The Republican presidential field

has been slowest to propose

action to avert a recession

Why? Candidates have spent much of the campaign

praising the economic performance of Bush,

and reassuring conservatives

of their budget-cutting bona fides

Tuesday’s presidential primary in Michigan provided another demonstration, after New Hampshire, that the gathering threat of economic recession is having a profound effect on public consciousness, although reflected in only a very distorted way through the prism of primary voting for the candidates of the two big business parties.

Exit polls confirmed the centrality of the economy in the thinking of those who voted. Some 55 percent of voters leaving the polls cited the economy as their biggest concern, more than three times the number citing terrorism or immigration, an indication that the right-wing campaign to whip up fear and chauvinism is having a diminishing effect even among those voting for Republican presidential candidates.

The confusion and disorientation in the Republican electorate was shown in their rallying to Romney as a standard-bearer for the defense of jobs.

His business record at Bain Capital, the takeover firm he co-founded, consisted of amassing a fortune of as much as $500 million by buying up companies, reorganizing them and eliminating jobs, and then selling them off at a profit.

Who'll Fix the Economy? [Portfolio]

There are several obvious story lines out of the Michigan primary. There's the muddle of the GOP race now that Mitt Romney has won his home state--this after Huckabee took Iowa and McCain took New Hampshire.

Will Thompson take South Carolina and Giuliani Florida for a total scrum? There's the story of native son Romney pulling it out in the state that made his father governor twice.

There's the story of John McCain who can win with Democrats and Independents but can't close the deal with Republicans.

But the larger story is this: We're heading into a recession. People want a president who'll fix the economy.

A few weeks ago, Republican candidates, with the exception of Mike Huckabee, were cheering the Bush economy. Now, they know it's going in the crapper and they don't have be in Michigan to see it.

Democrats were obsessed with Fallujah and Baghdad and were appalled at Bush deficits. Now they want big stimulus packages to keep the economy from tanking.

It's fitting that Michigan came the same day as the say Citigroup earnings report and Wall Street selloff.

The collapse of Citigroup stock, the continuing write downs on Wall Street, the looming credit card crisis--you don't have to be a perennial bear to be worried.

These conditions are good for Romney, the Harvard MBA and Bain Capital founder. He may not have a populist edge like Huckabee but he has a story to tell: I know how economies work.

I've fixed ailing businesses and the Olympics. I can fix, as Gordon Gekko said of Greed, "you mark my words - will not only save the faltering American business economy; it will save that other malfunctioning corporation we call the USA."

In this kind of atmosphere, Romney's reversals on immigration and abortion and, oh, just about anything else won't matter so much. He dominated the economic vote in Michigan, according to the exit polls.

On the Democratic side, the fact that Clinton--for whom my spouse works--is winning working class voters while Obama does better with the affluent suggests that she's better positioned for a tanking economy.

Unity and hope and reform and comity and history---the staples of the Obama mantra-- may sell better in good time than bad.

Economic Reality "Bites" The Presidential Candidates [CNBC]

Received political wisdom is running smack into economic reality. It’s not yet clear which force will prove more powerful.

For presidential contenders, the collision takes place in Michigan, Nevada and South Carolina. Unlike comparatively prosperous Iowa and New Hampshire, all three suffer above-average unemployment as the U.S. economy teeters near recession.

“The economy dwarfs everything,” says Lansing-based pollster Ed Sarpolus; in addition to the nation’s highest jobless rate, Michigan ranks near the top in mortgage delinquencies and home foreclosures.

That increases pressure on candidates of both parties, who so far have been constrained from more aggressive responses by lessons of recent political history.

The Republican presidential field has been slowest to propose action to avert a recession. Why? Candidates have spent much of the campaign praising the economic performance of their party’s leader, President Bush, and reassuring conservatives of their budget-cutting bona fides.

Tax cuts represent the conventional Republican approach. But extending Mr. Bush’s tax cuts, which leading Republicans favor, won’t help soon since they’re already on the books through 2010.

Additional broad-based income tax relief isn’t easy, since more than one-third of taxpayers are off income tax rolls already.

Cutting the payroll tax is politically dicey since it finances Social Security benefits.

“To get a short-term boost to the economy you have to do something that reduces the tax burden of tens of millions of people, not just a few corporations or a few investors,” says GOP supply-sider Jeff Bell.

“The Republican Party feels handcuffed because Social Security is controversial.”

Pressure to remove the handcuffs won’t ease soon. California, the biggest Feb. 5 primary, suffers similar woes as Michigan.

Nationally, according to a recent NBC/Wall Street Journal poll, two-thirds or more of three key general election targets--independents, suburbanites, and rural voters--are dissatisfied with the economy.

Democratic candidates have hesitated for different reasons. They’ve spent years slamming Bush for excessive tax cuts, and making “fiscal responsibility” the cornerstone of their claim to economic credibility.

That blunts the conventional Democratic policy tool--stimulus through government spending.

But primary pressures are now overcoming that constraint. Just before Christmas, populist Democrat John Edwards proposed $25-billion in spending on energy, job training, and unemployment programs.

Last week, Hillary Clinton upped the ante with a $70-billion package, nearly half targeted to the housing crisis.

In the evolving Democratic primary race, that bread-and-butter spending targets the working class constituency that delivered her New Hampshire victory.

Obama, strongest so far among independents and affluent Democrats, countered yesterday with a variant of the idea favored by Mr. Bell, the Republican supply-sider.

He’d accelerate his previously announced plan for a $500 credit against each worker’s payroll tax liability; to ensure its stimulative effect, he’d abandon for now the imperative of offsetting tax increases.

Next Saturday’s Nevada caucuses, where union voters represent a crucial voting bloc, will test whether it augments Mr. Obama’s blue-collar constituency.