Voters focus on pocketbooks as economy wobbles

DES MOINES, Iowa (Reuters) - The colorful topics -- whether Oprah or immigration -- steal the media attention on the U.S. campaign trail, but voters never take long to get to their household budget when asked what really matters.

"Health care. Right now, I get it through my company and it's worthless. It's almost $300 a month and you get nothing," said Morgan Hall, a psychologist who came out to hear Democrat Hillary Clinton at a recent Des Moines campaign stop.

"(U.S. President George W.) Bush said the economy is good, but I think he's pulling our leg," retired sheet metal worker Marvin Hohneke, 69, said. "Food prices are getting pretty darn high. Milk is pretty near $3 a gallon."

Across the capital city of Iowa, the state that holds the first contests in the process to nominate parties' presidential candidates on January 3, the same worries surfaced at a campaign stop for Republican former Massachusetts Gov. Mitt Romney.

"Keeping the tax cuts permanent -- I'm middle class and we're the ones that benefit from the tax cuts. I'm afraid of a president who will put those taxes back up," said pastor Chris Magnell, 34. "Fiscal issues are probably number one for me."

While the endorsement of Democrat Barack Obama by TV star Oprah Winfrey was competing for media attention with questions about Romney's Mormonism and immigrant gardeners in recent days, economists say the November 2008 presidential election could come down to voter pocketbooks.

A CNN/Opinion Research Corp poll released on Tuesday showed 29 percent of voters said the economy was their top issue in the presidential campaign, compared with 23 percent who listed the Iraq war. For the first time in four years, a majority of Americans, 57 percent, believe the country is in a recession.

ECONOMIC WORRIES

Fears of an economic slowdown coupled with a continued housing crisis, rising energy costs and wildly fluctuating stock markets have helped push pocketbook concerns up the priority list. At the same time, fewer troop deaths in Iraq have eased concerns about the war.

"If conditions in Iraq remain stable, I think the economy will be at the top of the political agenda through the spring and summer of next year and in the teeth of the election," said Mark Zandi, chief economist at Moody's Economy.com.

The shift in focus to domestic issues from what might have been expected to be a referendum on the Iraq war could be a boon for Democrats, who were attacked as being weak on national security in 2004 but traditionally poll stronger on homefront matters like health care, education or retirement benefits.

The fact that Americans feel less financially secure than they did before Republican Bush took office eight years ago also makes it harder for Republicans to run on their record.

Since 2001, health insurance premiums have increased 78 percent, while wages have risen just 19 percent, according to the non-profit Kaiser Family Foundation.

"People place blame for a bad economy not on one party or another, but on who is in power," said Zandi. "Incumbents generally suffer .... In the general election, the Republicans will be penalized."

Still, each party appeals to worried voters in a different way. Democrats have promised health-care reform to bring coverage to more Americans -- a pledge that has convinced Iowa health-care worker Chris Kirschbaum, 22, to support Clinton, a New York senator.

"I see people who aren't covered as well as they need to be, because it's an out-of-pocket cost, their employer doesn't give enough, or they think they won't need it," he said.

Retired businesswoman Kay Levitt, 72, likes the former first lady for another close-to-home issue.

"I heard her talk about loans for college students, she's just very smart and has the experience to do it," Levitt said.

But the Republican candidates have promised to make Bush's tax cuts permanent, and Levitt's husband is considering voting for a Republican for fiscal reasons. While the federal deficit ballooned under Bush, Allen Levitt, 73, thinks that could change under a new Republican president.

"I like Romney for what he did in Massachusetts, he pulled that deficit way down and did some good things," said Levitt, a retired salesman. He's also considering Clinton.

"I'm still working on him," his wife said.

(Editing by Lori Santos and David Storey)