Obama and the Economy: Can He Connect?

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While McCain woos voters with a national security pitch, Obama must win on the economy -- a key campaign tenet. So far, he's short on details.

Back in 2004, newly minted Senator Barack Obama gave the speech of his life at the Democratic National Convention in Boston, in the process hurtling himself onto the supercharged path that has brought him to within days of being crowned as his party's new Presidential nominee.

The question now, as he and newly named Vice-Presidential pick Senator Joseph Biden move through a final round of campaigning in Denver, is: Can Obama repeat the feat? Can he use a fired-up speech at this year's party gathering to help propel himself all the way to the White House?

No doubt, the crowd of 75,000 expected to show up at Invesco Field, home of the Denver Broncos football team, to hear him accept the nomination Thursday night will be jazzed. But for the much larger audience watching back home on TV or just beginning to tune in to the Presidential race as the candidates head into the final sprint, the senator from Illinois faces some bigger challenges.

No Cakewalk for the Dems

By all rights, he should be far ahead of Republican rival John McCain. With the economy in the tank, continued frustration over the Iraq war, and President George Bush's popularity at near historic lows, even many Republicans thought this year would be a virtual cakewalk for the Democratic nominee. One ominous sign for the Republicans: A fall in real incomes in the months leading up to the election almost always leads to a loss for the party in power, pointed out Nigel Gault, head of North American macroeconomics for Global Insight, in a recent conference call with investors. "The incumbents tend to take the blame," he said. "This should be an uphill battle for McCain."

But on the day of what Obama and the Democrats hope will be their own Rocky Mountain high, that's not proving to be the case. Despite rising unemployment, soaring energy prices, a deepening slump in the housing and credit markets, and growing fears that the U.S. economy is already well into a recession, Obama has not been able to capitalize on the economic woes to build an electoral lead. "It's an absolute mystery that Obama has not been able to exploit this issue more aggressively," says Greg Valliere, the Washington (D.C.)-based political analyst for the Stanford Financial Group.

Indeed, even as voters have increasingly said the economy is far and away the No. 1 issue for them, the race has tightened. While Obama held a 48% to 42% lead over McCain earlier in August, according to a daily poll done by Gallup, he will enter the Democratic convention in a statistical dead heat, leading by just 46% to 44% in a poll dated Aug 23.

Working Class Not Convinced

Moreover, Obama isn't benefiting from the view of many Americans who say that in general they have more faith in the Democrats' ability to handle the economy than that of the Republicans. In an August tally by independent pollster Rasmussen Reports, 51% of respondents said they trusted the Democrats more on the economy, vs. 39% for the GOP. But when the two candidates were compared head-on, says Scott Rasmussen, 45% said they trusted Obama more, while 45% favored McCain. "There's no evidence that either candidate has really connected on this issue," says Rasmussen.

That's a much more critical problem for Obama than McCain. Convincing voters that he has what it takes to help the struggling economy and combat the squeeze on middle-class voters is a central tenet of his campaign, while McCain has largely based his candidacy on his leadership on national security issues. "If he is going to win, Obama will have to win on the economy," says Thomas Riehle, a Democratic strategist and pollster who heads Washington-based RT Strategies.

Riehle and others point to a number of reasons why that hasn't happened so far.

Most importantly, Obama is still garnering a lower share of white working- and lower-middle-class voters than he needs. He's also behind where he needs to be with whites over 50. His lofty rhetoric -- and focus on criticizing McCain and the Bush legacy -- have yet to demonstrate convincingly to many of these struggling folks just exactly what he would do to turn the economy around.

Biden Gives Foreign Policy Cred

Other, more specific factors also have come into play: McCain's campaign, rejuvenated in the last month by a management shuffle at the top, has succeeded with a harder-hitting advertising message and attacks on the stump. McCain's full-bore support of offshore drilling also appears to have resonated more immediately with voters fed up with $4 a gallon gas than Obama's talk of pumping up tires and his focus on developing a longer-term strategy to increase the use of alternative energy.

McCain's attacks have succeeded in raising questions as to whether Obama, just a few years into his Senate term, has the right values or enough experience to lead the nation. The Russian invasion of Georgia has also played into McCain's strengths, reminding voters that the domestic economy isn't the only challenge awaiting the next President.

The need to calm those worries was a big reason behind Obama's decision to tap Joe Biden as his Vice-Presidential pick. Biden has been in the Senate for 36 years, many of them spent on the Senate Foreign Relations Committee. His experience and hefty foreign relations credentials should help calm some of those worries. Analysts say the fact that Obama chose that direction to round out the ticket -- rather than choosing someone with a strong appeal to working-class voters, like Hillary Clinton or Virginia Governor Tim Kaine -- suggests Obama thinks he can address the economic concerns more directly on his own. Still, it's no coincidence that in introducing his new running mate in Springfield, Ill., Obama emphasized Biden's strong working-class appeal.

Time for Specifics

What will he need to do? Analysts and strategists say that in his convention speech and the weeks thereafter, Obama will need to talk less about the need for change and the perceived failures of the Bush Administration and offer more specifics about how his priorities and policies will make things better. He also needs to come off less as the distant law professor and do a better job convincing those who are struggling that he truly understands their woes -- in other words, channel his inner Bill Clinton and show more empathy with those he is trying to woo.

"He's got to use the convention to show people clearly what he intends to do to make their lives better," says Democratic strategist Hank Sheinkopf, who has long focused on such struggling blue-collar regions. "In economically sensitive places like Ohio and Michigan, people need to know what his bottom line is. They want to know what he will do to get them working again."

Adds Larry Sabato, a Presidential scholar who heads the Center for Politics at the University of Virginia: "He needs to be specific and show people how his election will help improve their lives."

More Nitty-Gritty

Already, since returning from his vacation in Hawaii, Obama has begun to tackle his problems on the economic front. Campaigning in the days before heading to Springfield to announce Biden's nomination, he got more nitty-gritty and personal.

In a campaign stop in Albuquerque, N.M., for example, he talked about his commitment to pay-equity laws to even out pay between men and women. To emphasize his point, he told his audience that he didn't want his daughters "to ever confront a situation where they are disadvantaged because of their gender. The thought of it makes my blood boil." And a new hard-hitting ad campaign portraying McCain as out of touch with the struggling middle class has begun to run in battleground states such as Michigan and Pennsylvania.

With an overwhelming advantage in the money race -- and the race to solidify his own and McCain's image in the minds of hard-pressed voters now nearing the home stretch -- more such appeals may soon be flooding the airwaves. But Obama's best chance to shift the dynamic of the race and begin to win over the voters who say they don't know enough about him, or what he would do to rebuild the economy, will come later this week when he hits the stage at Invesco Field.

Sasseen is Washington bureau chief for BusinessWeek.