10/10/2008 10:30 am ET Updated May 25, 2011

How Obama Taught the Nation (And McCain) a Lesson on Economics

In their town-hall-style encounter in Nashville, Barack Obama dominated the debate about economic issues as thoroughly as Bill Clinton bested George H. W. Bush in 1992 and Ronald Reagan overwhelmed Jimmy Carter in 1980.

Just as Reagan is remembered for asking "Are you better off now than you were four years ago?" and Clinton is still quoted as saying "I feel your pain," Obama memorably declared, "The middle class needs a rescue package."

That sentence summed up Obama's message, which was as simple as it was successful: He began his answers by describing how middle-class families are experiencing the economic crisis. Then he explained how he would solve the problems that these everyday Americans are enduring. Then he drew clear contrasts with John McCain and George Bush, explaining that his proposals would benefit almost all Americans, while his rival follows the administration's philosophy, "let the market run wild, and prosperity would rain down on all of us."

Obama set the tone for the debate with his responses to Tom Brokaw's first two questions about how to "bail out people" from "economic ruin" and whom he would "have in mind for a Treasury Secretary." With the first question, he began by saying, "A lot of you, I think, are worried about your jobs, your pensions, your retirement accounts, your ability to send your child or your grandchild to college." With the second question, he continued to explain the economic squeeze on the middle class: "For many of you, wages and incomes have flatlined. For many of you, it is getting harder and harder to save, harder and harder to retire."

These statements were more than exercises in empathy; they set the stage for Obama's arguments about what's wrong with the economy and his approaches for setting it right. The current economic crisis, Obama insisted, "is a final verdict on the failed economic policies of the last eight years, strongly promoted by President Bush and supported by Senator McCain." The answer, he suggested, is "fundamental change" -- the understanding that "it's not enough just to help those at the top." As he explained, his own approach includes investing in health care, education, and new energy sources that will create millions of new jobs and preserve the natural environment.

While often criticized as "professorial," the former law school faculty member showed that he can explain complex economic issues compellingly and comprehensibly, from the origins of the financial crisis to the details of his healthcare plan. This is a skill that Clinton and Reagan both demonstrated, and it is essential for a successful presidency, especially in hard times. In one of the clearest explanations that any journalist, economist, or public official has offered for the financial crisis Obama said: "Right now, the credit markets are frozen up. And what that means as a practical matter is that small businesses and some large businesses just can't get loans. If they can't get a loan, that means they can't make payroll... then they may end up having to ... lay people off."

Similarly, he explained his healthcare plan as simply as any public figure has presented such a proposal. "If you've got a health care plan that you like, you can keep it," he declared. "All I'm going to do is help you to lower the premiums." But, if you're uninsured or don't like your insurance, you can buy into the federal government employees' plan that Obama and McCain both belong to. Small businesses would get 50 percent tax credits to cover their employees -- not fines, as McCain charged.

For his part, McCain displayed some of the ease with the town-meeting format and the familiarity with foreign policy issues that had contributed to the high expectations for his performance. But, when it came to economic issues, he kept returning to three certitudes that he asserted with out explaining: All tax cuts are good. Almost all government programs should be frozen. And earmarks in federal spending are the root of the economic crisis.

Thus, McCain began by proclaiming: "We have to keep Americans' taxes low, all Americans' taxes low. Let's not raise taxes on anybody today." But this argument did not withstand Obama's counterpunch. Having already identified himself with the struggles of the middle class and made the case against economic strategies targeted to wealthy investors, Obama was able to distinguish between the beneficiaries of McCain's tax cuts and his own. "When Senator McCain is proposing tax cuts that would give the average Fortune 500 CEO an additional $700,000 in tax cuts, that's not sharing a burden," Obama declared. "What I want to do is provide a middle-class tax cut to 95 percent of working Americans -- those who are working two jobs, people who are not spending enough time with their kids -- because they are struggling to make ends meet."

As in his acceptance speech, Obama was unafraid to say what he believes, what he will do, and whom he is fighting for. Confronted with an adversary advocating a philosophically coherent position, McCain backed down. Tellingly, he did not respond by accusing Obama of favoring "wealth redistribution," as Sarah Palin had said of Joe Biden, nor did he deploy the traditional conservative contention that distinguishing between the beneficiaries of different tax cuts amounts to "class warfare."

Instead, McCain seemed eager to close out the economic portion of the debate and turn to national security. Indeed, an unnamed McCain adviser told the New York Daily News, "If we keep talking about the economic crisis, we're going to lose." But, during a week when the Dow Jones declined dizzyingly and the Bureau of Labor Statistics reported that 159,000 jobs were lost last month, Americans may be more interested in changing the nation's economic policies than in changing the subject that dominates the presidential campaign.

David Kusnet was chief speechwriter for former President Bill Clinton from 1992 through 1994. He is a visiting fellow at the Economic Policy Institute and the author of Love the Work, Hate the Job: Why America's Best Workers Are More Unhappy than Ever (Wiley, 2008).