of those on wall st.

While true there are corrections, the lack of regulation makes the swing harder and more people get their lives turned upside down.

So live with having only a small understanding of what you are talking about and when you open a dictionary, if ever, look under "I" for ignorant. Too many people are involved in the economy at many different levels to let so few dictate the entire thing for everyone.

[UncommonSenz]

When will Republicans get it through their head that markets can be distorted. When you have no oversight, markets get manipulated. And the free market is not a cure all that magically corrects for everything (despite your unfailing belief in it)

Unregulated markets don't care if you cheat, lie, steal. They don't care if you treat your company like an ATM machine. They reward ponzi schemes (which, by their very nature, eventually collapse). They reward exploiting workers, underfunding pensions, sidestepping environmental regulations and interfering in politics to buy legislation that gives the benefits to the CEO class and places the costs on the average worker.

Free markets are the best way to encourage and reward constant innovation. HOWEVER (the part all repubs seem to overlook) without regulations, the system is prone to abuse. THAT is what we have here, and THAT is what needs correcting.

"Our free-market economy will sort itself out." That is the same tired line that got us into this mess. We tried it your way, and it failed exactly the way we said it would.

[Lemeritus]

Our free market economy WILL NOT sort itself out until we take an honest look at where it is, how it got there, and what we can do to prevent it from happening again (and again, and again).

Robert Reich in U.S. New & World Report, yesterday: "The Street's fundamental problem isn't lack of capital. It's lack of trust.... Financial markets trade in promises—that assets have a certain value, that numbers on a balance sheet are accurate, that a loan carries a limited risk.... Yet it's turned out that many of these promises weren't worth the paper they were written on.... If what's lacking is trust rather than capital, the most important steps policymakers can take would be to rebuild trust. And the best way to do that is through regulations that require financial players to stand behind their promises and tell the truth, along with strict oversight to make sure they do."

We can debate Friedman economics until the cows come home (or the last glacier melts), but what sank this free market experiment is simply those off balance sheet liabilities known as LIES.

[charon]

If it's a free-market economy then why are taxpayers paying for the screw ups of the Republicans?

[Nexialist]

It has not occurred to anyone that the one thing that has to be maintained is confidence in our financial institutions. What if we had started to see runs on banks? To reassure people the fundamentals of our economy are strong was absolutely the right thing to do. McCain had to back off the statement because all the Obama campaign could think of was how to take political advantage of misery, a general theme Democrats use which has a history of backfiring and keeping them out of the White House. Just ask presidents Dukakis, Gore, and Kerry.

[Lemeritus]

Are you from the "A lie's as good as the truth if you can get someone to believe it" school? Tell you what, when the Titanic left Southampton on April 10, 1912, the word was "God himself" could not sink that ship. There was an abundance of confidence and a tragic paucity of preparation for the worst. You may take comfort in McCain's denials, you may think that by telling the truth Obama is taking political advantage of misery, but the stewards are knocking at your door, Nexialist, asking you to join them on the boat deck -- and don't forget your life vest.

[Nexialist]

There you go again.

[PumaAnn]

I would buy the idea that O is telling the truth if I saw even any true accountability. The Republicans put forth a bill to increase oversight on Freddie and Fannie. Democrats killed it.

Too bad, huh?

Accountability requires honesty. I'm not seeing it.

[Mitchell Bard - Huffpost Blogger]

Man, can you cherry pick, PumaAnn. How many ethics and other pieces of legislation did the Senate Republicans filibuster in the last two years?

You are deluded if you think McCain is more ethical than Obama. The record says the opposite. Have you watched this campaign? Have you seen McCain's sleaze attacks, lies, and flip-flops (sometimes the same day).

You post here all the time. We all know of your irrational hatred of Obama.

[Nexialist]

You miss the larger point. Our entire Congress is corrupt. McCain has pledged to make reform a priority. He has a track record of opposing things like earmarks, and as president not only would he understand the challenges, but have a fighting chance to do something about it. Government needs to be reformed before it can be trusted to pass meaningful legislation. An Obama//Reed/Pelosoi regime would just yield more of the same corruption we had when Republicans controlled everything.

[DavidK08]

If honesty is your thing, you must hate, hate, hate McCain.

I think he is changing his mind again...I know because I see a tree blowing outside my window.

[rosal]

Just as we heard how Iraqis were going to welcome us with chocolates and roses, same thing, Create a mess and keep telling the people everything is great, some people just don't want to face the truth. I pray one of these days everybody won't have to face reality head on and when its too late.

[MPeter]

Absolutely. He is a good excerpt from NYT editorial.

