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Now that both the Republican and Democratic Parties have their respective nominees, to be officially anointed at their respective Conventions, the general election campaign is effectively getting underway. At this point, if I had to venture a guess, the score stands: Advantage Obama.

Can Senator Obama Seal the Deal?
Senator Barack Obama’s triumph in the Democratic Party’s primary and caucus process underscored the continuing rise of a charismatic leader who first dazzled the Democratic Party at the 2004 Convention. Senator Obama is capable of sketching a memorable vision of where he wants to lead the nation. Far from being an unimportant skill, Senator Obama’s ability to communicate is a key leadership attribute, as an essential task of leadership involves reaching and inspiring people toward a common cause. His background as a community organizer, public servant, and push for post-partisan change taps strongly into the spirit of volunteerism with which the nation’s younger voters identify. Even as his policy positions are left-of-center, he frames them in a fashion that transcends existing political divisions.

During the primary process, he defeated a widely-known candidate who offered many years more in life experience and had stronger political connections from her husband’s Presidency. In overcoming Senator Clinton’s advantage in experience, he demonstrated a capacity that should serve him well as he goes up against another experienced candidate in the general election campaign.

Senator Obama rendered Senator Clinton’s argument over experience largely impotent by shifting the focus to judgment. Over and over again, he highlighted both Senator Clinton’s 2002 vote to authorize the war in Iraq and her repeated refusal to take personal responsibility for what Democratic primary and caucus voters believe constituted a grave error in judgment. Senator Obama’s success in shifting the lines of argument to that of judgment elevated his stature as a leader while diminishing Senator Clinton’s.

When it comes to leadership, judgment takes precedence over experience. University of Southern California and University of Michigan business professors Warren Bennis and Noel Tichy explained:

After a five-year study of leadership covering virtually all sectors of American life, we came to the inescapable conclusion that judgment regularly trumps experience. Our central finding is that judgment is the core, the nucleus of exemplary leadership. With good judgment, little else matters. Without it, nothing else matters.

Senator Obama’s strong attributes notwithstanding, his ability to offer the nation a credible economic policy will likely determine whether he can close the deal to gain the Presidency.

Opinion polling shows that voters consider the nation’s economy their highest priority. Given that the U.S. is in the midst of economic weakness, the election will likely be won or lost on the economic battleground.

Senator Obama’s economic platform will need to allow him to maintain Democrats and attract a sufficient number of Independent voters to win the election. That agenda need not preclude fiscal discipline. However, it must offer more. It should be built on the foundation that education and hard work should allow each generation to do better than the preceding one. Such a message would be consistent with the historic example of Senator Obama’s candidacy that demonstrated that the nation’s best opportunities—even its highest office—are available to any person regardless of race, ethnicity, gender, etc. He will need to argue that the nation’s long-term economic growth can best be achieved from its ability to leverage the talents, abilities, experience, and creativity of all of its citizens in a society in which markets prosper and government is a partner.

Former Treasury Secretary Robert Rubin described the kind of approach that could help accomplish that task. He advised:

To move forward, serious policy advocates from all perspectives should start by ageing on two basic bedrock principles: that there is no free lunch; and that a strong future requires incurring costs now for benefits later. We should then put everything on the table. Our strategy should have four components:

1) We should re-establish sound fiscal conditions for the intermediate term (the 10-year federal budget window) and put in place a real plan to get entitlements on a sound footing for the long term.
2) We need a strong public investment program…to promote productivity growth, to help those dislocated by technology and trade, and to equip all citizens to share in our economic well-being and growth.
3) We must pursue an international economic policy that continues global integration, especially multilaterally, and proactively addresses our other international economic interests, including combating global poverty.
4) We should work toward a regulatory regime that meets our needs and sensibly weigh risks and rewards.

Can Senator McCain Pull an Upset Victory?
Senator John McCain faces formidable obstacles. He is running against the stiff headwinds of a highly unpopular Administration and a charismatic leader who is an orator of Ronald Reagan’s and John Kennedy’s caliber. The old “playbook” that worked so well against such Democratic Party candidates as President Carter, Senator Mondale, Governor Dukakis, and Senator Kerry is irrelevant in addressing the Obama candidacy.

Senator McCain’s waging a campaign on the premises that Senator Obama is an “empty suit” who lacks the experience necessary to serve as President or that he is a throwback to the “Big Government Liberals” of 1960s and 1970s vintage will not be sufficient. Senator Clinton “tested” Senator Obama on the first premise depicting him as offering little more than words and being unprepared to answer the call should a crisis confront the nation. She failed.

