KWAME HOLMAN: During this campaign season, Democrats have been trying to drive home the message that they're more focused on the current economic downturn than Republicans are, and better prepared to correct it.
SEN. TOM DASCHLE (D-S.D.): People see their income falling, their jobs disappearing, their retirement funds declining, and the cost of health care rising.
KWAME HOLMAN: While Congress still was in session, Majority Leader Tom Daschle led an effort by Senate Democrats to elevate the economy as a campaign issue.
SEN. TOM DASCHLE: When it comes to dealing with our economy, the President, his advisors, and Congressional Republicans have put forward two kinds of ideas: Old ideas and bad ideas.
KWAME HOLMAN: But with debate over Iraq and homeland security legislation dominating the session, the economy got little attention.
REP. RICHARD GEPHARDT (D-Miss.): It's a great pleasure to be here.
KWAME HOLMAN: Democrats made one last attempt on the day Congress adjourned. They invited Republicans and representatives from the White House to participate in their "economic summit." None accepted the invitation. House Minority Leader Dick Gephardt:
REP. RICHARD GEPHARDT: I must say that the leadership in the House, from President Bush on down, seems to not hear what is happening among the American people today. This leadership seems to be tone deaf, and it doesn't seem to bring forward new or sensible ideas that could gather bipartisan support to get our economy going again.
KWAME HOLMAN: We talked with Louisiana Republican Jim McCrery, who sits on the House ways and means committee. He rejected Gephardt's assumptions.
REP. JIM McCRERY (R-La.): The House, which works closely with this administration, has passed a number of bills designed to stimulate economic activity, to boost consumer confidence, to boost confidence in the markets; and every one of those bills is sitting over there in the Senate, which is controlled by the Democrats, not seeing the light of day.
So I think the Democrats are on very thin ice if they try to make the case that the president or the Republican Party is guilty of ignoring the economy.
KWAME HOLMAN: The economy, as a political issue, has found its place during these final days of the midterm campaign.
It's been the first issue raised during many of the local and statewide candidates' debates televised into homes across the country.
ELIZABETH DOLE: First of all, it is very important that we get this economy moving aggressively, and that's why I favor, again, fiscal responsibility.
ERSKINE BOWLES: We do have to crack down on this corporate corruption. There's no question about that. We have to restore confidence in our capital markets.
KWAME HOLMAN: And campaigning for Republican candidates, the president himself has been talking more about the economy, less about Iraq and terrorism.
PRESIDENT GEORGE W. BUSH: When it comes to making America a stronger country, that starts with making sure our economy continues to expand, my attitude is, any time somebody who wants to work and can't find a job, says we got a problem.
KWAME HOLMAN: It appears voters are interested in what the candidates have to say about the economy. Polls show it has become their number-one concern heading into Election Day.
GWEN IFILL: But will the voters' number-one concern translate into action at the polls this Election Day?
We put that question to Gary Jacobson, professor of political science at the University of California San Diego. Kim Wallace, a political analyst at Lehman Brothers, a global investment bank. And Tom Gallagher, a political economist and senior managing director at the International Strategy and Investment Group, a Wall Street research firm.
So let me put that question to you, Kim Wallace: Will the voters be voting their pocketbooks at the polls?
KIM WALLACE: We don't know. I don't think we're going to know the answer to that question until we have the exit polls coming after the election. Polls clearly indicate that, as the piece showed in the front of us, that voters are concerned about the economy. In fact, it's their number-one concern. But at the same time, public opinion surveys show that they don't blame any politician in particular for the downturn in the economy.
GWEN IFILL: Tom Gallagher, is that a function of the midterm election syndrome, or is it because people just really aren't that personally concerned?
TOM GALLAGHER: Well, I think they are concerned, but I wonder if there is a sense that a lot of us exaggerate the importance of the economy in a midterm... in a midterm election. We all tend to look at elections as a referendum on how the president and his party are handling the economy, but it may just be a more general referendum on how they're doing. Usually the voters' perception of the economy and their perception of the president are pretty close together.
This time, there's a wide gap. And so it may just be that the president's high approval rating means that the Republicans might escape some of the damage that might otherwise be done with the weak economy.
GWEN IFILL: Gary Jacobson, does that make sense to you, that the president's popularity is obscuring people's concerns when it comes to voting?
