Place Your Bets

By Alan Stoga*

Now that John Kerry has emerged as the Democratic presidential candidate for November’s election, it is time to place bets on the winner. Will Kerry, who overwhelmed opponents who seemed to be far ahead of him as recently as Christmas, be able to sustain his momentum for another nine months and make President Bush a one term president like his father? Will Bush, whose campaign has barely started, be able to persuade the centrist voters that ultimately determine U.S. elections that his presidency is successful enough to deserve four more years?

Bill Clinton defeated George Bush with the mantra, "It’s the economy, stupid." Americans always vote their pocketbooks. Since every economist in the United States agrees that economic growth is strong, inflation low, interest rates unlikely to rise very much, and business and consumer confidence moving higher, this election should be over before it starts.

Yet, the best evidence is that Americans are roughly split over the two candidates–just as they were roughly split between Bush and Gore four years ago. The opinion polls clearly show that the election will be decided by the roughly 5% of the electorate who have not yet made up their minds. These people tend to be moderate, middle class, and middle aged–and overwhelmingly worried about the economy. In politics it does not matter that these voters are objectively wrong about their economic facts; it matters only that they think they are right.

In part, this reflects months of Democratic presidential contenders receiving massive media coverage while they incessantly and loudly focus on the problems in the economy, rather than on its strengths. If the election were today, the undecideds would probably vote their fears and Kerry would win.

But the election is not today. Sooner or later, the combination of continued strong economic growth and rising business confidence will produce more jobs and a more positive environment. Since the media and the Democrats seem to have convinced voters that the barometer of economic well being is the number of new jobs being created each month–rather than the welfare of everyone who already has a job–the eventual increase in jobs would re-elect Bush when the votes are finally cast.

However, Bush’s greatest vulnerability might prove to be something other than the pace of new job creation. Contrary to what most people outside the United States seem to think, most U.S. voters–particularly the voters who are still have not decided between Kerry and Bush–simply do not care about international issues, at least when they cast their ballots. But, Americans do care about having cheap gasoline. With global economic recovery, a tough winter, and OPEC’s recent surprise determination to cut production this spring, gasoline prices are rising. It is a simple equation: if gasoline prices are significantly over $2.00 on election day, Bush will lose.

This is where foreign policy–or, at least, foreign policy conspiracy theories–come into play. Most of the world seems to believe that the U.S. invaded Iraq to control its oil and, more recently, that Washington is ignoring President Chavez’s cynical manipulations to stay in power because of Venezuela’s oil exports. Yet both countries are producing less oil than when Bush came to office, and the rest of OPEC seems reluctant to replace the lost production. If this continues, Saddam and Chavez could become the real swing voters in the upcoming election.

But Bush and his team certainly understand the politics of oil. If getting re-elected takes pushing on oil producers, then at least some oil producers are likely to be in trouble.

Of course, the candidates will debate many issues, large and small, during the next nine months. Kerry will talk about foreign and defense policy just enough to demonstrate that he has the background to be president. Bush will emphasize his leadership in recovering from the 9/11 attacks. Both have signaled they will enthusiastically attack each other’s records and characters.

For the moment, Kerry’s aggressiveness has clearly surprised Bush and pushed him onto the defensive. However, the game has just started, and Bush will certainly rebound. Kerry will have an opportunity to score points when he chooses his vice presidential running mate, but only one selection–Hillary Clinton–would have enough weight to move voters. Bush could counter with the equally unlikely, but potentially as powerful choice of Colin Powell to replace Vice President Cheney.

Despite all of this, if history is a good predictor, when the votes are finally counted, it will be "the economy, stupid." Which means: bet on Bush.

*Alan Stoga is President of Zemi Communications, www.zemi.com.