EDITORIAL
Mr. McCain and the Economy
John McCain spent Monday claiming as he had countless times before — that the economy was fundamentally sound. Had he missed the collapse of Lehman Brothers or the sale of Merrill Lynch, which were announced the day before? Did he not notice the agonies of the American Insurance Group? Was he unaware of the impending layoffs of tens of thousands of Wall Street employees on top of the growing numbers of unemployed workers throughout the United States?
On Tuesday, he clarified his remarks. The clarification was far more worrisome than his initial comments.
He said that by calling the economy fundamentally sound, what he really meant was that American workers are the best in the world. In the best Karl Rovian fashion, he implied that if you dispute his statement about the economy’s firm foundation, you are, in effect, insulting American workers. “I believe in American workers, and someone who disagrees with that — it’s fine,” he told NBC’s Matt Lauer.
Let’s get a few things straight. First, no one who is currently running for president does not “believe in American workers.”

[Lemeritus]

Sadly and despite the Judith Miller disaster, "low information voters" (I'm really beginning to hate that term but I can't think of anything to effectively replace it) neither trust nor read the New York Times. It is widely considered to be the mouth-piece for the elite liberal establishment -- like truth in this election cycle, it is largely ignored by the people who need most to hear the truth.

[likeabite]

Rosal you are so correct. There are so many uneducated Americans and even the educated ones on the issues sometimes choose to live in their bubble and ignore what is going on. We're in the cusp of another Great Depression and this old sickler is running around telling people everything is alright. The sad part is that, people are actually going to believe him and vote for him and kill us as well as our economy. Let's wise up people. PLEASE!!

[dharma89]

An excellent article. McCain himself has no educational background in economics, and probably can't answer even basic questions of macro- and micro-economic science. He has done virtually nothing in nearly 25 years in Congress to distinguish himself in this arena. His sidekick (running mate) is similarly clueless. Your point is well made--their collective ignorance appeals to both the vacuous middle American and to the Wall Street types who know in the end they will get to run things the way they want if McSame-Pain are elected.

[Mitchell Bard - Huffpost Blogger]

Thanks, dharma89. And throw in that McCain's top economic advisor, Phil Gramm, is one of the people with the biggest culpability in creating the mess we're in, and that only makes the point more stark that McCain is not the man to elect.

[Lemeritus]

I think we need to tread lightly around the villainy of Phil Gramm since t'was Bill Clinton who did the eulogy over the Glass Steagel Act in 1999. Further -- though Clinton was only one of several presidents to rely upon him -- t'was Clinton's Fed guru, Alan Greenspan, whose fiddling with interest rates led to the housing bubble. This is not to shift the blame to Clinton -- who, I believe, had a keen talent for economic management; it's simply to say that we can't afford to point fingers without expecting a few to be pointed back at us. And, finally, there's nothing wrong with taking responsibility (or blame) where due and moving forward based on lessons learned.

[rdlmorgan]

Mitchell, there seems to be bashing and distortions on both sides so I don't think it's smart to act like it's only McCain and Obama's a victim. If you listen to McCain and really hear what he's saying without trying to bring him down, you would realize that he's saying what the American people want and need to hear. It's not more of George Bush. It's change we can understand. The Dem's just sound desperate.

[JustMyWords]

And most Republicans are sounding delusional. McCain may be saying what the "American people" want to hear, but it's not necessarily what they need to hear. And I use the term "American people" with great reservation. Exactly what "American people" are you referring to? Personally, being stroked with less-than-realistic opinions that could come out of the Pollyanna School of Economics is NOT something I want to hear. It seems a lot like I'm being told, "Hey, just ignore everything you see - you're doing just great, too bad you're not bright enough to figure it out!"

[alguien]

what people need to hear is seldom what they want to hear. what the want to hear is usually idle comfort.

[demandfortruth]

it's hard to believe him when he makes amazing statements about how he is "less government regulation" and believes in the free-money market. We have seen the effects of both, and both have been proven to be failed policies.

[Mitchell Bard - Huffpost Blogger]

rdlmorgan, it's just not factually true to equate the lies and smears and distortions on both sides. I'd love to go issue-for-issue on it.

Look, you may feel more comfortable with conservative philosophies. That's certainly your right. And you may choose to vote for McCain despite the sleazy campaign he's run. But you can't make McCain's conduct go away just by wishing for it to be true (or making untruthful statements that it is somehow been balanced on both sides).

Did you see Cohen's column in the Washington Post? Even McCain's biggest backers are disgusted by the campaign he has run.

[Nexialist]

Democrats always act like they have the high moral ground. The reality is perception of fairness goes more to whose ox is being gored than any objective standard. It just helps Democrats that the mainstream media agree with them on social issues and as a result are much harsher on Republicans.

