NOAH ADAMS, host:

From NPR News, it's ALL THINGS CONSIDERED. I'm Noah Adams.

MELISSA BLOCK, host:

And I'm Melissa Block.

On the program this week, we've been remembering this time last year, a time a lot of you might rather forget. The Treasury Department took over Fannie Mae and Freddie Mac. The legendary investment bank Lehman Brothers went bankrupt. And the world's largest insurance company AIG was threatening to bring down the entire banking system.

ADAMS: And all these events took place in the middle of the presidential campaign.

As part of our series on the financial crisis one year later, NPR's Don Gonyea reports on how it changed the course of that campaign.

DON GONYEA: A year ago this time, the big political conventions had just ended. Election Day was less than two months away. But suddenly, there was just one story and just one issue.

(Soundbite of a newscast)

Unidentified Woman: Right now, breaking news here: stocks all around the world are tanking because of the crisis on Wall Street.

GONYEA: President Bush, overshadowed for months by the campaign, found himself with another major crisis to deal with.

President GEORGE W. BUSH: The American people are concerned about the situation in our financial markets and our economy, and I share their concerns.

GONYEA: So did the two major party nominees, Democrat Barack Obama and Republican John McCain, each trying to demonstrate his readiness to handle the crisis if elected. But McCain's strength was national security and his resume as a war hero. The economy had been his weak spot going back to the primaries. His first reaction in September was an effort to reassure the public.

(Soundbite of past recording)

Senator JOHN McCAIN (Republican, Arizona): Our economy, I think, still the fundamentals of our economy are strong. But these are very, very difficult times.

GONYEA: Candidate Obama pounced, seeing his chance to tie McCain to the economic policies of President Bush.

(Soundbite of past recording)

(Soundbite of applause)

President BARACK OBAMA: (As presidential candidate) This is what happens when you see seven years of incomes falling for the average worker while Wall Street is booming and declare, as Senator McCain did earlier this year, that we've made great economic progress under George Bush.

(Soundbite of booing)

Sen. OBAMA: This is how you can reach the conclusion, as late as yesterday, that the fundamentals of the economy are strong.

GONYEA: McCain's problems were compounded by a decision to suspend his campaign until Congress dealt with emergency legislation to bolster the economy. He even said he would cancel his appearance at a presidential debate, a call he later reversed.

Earlier in September, McCain had taken a modest lead in polls. But once the economy became the issue, Mr. Obama pulled ahead and began to pull away.

Looking back, this was the decisive moment in the fall campaign. But David Axelrod, a senior advisor to the president and a top Obama campaign strategist, says the outcome wasn't so clear at the time.

Mr. DAVID AXELROD (Senior Presidential Advisor): I think it became a great test of leadership at that moment, and I think it redounded to his benefit. But we had no way of predicting that at the time. All we knew is that a very serious crisis was in the offing, and he wanted to deal with it in as responsible way as possible.

GONYEA: That very serious crisis has continued to dominate the agenda under the new president. Within weeks of his inauguration, he signed into law a $787 billion economic stimulus package.

Pres. BARACK OBAMA: I don't want to pretend that today marks the end of our economic problems, nor does it constitute all of what we're going to have to do to turn our economy around. But today does mark the beginning of the end.

GONYEA: The stimulus passed without a single Republican vote in the House, and the opposition has continued to accuse the White House of trying to spend its way out of recession, running up huge deficits.

Here is Congressman Eric Cantor, the Republican Whip, on Fox News this summer.

(Soundbite of newscast)

Representative ERIC CANTOR (Republican, Virginia): I do think it is fair to say that the stimulus is a flop. The goal that was set when we passed it was unemployment wouldn't rise past eight and a half percent. And what we see now is businesses just aren't hiring.

GONYEA: But the White House counters that the benefits of the stimulus have only begun to be felt; and that without it, the recession might have been far worse.

At a union picnic in Cincinnati yesterday, the president looked for good news even amid reports of 216,000 jobs lost in August.

Pres. OBAMA: But for the second straight month, we lost fewer jobs than the month before, and it was the fewest jobs that we had lost in a year.

(Soundbite of applause)

Pres. OBAMA: So make no mistake, we're moving in the right direction. We're on the road to recovery, Ohio. Don't let anybody tell you otherwise.

(Soundbite of cheering and applause)

GONYEA: But the road to recovery can be long and hard and politically painful, especially for a president and a party that took over promising an end to the economic crisis.

Don Gonyea, NPR News, Washington.

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