GARY JACOBSON: It certainly is. Normally the president's overall approval rating is, oh, three or four points off from his economic approval rating. And in bush's case, his approval ratings are 15 to 20 points higher overall than they are on the economy.
So if he were being rated solely on the economy, I think the Republicans would be in trouble. That said, it's important to remember that the current economy, by the usual measures, is not especially bad. The unemployment rate is now below the average for the past 30 years, and below the average for midterm elections over the past 30 years. GNP growth is about average. Real income growth is about average. Of course, inflation is at a 30-year low. So on some of the basic measures that we look at in the economy, it's not in dreadful shape.
GWEN IFILL: But, Mr. Jacobson, we saw new numbers today, consumer confidence numbers, which show consumer confidence at its lowest rate since 1993. Why doesn't that translate?
GARY JACOBSON: Well, I think that we have a new factor in here, and that's the stock market.
So many people are now invested in the stock market that when it falls as sharply as it has fallen over the last couple of years, people notice, and it filters into their evaluations of the economy. And on that score, people think the economy is in quite bad shape. So the political consequences of their perceptions are certainly worth taking into account.
GWEN IFILL: Okay, Kim Wallace, let's talk about the stock market. People opened their third-quarter statements and they got a lot of bad news. They're going to the polls. Who are they going to take it out on, or are they going to take it out on anybody?
KIM WALLACE: I don't know if they'll take it out on anybody. In fact, the monthly statements that were opened just before going to the polls in November actually might look a little bit better than the previous two or three months, so people may have a little bit of the edge taken off.
What Gary was referring to earlier is that expectations about how well the economy will do going forward have fallen dramatically. And whether or not people are astute enough to assign blame for what they think is bad news coming, we'll have to wait and see.
GWEN IFILL: Mr. Jacobson also mentioned the unemployment rate, which, even though it has been climbing steadily, creeping upward, it's still not as bad as it could be.
TOM GALLAGHER: It's not, but voters often have a 'what have you done for me lately' approach, so I think it's also good to look at the change in the unemployment rate and not just the level of the unemployment rate. And that's still an important development in the rest of this campaign.
There's only a week to go, but Friday, there's the October employment report, which gives us the unemployment rate. Most economists expect an increase in that from 5.6 percent to maybe 5.8 percent.
So that might be something that could galvanize voters' opinions and give Democrats what's eluded them so far, which is an advantage on the economy.
GWEN IFILL: Throughout this campaign, Mr. Jacobson, we've also seen a lot of preoccupation with what's happening involving the war against terror, potential war in Iraq, terror at home, domestic violence -- at least in the Washington area, and closely watched around the country, the sniper here.
Are people so taken up with other subjects that they're just not particularly using the economy as a guide for their vote?
GARY JACOBSON: Well, certainly there have been important distractions. And these are not simply distractions; they're also Republican campaign issues.
And so they've been used in the campaigns by Republicans to support their side because it's something where voters tend to prefer Republicans, and so we have competing campaigns: One side tending to focus on the economy; the other side tending to focus on domestic peace and international peace and the war on terrorism.
And voters get to choose which frame they want to follow. And my guess is that Democrats will vote on the economy and Republicans will vote on the war on terrorism, and the net effect will be a pretty much straight party line election, just like it was in 2000.
GWEN IFILL: Do voters think, Kim Wallace, generally that whatever happens with the economy, either party can fix?
Do they think the Democrats are better equipped or Republicans are better equipped, and does it matter?
KIM WALLACE: Generally, Americans assign blame or credit for what happens in the economy to the president, or at least to the party that's perceived in power. Usually that's the president's party.
GWEN IFILL: But what's happening this time?
KIM WALLACE: But what's happening this time is that you have a popular president away from the issue on the economy.
And as we have discussed, there have been several other issues that have dominated, and as Gary pointed out, some of those purposely put out by the Republicans and the president. We've gone through a year now of rhetoric about the war that continues at a very high pitch. That has done a job of distracting people from other issues.
GWEN IFILL: How about the whole general idea of insecurity, financial and economic insecurity, as well as the other kinds of insecurity I was just talking about? Does that factor or play through in the polls, or does it play through at the polls, I guess?
