In Ohio, It's Really About the Economy

Voters reeling from job losses and housing troubles will play a key role in the Presidential contest
Abandoned homes in the Slavic Village section of Cleveland Billy Delfs

For most of her adult life, Kirsten Heft has voted Republican. A stay-at-home mother of two who lives on the outskirts of Columbus, Heft was raised in a GOP family, and her husband, Brian, a project manager at Motorola (MOT) and a member of the Air Force Reserves, is even more staunchly Republican. She voted twice for George W. Bush, and the GOP always seemed the way to go.

But as Ohio heads into the critical Mar. 4 vote, Heft has decided she'll register to vote in the Democratic primary. Fed up with the struggle to make ends meet on a budget without wiggle room, worried about how they'll manage to save for college for 9-year-old Travis and 7-year-old Robin, and outraged that her sister-in-law, recently diagnosed with cancer, has to worry as much about the cost of treatment as she does about getting better, Heft is going with Illinois Senator Barack Obama. "Thinking about how you're going to pay for your care shouldn't be the first thing on your mind when your doctor shows you your scans," says Heft. "Economic issues are key for me, and I think the Democrats are more interested in doing things that will help get the middle class back on track."

With a large swath of voters who can't be counted on to vote reliably Democratic or Republican, this quintessential swing state is once again set to play a critical role in the Presidential election, both in the Mar. 4 tally and the general contest in November. And the current mood is decidedly more sour than in 2004, when President Bush eked out a narrow win in the hard-fought Ohio race to clinch his reelection. That year, Democratic candidate John Kerry stressed the economy in his bid for Ohio votes, but the GOP's appeal to conservative social values carried the day.

This time around, though, an intense focus on helping Ohio's battered blue-collar and middle-class voters could favor the Democrats, especially if they continue to attract moderate Republicans and the 10% of the electorate that is made up of independents. New York Senator Hillary Clinton and Obama are now borrowing a page from the playbook used in 2006 by Sherrod Brown to defeat Mike DeWine, Ohio's Republican incumbent, for the U.S. Senate. Unlike John Kerry, Brown succeeded in turning the state's troubles into an electoral advantage. As a majority of independents and many Republicans abandoned the GOP, Brown grabbed 56% of the vote. Democratic candidates for a host of other offices from the governor on down also swept out their Republican rivals. "By focusing his populist streak on middle-class anxiety, [Brown] did a much better job tapping into concerns about the economy," says Herb Asher, a political science professor at Ohio State University.

The heated rhetoric used in Ohio by Obama and Clinton gives some hint of how the Democrats' eventual nominee may play the general election. With much of its manufacturing base devastated by global competition and the highest rate of home foreclosures in the nation, Ohio is at the epicenter of two of the economy's biggest challenges. Those issues, along with the high cost of and limited access to health care, increasingly have become the focus of the campaign.

Both Clinton and Obama have criticized trade deals such as Nafta that many voters here blame for the loss of jobs. Obama has urged companies to be "patriot employers" by creating good-paying jobs in the U.S. with benefits, while Clinton has pledged to appoint a "trade prosecutor" to enforce agreements and crack down on unfair Chinese practices. Each has amped up the attacks on oil companies, drugmakers, insurers, high-paid CEOs, and other corporate interests they say have benefited in recent years at the expense of ordinary Americans. "Both are taking an increasingly populist tone, molded for what they think Ohio wants," says Zach Schiller, the research director of Policy Matters Ohio, a public policy research organization.

BEYOND ANXIETY

Ohio's plight is a vivid reminder that manufacturing still provides a livelihood to millions of Americans—and that the agony of U.S. manufacturing's decline is far from over.

Since 2000 the state has lost 236,000 manufacturing jobs, a 23.3% drop. One sign of the times: In 1995, General Motors (GM) was Ohio's largest private employer, with some 63,200 employees, while Wal-Mart Stores (WMT) was ranked No.6, with 15,100. Today the discount retailer is the state's top source of jobs with 52,000 workers. GM employs just 12,300.

Many Ohioans fear things could get worse. Steven Cochrane, senior managing director for Moody's Economy.com (MCO), says Ohio is already probably in recession, and new signs of trouble are popping up. Standing in a showroom loaded with brightly painted new Fusions and Escapes, R. Douglas Seibert, the executive vice-president and general manager of Columbus car dealer Graham Ford, doesn't need to consult a forecast to know a slowdown is hitting home. He's seen it in the thinning traffic to the dealership. A year or so ago he might have sold 200 cars a month. Now he's closer to 100. And most buyers these days are looking for used vehicles or fuel-efficient cars, which bring lower prices and far smaller margins than the big SUVs that used to be his bread and butter.

