August 04, 2007	Saturday	Rajab 19, 1428

CINCINNATI: Evan as the Iraq war dominates US politics, persistent pocketbook concerns may mean more bad news for Republican candidates hoping to get relief from voters angry about Iraq.

“I'm worried about the export of American jobs into foreign countries for cheap labor. And health care. Those things are about equal for me,” said Cincinnati stay-at-home mom Staci Rucker, 31, after listing Iraq as her top concern in the November 2008 presidential election.

Daily headlines about a US housing slump and growing concerns that tighter lending standards will hurt consumer and business spending have boosted worries over the economy — just in time for the presidential primary season that begins in January and the general election 11 months later.

And like the Iraq war, analysts said blame for economic woes may fall at the feet of President George W. Bush and fellow Republicans, even if they've otherwise presided over a long period of relative prosperity.

“A bad economy is just another thing for voters to be angry about, and another thing Democrats can add to the litany of things they can blame on the Republicans,” said Andy Laperriere, managing director of International Strategy & Investment, a broker-dealer firm in Washington.

A July poll by the American Research Group found 23 per cent of Americans approve of the way Bush is handling the economy, while 73 per cent disapprove. That's despite years of solid growth, a contradiction that makes it hard to gauge whether the economy will help Republicans or Democrats in 2008.

National polls regularly put the Iraq war at the top of US voters' concerns, followed by issues including the economy, health care and immigration.

A TOSS-UP?: In the seven years since Bush took office unemployment has fallen to a near-record low 4.5 per cent, inflation is tame, home prices up, profits robust and even wages stronger.

While some housing markets are in free-fall and voters are unhappy with health care, former IMF chief economist Kenneth Rogoff said the economy may still be a plus for Republicans, despite concerns about globalization and job outsourcing.

“In fact, I think (the election) is a toss-up for that reason. Democrats will benefit hugely from Iraq, and the Republicans will benefit on the economy — unless it tanks,” said Rogoff.

The best time, politically, for an economic peak is two to four quarters before an election, Rogoff said, since it gives voters enough time to feel good again before casting a ballot.

“So if we start to see the economy really slowing down at end of the year and going into 2008, that will hurt the Republicans,” Rogoff said.

US economic growth surged in the second quarter of 2007 but the Federal Reserve has predicted growth will moderate in the second half of this year before picking up some steam in 2008 — which could be good timing for incumbents.

But both parties are incumbent, in a way. Republicans have held the White House since 2001, while Democrats took control of Congress after the 2006 election.

“What is the incumbent party? It's not Bush (since he's not running again), and it's a problem for Democrats because they only had a couple of years. Could they be viewed as the incumbent? I was expecting to see more progress when they took Congress, but it seems like Washington has kind of ground to a stop,” said J.P. Morgan chief economist James Glassman.

Voters also don't seem convinced that one party is better than the other on economic issues.

“Neither party has a detailed plan how to solve those issues,” said Rucker, a registered Democrat.

Store clerk Gloria Garner, 40, said health care is her top concern — even above the Iraq war — but no candidate seems likely to improve things.

“I haven't really heard anything (convincing),” she said.

Still, ISI's Laperriere said some candidates look better than others if economic woes are a top issue in 2008.

On the Democratic side, Sen Hillary Clinton can remind voters of the boom during her husband's eight years in the White House, while former Sen John Edwards has given voice to the jobs and poverty concerns of many, Laperriere said.

University of Maryland professor Peter Morici agreed.

“If it's about pocketbook issues, then it's going to be about health care and in favour of Clinton or Edwards,” said Morici, a business professor. “Anything Republicans talk about, even if correct, is going to sound like what was just tried (over the last seven years) .... Fair or unfair, the Republican candidate is going to carry that on his back.”—Reuters