Iowa Makes Fertile Battleground for Obama, Romney

NEW YORK ( TheStreet) -- "We'll be the last people on the planet to starve to death."

Rep. Steve King (R., Iowa) says this with a chuckle as he chats about the strength of Iowa's agricultural sector -- just one of many bright economic spots for the nine-year incumbent congressman to boast about.

It's a state that found resilience and growth during the Great Recession, and now enjoys an unemployment rate well below the national average along with a surging agricultural and manufacturing sector.

"This economic crisis didn't find Iowans highly leveraged, and we saw our agriculture commodity prices stay up there -- part of it was the really high energy prices we had at the same time -- and so we came through it building capital rather than watching a downward spiral," says King.

So why does President Barack Obama, who won the state by almost 10 percentage points in 2008, barely lead Mitt Romney in most major polls there?

"The economy nationally still isn't where it needs to get, so I think that's a little bit different than when you're running as a first-time candidate with a fresh approach," says Tom Henderson, Polk County, Iowa Democratic Party chairman. "You can be doing well as a state but you also want the nation to be doing well, because that gives you a feeling of security that it's not going to come visit you."

The latest U.S. economic data is mixed at best. Gross domestic product grew in the most recent quarter at a sluggish 1.9%; the June jobs report revealed that the country is adding jobs, but slowly, and activity in the manufacturing sector dipped last month into slight contraction for the first time since July 2009.

But if you simply narrowed in on Iowa's economy since 2008, you would have weathered Lehman Brothers, bailouts, the European debt crisis pretty nicely.

The jobless rate in Iowa is 5.1%, good enough for 7th in the country; unemployment claims are down 16.8% year over year; personal income was up 6.4% in 2011 from 2010; home sales are up 14.4% (based on general Midwest sales) and farmland values are up 27% against a year ago.

It's almost impossible to speak with Iowans without them mentioning "ag," or agriculture.

Corn production reached 2.42 billion bushels in 2009, dipped to 2.15 billion bushels in 2010, and jumped to 2.36 billion by 2011. Iowa remains the no. 1 producer of U.S. corn as it beats Illinois production by 409.6 million bushels, according to the United States Department of Agriculture.

If it seems odd to single out corn, consider the fact that Iowa creates about 30% of all ethanol in the United States -- an industry that says accounts for some $13 billion of Iowa's GDP.

The state is also the U.S. king of soybeans, producing 466.1 million bushels in 2011.

The production of Iowa manufacturers has soared during the four years of Obama's term thanks to a boom in exports.

"Between our agricultural trade and our manufacturing trade -- both playing upon foreign markets -- that's been big for us; so we've had kind of a confluence of events there," says John Stineman, executive director of the Iowa Chamber Alliance and Steve Forbes' 2000 Iowa caucus campaign manager.

A relatively weak dollar since the crisis has improved the value proposition for manufacturers to sell goods made in Iowa abroad. For example, Deere & Co. ( DE) produces John Deere agricultural tractors and engines for manufacturer use in Waterloo, Iowa, and it manufactures self-propelled sprayers, tillage equipment and grain drills in Des Moines.

In the past few years John Deere equipment produced in Iowa benefited greatly as world commodity prices soared, specifically a spike in wheat prices from severe drought in Russia, which in turn stoked demand for agricultural equipment.

Financial services and biotech have also proven to be resilient sectors in the Hawkeye State, where just six electoral votes are up for grabs but where two giant politicians have serious boots on the ground.

Obama's campaign has 14 offices, five regional directors and some 14 full-time staff running the statewide operation, according to -- they have been establishing a grassroots presence since well before the GOP Iowa caucuses. Romney's campaign has only recently started to ramp up its general election presence, but the presumed Republican nominee mad a pit stop in the state last month signaling his campaign's belief that Iowa could be attainable in November.

And that's not an outrageous notion when one notes that Iowa delivered tight 2000 and 2004 presidential races.

Al Gore defeated George W. Bush by 0.31% there in 2000, while Bush bounced back to beat John Kerry by 0.67% in 2004.

"I know it's going to be tough for President Obama ... but I believe the more that Iowans hear about the president's policies and how they have helped our state, the more they will come around," Sen. Tom Harkin (D., Iowa) says.

Harkin says that the president's policies have helped boost domestic energy sector in biofuels and ethanol, and with promoting agricultural exports.

"Taken together, there is every reason for Iowans to vote for Barack Obama," Harkin says.

Rep. King, who formally endorsed Romney in May and who has his own congressional seat to defend in November, thinks the former Massachusetts governor needs to clarify some of his energy and agricultural positions to Iowa voters.

"I'd like to ask Mitt Romney to come to Iowa and take a stand and just inform the public as to what your policy and position will be, and I think that I'm comfortable with him -- I've not heard anything that causes me pause -- I just think that there's an undercurrent of doubt out there and that that affects peoples' thinking in the ag riculture community," King says.

Part of what King may be speaking to is Romney's tepid energy platform. Iowa's energy sector has obviously benefited from ethanol business, but it also stands as the nation's top job market in wind power.

During this election cycle, Romney has criticized Obama's " imaginary world where government-subsidized windmills and solar panels could power the economy."

But before the 2008 primary cycle he seemed open to the idea: " Energy independence will require technology that allows us to use energy more efficiently ... more ethanol, more biodiesel, more solar and wind power, and a fuller exploitation of coal."

Obama isn't without his own hurdles.

One Iowa Republican says that the president has taken for granted many of the people who voted for him in 2008.

"Obama has let them down," says Kevin McLaughlin, Polk County GOP chairman. " They're tired of being taken for granted by the Democrats ... and tired of Democrats showing up before the elections and expecting them all to vote for the Democrat candidate."

McLaughlin says he has spoken to a number of people in his county who supported the president in 2008 but have reservations ahead of the 2012 race.

One such person is Rev. Bobby Young, who is the senior pastor at Mt. Hebron Missionary Baptist Church in Des Moines.

Young says he has never really had a party affiliation and that a candidate has to "strike a chord" in him to win his vote. He explains one of those issues.

"I see some things that probably most politicians don't see, because I deal with stuff at a grassroots level. We are creating an underclass in this country, and I don't like what they're doing and how they're doing it," says Young.

Young's grievances include, among others, bedrock social issues and bank bailouts: He thinks federal lawmakers need to address drug use and gun violence in impoverished communities and says the bailout money the government handed banks could have been channeled into government contracts to minorities for federal construction projects.

King and McLaughlin both reference Obama's controversial decision to require Catholic hospitals to provide contraception coverage for employee health plans. They think it has vexed religious communities and that it could shift many voters' allegiance from Obama. Young says it's a moral issue, and that politicians shouldn't legislate morals. Henderson says he doesn't think it will be enough to turn the election as part of the president's strategy was to make sure access reached all women -- a huge part of his base as well.

There are plenty of issues Romney and Obama must address in Iowa and balancing them in order to reach Iowa voters, it appears, will be tough because there isn't a single issue hitting home on a local level for either candidate to run with.

"There's been no local issue here that's been dominant," Henderson says.

The statewide economy is strong, Iowans have jobs and business sectors are booming. Most local talk shifts among 8.2% national unemployment, health care and federal deficits.

"I gotta see something there other than just hearing a bunch of words," says Young.

-- Written by Joe Deaux in New York.

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