[FlyTheBlueSky]

Of course it's in line with McCain's strategy - the fundamentals of the lobbyist economy are strong, and it's a topic that is close to his heart. And campaign.

[JWilkes08]

Palin and McCain are keeping with the Bush tradition.. stay the course of deceit and manipulation,just to win!!! Why on earth would anyone think that McCain's economic plan will be any different than what we have experienced for the last 8 years. IT DIDN'T WORK THEN AND IT WON'T WORK TOMORROW! Well, I know why, McCain believes in his tax plan, because he has sold his soul just like Bush to the Elite and Wealthy, and those people believe the middle class are nothing more than a waste of air! So, what do they do? Get rid of the middle class! If you don't see the writing on the wall.. you'd better pay attention quick and in a hurry because if you think times are hard now... just elect old McSame in the oval office, and you will wish you had Bush back. That's how bad it will be.

[russelld]

JW I know it's scary, but you're absolutely right. Obama does Bball and has to pull it off in the last five minutes.

[JWilkes08]

WOW... what is there to say but WOW! What a tragedy this campaign has become. I've seen this before..OH yeah.. 2004 with Bush and the so called weapons of mass destruction and protecting us from the terrorists!! LIES and more LIES. I'm beginning to believe what others are saying that Bush is not in charge of anything. He's merely a puppet. No one will ever convince me that McCain picked Palin himself. She was picked by those who are really calling the shots in Washington. Now, those same people are prepping and spoon feeding Palin every syllable that comes out of her mouth. Any man or woman with 8th grade reading skills can get up there and do the same thing. She gets up there scolding Wall Street and Washington for this mess of an economy we are in as if she really knows any different. She doesn't, all she knows is what someone told her to say. Have mercy people!!!! I saw early on how McCain was manipulating the truth with Obama's tax plan. I absolutely understand that yes, Obama will raise taxes, but only for the top profit makers of this country, not the average hard working American.

[ssengele]

No, I don't think that was McCain's goal at all here. The way he used the phrase this week was to refer to the working class as the "fundamentals of the economy". It's bait, and when anyone brings it up, Republicans get to scream about lies and distortion, and claim that McCain is the only candidate who believes that the working class isn't "unsound". Never mind the fact that McCain's used the phrase many times before with a totally different meaning--now, any time Democrats bring up the phrase "fundamentals of the economy", you can expect self-righteous indignation.

[ssengele]

Actually, I'm wrong. That was just the damage control. Carry on!

[justobserve]

"Today John McCain hit the morning talk show circuit and bragged:
The point is, I was chairman of the commerce committee. Every part of America's economy, I oversighted. I have a long record, certainly far more extensive of being involved in our economy than Senator Obama does.":
So, McCain took credits that he is experienced : he was on the watch but he DID let this happened to us? He said "I will not never let this happen again". Does that mean he NEVER AGAIN but DID without telling the truth?
"I KNEW McCAIN 2000, but McCAIN 2008, YOU ARE NO McCAIN 2000! Vote DEMOCRAT for AFFORDABLE HEALTH CARE, WOMEN'S CHOICE, VETS BENEFITS, EQUAL PAY".

[Mugzi]

Well, he admitted he didn't know anything about the economy!!! Wake up people...how much more is he going to destroy....I can't believe anyone would even give him another chance to destroy our lives!

[joebiz]

Good post, I'm glad you you made the distinction that Wall Street is not Main Street. Wall Street is primarily stock markets and high finance, while Main Street is the America that is quite the opposite, but related to Wall Street via consumer confidence and psychology.

The "natering nabobs of negativism" was the vision McCain wanted to present to the Midwest. It failed.

[Drobezisi]

Thanks for this blog, Mitchell. I was actually thinking about something very similar recently. That is, in the midst of all the media backlash about McCain's dishonest campaign, we may have been missing the point that in fact he's being very honest on his economic message - at least as far as his specific audience is concerned. The real question is: who's he really talking to? When he talks about Obama wanting to raise "your taxes", and talks about the fundamentals being strong, it's clear: he's talking to the wealthiest Americans. And he's right. Obama does want to raise their taxes, and for them the economy is doing fine. The problem is that ordinary Americans are allowing themselves to be duped into thinking that McCain's message is to and for them. It absolutely is not, and never was. Now, my assessment of the situation kind of stopped there, so I am grateful for your comments about the motivation behind the undecided voters falling for this crooked message. I think you are probably right on the money. Let's just hope reality intrudes on their dream world enough during the next 49 days to snap them out of the coma they're in.