TOM GALLAGHER: So far it hasn't. You were asking Kim a little earlier about 401(k) statements. Well, a polling group actually did a poll. They asked people, "If your 401(k) took a big drop in the third quarter, how are you inclined to vote?" Two-thirds of the people said it wouldn't incline them toward either party. Only a small plurality gave an edge to the Democrats, which I think is an indication that people feel insecure, but they haven't been given a reason yet by either party to lean towards one or the other.
GWEN IFILL: I was out, Mr. Jacobson, in Indiana a couple of weeks ago, talking to voters about this. And each and every one voter we talked to said, 'yes, the economy is a big issue for me." And then I said, "how does it affect you personally?' And they'd say, 'well, you know..' they were a lot fuzzier about that.
Is it possible... do people understand, in the abstract, the notion that the economy is important, but that it hasn't hit home for I'm people who are likely voters yet?
GARY JACOBSON: Yes, that's entirely possible. And in fact, the way voters do react to the economy is in terms of their view of the national economy much more than their own personal circumstances, since their personal circumstances can be affected by so many other things. But insofar as the national economy is used as a political issue, it is the national focus.
They expect the president and the Congress to deal with the national economy and that the effects of that, if they're beneficial, will filter down to ordinary people.
GWEN IFILL: Put on your professor cap for me, Mr. Jacobson, for a moment, and tell us historically, is this a different kind of midterm election in terms of the accountability that voters seem to be expressing toward the president and the party in power, than other midterm elections?
GARY JACOBSON: I don't think so. I think that when we... when you run the statistical models after this election and plug in data on the economy and plug in data on the presidential approval, that the net effect of those variables is going to predict an outcome that has pretty much the status quo as the result.
And I think that's what we're going to get. So we'll look back on this as a normal election held in extraordinarily abnormal circumstances.
GWEN IFILL: Mr. Wallace, you've tracked a lot of these campaigns, and you know one of the themes has been a lot of negative advertising, which often is a wash, where the presses turn out or whatever.
What do you think have emerged as the common themes that people will be voting on if not the economy?
KIM WALLACE: Well, physical security-- national security obviously is going to be a theme. I think corporate accountability-- corporate scandals have an overhang in the minds of a lot of Americans, largely because, as we have discussed, you have a higher proportion of American households invested in the markets than has been the case previously in any other midterm election.
GWEN IFILL: So which party benefits on corporate scandals?
KIM WALLACE: On corporate scandals right now, it's about a 50/50. In fact, the president's party has a 52 percent favorable rating on corporate scandals, which is a surprise to a lot of Democrats who feel that the Republican Party came late to that issue. But nonetheless, the president has done an effective job of closing out that flank, if you will.
GWEN IFILL: How about... what issues are you seeing, Mr. Gallagher?
TOM GALLAGHER: I think it's a tug of war between Iraq and foreign policy and the economy.
Let me interject with another notion here. We often think about these issues as they influence the swing voter. But I think for a midterm election, a better model is how it effect turnout, because turnout in presidential years is 50-55 percent. In midterm elections, it's usually below 40 percent. And that's shown up in some interesting ways.
In the last two election cycles, it's interesting that in the Senate races, the tossup races weren't split evenly between the two parties. Democrats won most of them in '98 and 2000. And I think it's because maybe they had a better "get out the vote" effort. But I think there were some unique factors that led to a surge in turnout on their side. Anti-impeachment in '98 was probably one factor. So I think in the last week, what might swing it toward either party?
I mentioned the employment report earlier for the Democrats, but if there's a victory for President Bush at the U.N. with an Iraq resolution, that's going to give a lot of play within the last few days to an issue that's really boosted the Republicans so far.
GWEN IFILL: And Mr. Jacobson, finally, what do you think are the issues which might shape this in the next week?
GARY JACOBSON: Well, I think those... the ones that have been mentioned are the correct ones. It's possible that the economy will gel as an issue.
I think if it does, that will hurt the Republicans. If there's more distraction, more of a focus on Iraq, Bush pulls off a small victory in the U.N., then I think that benefits the Republicans. But absent that, I think that the pattern is pretty much set for the election at this point.
GWEN IFILL: Okay. Gary Jacobson, Tom Gallagher, and Kim Wallace, thank you all for joining us.
KIM WALLACE: Thank you.
TOM GALLAGHER: Thank you.
GARY JACOBSON: You're welcome.