Invoking the “Big Liberal” argument against Senator Obama, who ranks among the Senate’s most liberal members, also will not suffice. A growing share of the nation’s voters was born in or after 1980. That rising voting demographic has no personal recollections of the Johnson, McGovern, Carter-era policy approaches. Furthermore, Senator Obama can effectively make the case that President Bush was, in fact, the “Big Spending Liberal” against whom Senator McCain runs. After all, during the Bush Presidency, federal spending increased at an average annual rate of 6.6% vs. 3.5% per year under his predecessor. All said, the “L” word is not likely to be as radioactive or potent as it was to the preceding generation of voters.

To succeed, Senator McCain will need to articulate a convincing case that he understands voters’ concerns, offers a program that would address those concerns, and has the ability to deliver results while working with a Democratic Party-led Congress. Lurching into partisan attacks would destroy Senator McCain’s ability to make the case that he can work with a Democratic Congress.

Although he might be tempted to ride the national security argument—an area in which he fares well in opinion polls, fits his distinguished military background, and is pertinent to some of the big foreign policy challenges facing the nation—national security alone is too narrow an area to secure victory. Foreign policy concerns more than just the ongoing ideological struggle with radical Islamists. It entails strengthening the frayed NATO alliance, rebuilding U.S.-Russia bilateral relations, developing a constructive partnership with a rising China, and placing greater emphasis on hard-nosed diplomacy, among other things.

Economic policy will likely prove far more important in determining the outcome of the November election. To date, Senator McCain has offered economic policy ideas, but has not laid them out in a coherent and consistent fashion. Given Senator Obama’s oratorical advantage, Senator McCain will need to compensate by offering greater specificity and he will need to make those concrete positions accessible to voters who might not possess the technical knowledge or background to properly assess their merits.

Although the federal government cannot enact policies that erase the cost disadvantages facing numerous major industrial companies in the United States—those are a product of managerial decisions and marketplace dynamics—the federal government can lower the overall cost of doing business in the United States. Senator McCain’s corporate tax cut could offer one such mechanism for doing so. However, he will have to overcome the skepticism of many who might be inclined to believe that he is favoring corporations at the expense of ordinary Americans who are currently being squeezed between high inflation and economic sluggishness. He will have to explain that by lowering the costs for companies, he will be freeing up their cash flow so as to put them into a position to expand their operations and increase growth-enhancing investments. In turn, those developments would yield greater growth. Furthermore, only stronger companies can create more jobs and generate more incomes.

When it comes to fiscal policy, out-of-control federal deficits soak up financing that might otherwise flow to individuals and businesses. Senator McCain cannot ignore the reality that Bush-era fiscal policy has been defined by profligate spending. At the same time, he has a real opportunity to differentiate himself from those policies. He can highlight his vote against President Bush’s expansion of Medicare, for which Dallas Federal Reserve President Richard Fisher recently noted added $17 trillion to the nation’s infinite-horizon unfunded liability. Considering that entitlement spending growth poses the greatest long-term economic risk to the United States, he needs to make entitlement reform a centerpiece of his economic strategy. A starting point would constitute establishing a bipartisan blue-ribbon committee comprised of eminent individuals such as Paul Volcker (who endorsed Senator Obama’s candidacy) or Robert Rubin (who served under President Clinton, but was perhaps the strongest Treasury Secretary in the past quarter century), former GAO head David Walker who is intimately familiar with the nation’s long-term financial challenges, among others, to develop a viable reform package. Proposing a transitional approach that would enact explicit long-term budgets for Social Security, Medicare, and Medicaid that are sustainable, set limits on automatic spending growth, and have a required review every five years while the Commission defines its reform package, as advocated by a group of Washington think tanks, would offer another component. Reviving the Budget Enforcement Act that triggered across-the-board spending reductions when the federal government failed to meet its deficit reduction targets would be another.

Beyond fiscal policy, he could indicate that he would only appoint Federal Reserve Board governors who are committed to price stability (low inflation). He should also reaffirm his commitment to pursuing trade liberalization. The instrumental role trade has played to date in keeping the nation’s sagging economy out of technical recession would offer a powerful selling point. Selecting a running mate who is well-versed in economic policy and possesses credible private-sector experience could also strengthen his ability to win on the economic battleground.

Conclusion:
Whether Senator McCain prevails remains to be seen. Certainly, there are viable openings. In the meantime, Senator Obama is an attractive and strong candidate. Even as Senator Clinton reluctantly or perhaps unwillingly fades from the scene in a fashion that could undermine Senator Obama’s efforts to unify the Democratic Party, Senator Obama likely has the advantage moving into the general election campaign.