KEY POINTS:
It's the economy stupid" was the cry that helped Bill Clinton defeat George Bush Sr in 1992. It would be a peculiar irony if the same theme helped his wife to defeat her rival Barack Obama for the Democratic nomination.
Yet it is possible. Indeed, more than possible. The state of the economy is the dark horse of an issue which has come from behind to take an increasing lead in the polls of public concern in the US, as it is also beginning to do in Europe.
Forget all the conjecture about Hillary Clinton as a woman and Barack Obama as black; when the voters start getting worried about their jobs, the value of their homes and the cost of borrowing, they lean towards a safe pair of hands.
Competence wins over idealism, and that favours Hillary among the Democrats and Mitt Romney among the Republicans.
You could write the history of post- war politics in the West in terms of this pull of the two different attractions - the politicians who offer experience and administrative capability against those who offer the prospect of change, a fresh image by which the public can feel better about themselves. When economics are to the fore, competence rules. When there has been a national humiliation - such as Black Wednesday, or the Madrid bombing - change wins out.
The extraordinary feature of the past decade and a half has been the prolonged period of Western economic growth - the longest cycle of sustained growth in the past century. You can talk of all sorts of sophisticated concepts of "triangulation", eroding party loyalty, big tents and small swings at the margin, but the simple fact is that, so long as economic growth has continued, so has the party in power.
Clinton would still be president had the US constitution allowed it. If his successor as Democrat leader, Al Gore, didn't quite make it, that was partly because he seemed rather too airy-fairy compared to George Bush Jr with his promise of tax reductions and an America-first outlook on the world.
Even then he nearly made it, should have, except for vote tampering.
John Howard lasted in Australia unperturbed by his foreign ventures and domestic illiberalism until concerns over climate precipitated his demise. Jose Maria Aznar might well be still in power in Spain if it had not been for the Madrid bombings, just as in Germany the Christian Democrats might have survived even the scandals of Helmut Kohl it if had not been for cost of unification and Iraq.
President Chirac would never have served a second term in France if it hadn't been for an economy that kept the majority - though not the number of unemployed - in a reasonable state of satisfaction.
Tony Blair's skill was to combine both the fresh face and the competence factor in the 1997 election. But the truth of it was that, after Black Wednesday, he'd have been elected without the fresh face so long as he overcame the economic management issue.
The question now is how the economic slowdown and the possibility of recession, at least in the West, changes the political set-up. It has already brought in a new president in France, although the voters may now be regretting it.
In Britain the situation is made more nuanced, or piquant, by the fact that the man in charge now was the Chancellor in command of finances then. Gordon Brown is now in the excruciating position of being held accountable for what goes wrong, just as he gained the credit for what went right.
His biggest difficulty is to sound the right note on a slowing economy. His natural instinct is to downplay the problems, because of his past association with the policy. Yet to appear complacent in the face of a public feeling the pinch would be certain political death.
But it is in America, and particularly within the Democrats, that the dilemmas are most sharply etched. The failures of Bush in the Middle East, and the plummeting reputation of the US in the world, in one sense demand a fresh face and new ideas. The growing sense of recession, on the other hand, tends towards experience. Each of the contenders has one characteristic but not the other.
Hillary Clinton has the competence but, despite her repeated use of the word "change", does not represent it. In a perverse way she needs President Bush to succeed in the surge and in the talks on Middle East peace to push Iraq and America's international standing off the agenda. Obama must pray for the opposite, that Iraq and the Middle East keeps reminding America of the disasters of the past years.
But, if economics are moving in Hillary's favour at present, Obama at least has one advantage. There is still time for him to get the experts and advisers to give him an air of competence in that field - if only he'll act quickly enough.
- INDEPENDENT
IDEAS FOR A LIFT
Worries that a recession may be looming have prompted several of the candidates in the presidential race to unveil plans to give the economy a lift. Here are their ideas:
HILLARY CLINTON
The New York Democrat has proposed a $70 billion package to stave off a possible recession, including $40 billion in spending for heating assistance, an extension of unemployment insurance and investments in energy efficiency.
The other $30 billion would go toward helping low-income families hit by the mortgage crisis.
A second, $40 billion phase of the package would be triggered if the economy failed to respond. That would pay for tax rebates for low- and middle-income workers.
JOHN EDWARDS
The former Democratic senator from North Carolina has proposed a $25 billion job creation plan with the possibility of an additional $75 billion if there is more evidence the United States is entering a recession.
The plan calls for investing in clean energy infrastructure, increasing federal aid to help states avoid cutting programmes that help families through hard times, reforming unemployment insurance and tackling the housing crisis.
BARACK OBAMA
The Illinois Democrat's $75 billion plan includes an immediate $250 tax cut for workers that would double if the economy worsens.
Older Americans would receive a one-time $250 bonus in their social security checks. Obama also would offer assistance to homeowners facing foreclosure and aid to states hit by reduced tax revenues. He would also extend unemployment insurance for laid-off workers.
MITT ROMNEY
The former Massachusetts governor has described the economy as fragile and said, "We should take action to keep the economy from falling into a recession."
On the campaign trail, Romney has urged eliminating taxes on capital gains, dividends and interest income for families earning less than $200,000 a year. "That's one idea and there may well be others," said Romney spokesman Eric Fehrnstrom.
RUDY GIULIANI
The former New York City mayor has said it's not clear yet if the economy is headed for a recession but he has outlined a multi-trillion-dollar tax cut he said would boost growth.
He would slash the corporate tax rate to 25 per cent from 35 per cent and reduce the capital gains tax to 10 per cent from 15 per cent. Giuliani also proposed overhauling income tax rates to give taxpayers the option of choosing a simplified tax form with a maximum bracket of 30 per cent.
MIKE HUCKABEE
The former Arkansas governor has said the "greatest source of short-term stimulus is the Federal Reserve", but added that the Fed also must be mindful of inflation.
Huckabee vowed to increase spending on both defence and public infrastructure.
He has promised to "preserve and expand" the Bush tax cuts and touts his "Fair Tax" plan, which would replace the income tax with a national sales tax.
JOHN MCCAIN
The Arizona senator has said immediate intervention the economy is "an option that has to be exercised from time to time but the last one, not the first one."
However, McCain is touting his plan to eliminate the alternative minimum tax, a levy that was originally intended to apply to the wealthy but increasingly hits middle-income people.
Asked if McCain would propose additional measures to lift the economy, his senior economic adviser, Douglas Holtz-Eakin, said, "We are monitoring the situation and if we think more is needed we'll propose it."
- REUTERS