The growing woes have made many receptive to the anti-trade talk they're hearing from the Democratic contenders. Mansfield, an hour north of Columbus, used to be known as a place to go for a job; Whirlpool, Tappan, and a host of other manufacturers all had plants there. Now the hulking GM plant on the outskirts of town is the last of the big factories left. As snow piled up in the half-empty GM parking lot early one recent evening, Joe Toth, a production worker with 22 years on the job, fretted about the future. From a high of over 4,000, the plant has shrunk to around 1,700 workers, and a new round of buyouts is in the works. Toth, 45, is gripped by the stories he hears around town. The local rubber products company, Swan Hose, that offered employees just $100 severance for each year worked when it laid them off and transferred production to China. The GM worker who took a buyout in 2006—and is now about to lose his home to foreclosure. "Is this an anxious time? That's putting it politely," says Toth. "Stark fear is more like it."

Toth, a dyed-in-the wool Democrat who wants to see Nafta canceled, worries about how he would pay his bills, pare down his debt, and continue to care for his 84-year-old mother if he were to lose his job. He likes the candidates' focus on the economy: Issues like Iraq and terrorism are much further down his list of priorities. "You can have all the national defense you want, but what good is it if your middle class is crumbling around you?" he asks. While many of his fellow workers supported John Edwards and still don't know who to back, he's leaning toward Obama.

The housing crisis is also much on the minds of many Ohio voters: 3.72% of all the state's mortgages are in foreclosure, according to the Mortgage Bankers Assn. The overly aggressive lending practices seen elsewhere bear much of the blame, but the consequences have been compounded as many homeowners have lost their jobs or ended up in new ones at lower pay. Once-thriving working-class neighborhoods in Cleveland and other struggling industrial cities in the state's northeast have been particularly hard hit as house after house sits empty. Many sport "For Sale" signs—but a combination of vandalism, the surplus of properties on the market, and the lack of buyers has left them virtually unsalable.

If the problems started in the industrial cities, they've now spread to the middle-class exurban communities—sprawling expanses of newly built subdivisions that have sprouted around the state's major cities in the past decade or so. Just north of Columbus, Delaware County long boasted of being the state's fastest-growing region, as miles of cornfields were transformed into neighborhoods for an expanding cadre of white-collar workers in health care, government, and other service sectors.

Over the past two years, Delaware County has earned a new distinction: Among Ohio's 20 largest counties, it's now suffering the fastest growth in foreclosures.

The mortgage troubles have sent prices tumbling and stalled sales throughout much of the state. Just a few minutes outside the Delaware County border, 41-year-old Sueann Nuss lives in a small home with her husband, Tim, and two children, 3-year-old Francesca and 19-month-old Elijah. The Nusses are part of a modest neighborhood of starter homes that in better times were quickly snapped up for around $150,000 to $200,000 as soon as they came on the market. But recently, Nuss has watched as several houses that sat unsold for nearly two years have gone for rent instead.

For Nuss, a Democrat who voted for Kerry and who now backs Clinton, it's one more sign of an economy that simply isn't working. "It's just getting harder and harder for people. It shouldn't be this tough," she says. Between ever-rising prices and health insurance that covers less and less, she wonders: "How did things get this bad?" While Nuss doesn't worry that Tim, a nurse-practitioner, will ever lack for a job, she thinks the government should create more incentives to keep companies from moving jobs overseas and encourage people to buy American-produced goods.

LOOKING FOR SUBSTANCE

The question for November is whether the tilt toward the Democrats will hold. Edd Dunlap is the sales and marketing manager for Compass Homes, a small custom-home builder in Delaware County. A longtime Republican and Bush supporter who nonetheless voted for the Democrats' Brown in 2006, he scoffs at some of the more populist lines he's hearing from the Democrats. "One of the candidates is complaining about a CEO making more in a day than the average worker makes in a year," says Dunlap. "I say so what—I hope he does. If the CEO is making a lot of money, that means the business is running well." The candidate making that complaint is Barack Obama. Yet for all that he mocks the current anti-business tone, Dunlap is intrigued by the Illinois senator. Although Dunlap likes Senator John McCain (R-Ariz.), he's worried about his age. While a vote for Clinton is out of the question, he says he'll give Obama a closer look if he ends up as the nominee. "If he gets more substantive, I'd consider him," he says.

Jim McGregor runs McGregor Metalworking Cos., a family-owned business in Springfield that makes components for auto and other industries. The past few years have been tough, as intense price pressure from struggling domestic rivals as well as low-cost suppliers from China and elsewhere have undercut his profits. At the same time, he's had to invest heavily in the business to meet his customers' demands. With steel costs up as much as 30% in the past three months, he's facing an even bigger margin squeeze. His daily struggles make him leery of this talk of patriotic employers and saving jobs. "There's a lot of 'feel-good' stuff being said now," he says. "But there's no comprehension on their part that if an employer can't get a return on investment, he can't do the things he needs to do to survive."

A staunch Republican, McGregor is firmly behind McCain. The Arizona senator has mostly talked about tax cuts as the way to revive the economy. But McGregor says McCain will have to offer up more specifics on how he would address the state's woes if he wants to bring Ohio back into the GOP camp. "If he doesn't get into the details, he won't get elected," he says. McGregor is confident that will happen—but he also worries that the Democratic rhetoric is raising unrealistic expectations that can't be met. "What will any of them do to correct the problems?" he asks. "That's the real question."

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