Feeling the Pain

Even though a political analyst's job is not to root for any political party, it's easy to feel a tinge of sympathy for a party when nothing is going its way. In 1994 Democrats couldn't buy a break, and last year the same could be said of Republicans. Similarly, when a battered party seems on the verge of catching a break, then gets hammered again, even an impartial observer has to feel its pain.

The Republican Party has been continually hammered on Iraq. And it's far too early to say that things are getting better there. Recent weeks have shown some signs of military progress in parts of the country. But Iraq's political situation looks as bad as ever, and many experts say that military advances aren't very meaningful without corresponding political progress.

If the situation is in fact improving in Iraq, making it a "less worse" problem for the GOP in the upcoming election than it was last year, Republicans are still likely to lose ground in both the House and the Senate. But progress in Iraq could shrink the GOP's 2008 losses or even level the playing field.

As for the presidential contest, most recent national and state polls show Hillary Rodham Clinton, Barack Obama, and John Edwards -- the three top Democratic contenders -- each leading Rudy Giuliani, Fred Thompson, John McCain, and Mitt Romney, the best-known and/or front-running GOP contenders. The gigantic wet blanket of the Iraq war has dampened the prospects of GOP candidates at every level of government. Getting out from under that weight would hugely help the party.

The situation in Iraq may or may not be getting better, but the U.S. economy, the more traditional yardstick and driver of political fortunes, is sending some exceedingly erratic signals. Several months ago, former Federal Reserve Board Chairman Alan Greenspan suggested that the country faced a one-in-three chance of suffering a recession. Greenspan can speak for himself, but it's hard to imagine that the events of the last month lengthen those odds.

Mortgage foreclosures are running at an annualized level of more than 2 million a year -- up 93 percent from a year ago. Growing numbers of Americans are running late on their mortgage payments, and many more are seeing their adjustable interest rates skyrocket while the value of their homes declines precipitously. The drop in values also puts a dent in the market for home equity loans, which many Americans have used in recent years to improve their lifestyle and which have helped the economy get through some rough patches. Two other ominous signs have popped up: Retail and auto sales are declining. Because of all this, polls measuring both business and consumer confidence are down, potentially signaling that employers are becoming cautious about expanding or hiring new workers.

While waiting to speak to a housing-industry group early last fall, I heard a representative from the North Carolina-based Center for Responsible Lending warn the group that the number of subprime housing loans was getting dangerously high and that a financial crisis was in the making. Some friends in the industry told me the guy's facts were right, so I started watching the housing sector more closely. And sure enough, beginning in January, the whole subprime mortgage market began to unravel. The problems have now started to creep up into residential and commercial loans that had been considered less risky. Contagion spreads. The U.S. economy has other weaknesses, but the subprime mortgage fiasco is a very painful broadside.

So now we political analysts need to keep one eye on Iraq and the other on the economy. History shows that voters typically blame economic problems, no matter the cause, on the party controlling the White House. Of course, the GOP still has time to catch plenty of breaks before Election Day 2008. At least for now, though, Republicans are battling very much uphill.