American politics

Keeping his fingers crossed

John McCain hopes to overcome his problems with the economy

A SUMMER lull has hit the American presidential campaign, so pity John McCain, the Republican candidate, as he tries to whip up excitement over his economic policy. He is in a complicated bind: voters have been battered by rising fuel and food prices; they fear a recession; home-owners have been whacked by falling house prices; and credit is growing more expensive. The problem for Mr McCain is that he has said that he does not know much about economics, and when he speaks about policy—often with admirable frankness—he frequently says things that voters do not want to hear.

Mr McCain, with his reputation for “straight talking”, has dared to eschew populism in some areas. He has touted the benefits of free trade for America just when his opponent, Barack Obama, is struggling to reconcile his earlier attacks on NAFTA with his own stated belief in trade. Last week the Republican visited Colombia, promoting a bilateral free-trade deal with the country, which Mr Obama opposes. Mr McCain opposes dishing out subsidies to America’s inefficient (and ungreen) ethanol producers, saying that he would get rid of the tariff on foreign sugar-based ethanol instead. And he is unafraid of speaking out in favour of tapping controversial energy sources, such as nuclear power and coal.

But the candidate is also ready to pander. He continues to back a petrol-tax holiday, an idea that most economists dismiss and one that Mr Obama wisely turned down. Mr McCain has reversed his position on offshore oil drilling, which he now supports, although this would bring no new oil to consumers for years. He hopes that it would send a signal to markets, bringing down prices sooner. On the housing market, he says (as did Mr Obama this week) that he would somehow rescue those who are genuinely at risk of losing the homes they live in, without bailing out speculators.

His difficult balancing act is not between left and right instincts, however, or between principle and compromise. The toughest part is between the two economically conservative wings of his party: the deficit hawks and the supply-siders. Mr McCain has hitherto sided with the former: a scourge of congressmen who stuff bills with pet projects for their districts or contributors. But the party these days is dominated by those who favour tax cuts above all, saying that the growth they produce is more important than cutting fat from the budget.

On Monday July 7th he announced that he would balance the budget by the end of his first term. That sounds all but impossible, especially given his need to appease both groups in the party. Mr McCain says he will not sign any bills with “earmarks” (those pet projects), and will freeze all discretionary spending for a year (apart from spending on defence). But he also says he will keep all of George Bush’s 2001 tax cuts (which he opposed originally) and will make other cuts, for example to corporate tax rates. He promises, not very convincingly, eventual reform of America’s convoluted tax system—an enormous and expensive challenge. And he pledges to be steadfast in the wars in Iraq and Afghanistan. But there is not nearly enough fat in the budget to cut to make all this possible. The Congressional Budget Office predicts that, if Mr Bush’s tax cuts were kept and no other changes were made, the deficit would be over $400 billion in 2013.

All presidential campaigns run economic plans with heroic, if not downright delusional, assumptions at their core. The problem for Mr McCain is that he risks, in making too many promises, tarnishing his reputation as a straight talker. There appears some unease in the McCain campaign over how to present their candidate. Among his staff there is, reportedly, conflict, as a former George Bush hand, Steve Schmidt, has been promoted to chief strategist while a McCain loyalist, Rick Davis, has been demoted, leading to talk of internal chaos.

The upshot is not encouraging for the Republicans. Opinion polls, for what they are worth, suggest that voters trust Mr Obama—despite his youth and inexperience in office—far more than Mr McCain when it comes to the economy. In addition, polls suggest that voters trust Mr Obama more on almost any related issue, such as health care, energy or taxes. If, as in 1992, the campaign to be president is all about the economy (stupid), then Mr McCain is facing an uphill fight.