EDITOR'S NOTE -- Another story in an occasional series, "It's the Economy," looking at the economies of battleground states in the coming election.
By SHARON COHEN, AP National Writer
CARROLL, Iowa (AP) -- In the swaying curtain of green fields outside town, Russ Ranniger hums along in his Deere tractor, plowing the same soil his father did, sleeping in the same 1881 wood-frame house he was carried into as a newborn 60 years ago. In nearly four decades of farming, he knows how to measure success.
Good crop prices? Check. Confidence (and money) to buy new equipment? Check. The past five years? "The best farming days of my career."
Howard Drees, a third-generation contractor in Carroll, gauges prosperity by his crowded work calendar. These days, he's so busy with mechanical and electrical projects he's hired an outside company to help and is searching for skilled workers.
These are good times in much of Iowa, partly due to a booming farm economy and a May jobless rate -- 5.1 percent -- that would be the envy of most parts of the country. Crop prices are strong, land values are soaring and farm incomes are up dramatically in recent years. The only cloud on the horizon? The threat of drought, which has sent ripples of anxiety through corn and soybean country.
In Carroll County, the unemployment rate was 3.5 percent in May. "Most people by and large know we've got it good," says Jim Gossett, head of the county economic development office. "We do feel lucky that we were not fighting so hard for jobs. But we have a different fight -- and that's finding workers. And I wouldn't trade the problem we have for the other one."
The irony? This prosperous state may be crucial in deciding who will win the presidency of a country still reeling from recession. It is anybody's guess how a fairly healthy economy at home and a sputtering recovery outside Iowa's borders will play at the ballot box -- whether the president will get credit, blame or both.
What is certain is that Iowa matters.
This small state holds big sway in the race for the White House. President Barack Obama and Mitt Romney, deadlocked in recent polls, are blanketing the airwaves early with TV ads, scrambling for the state's precious six electoral votes.
Iowa was magical for Obama four years ago; his win in the first-in-the-nation caucus propelled him to the front of the Democratic pack at the start of primary season and set him on his way to the White House. Four years later, the luster seems to have faded and Republican Gov. Terry Branstad has made a habit of saying: "We launched him and we can sink him."
And yet, this state hasn't been particularly lucky for Romney. In 2008, his $10 million campaign here fizzled with an embarrassing second-place finish, marking the beginning of the end of his truncated presidential bid. Then this past January, a single-digit win turned into a double-digit loss after a recount.
This fall, no one expects a rerun of Obama's 10 percent cruise to victory in 2008 over Republican John McCain. The contest is likely to be similar to Iowa's razor-thin margins in the last two contests: Al Gore in 2000 and George W. Bush in 2004 both won by less than a percentage point.
Registered independents will be pivotal. They outnumber registered Republicans or Democrats in Iowa.
How they all view the state's prosperity will be critical, though some are skeptical it will translate into good will because of a widespread antipathy toward federal government -- which, in turn, is personified by Obama.
"Just like the general that's on a horse running in front of the troops, you're the first one who gets shot in the war," says Rick Hunsaker, director of a regional planning agency. "I think the president takes a lot of heat. I just don't know what that's going to mean in the voting booth. ... It's so sad that things are polarizing. You don't hear people out there say, `These are the president's weaknesses, yet these also are his strengths.' It's either you're all bad or you're all good and nobody is that way."
Art Neu, a former lieutenant governor and local lawyer -- and a Republican who credits Obama with doing "an exceptional job given what he stepped into" -- says that in today's environment the president could even take a hit if the dry weather turns into a drought this summer.
"If the economy suffers because of the crops, I think that's going to go against Obama," he says. "It's not his fault. When people are mad, when things are bad, they strike out. It's not rational. It's tough to be an incumbent during a recession even though you weren't the one that made the recession."
Iowa was spared the huge housing foreclosures and double-digit jobless rates that wracked huge swaths of the nation during the recession. But some communities, especially manufacturing areas in the eastern part of the state, suffered layoffs and plant closings and have struggled to recover.
The state has reaped the benefits of the thriving agricultural economy, with farmers investing in big-ticket items such as equipment and buildings. That's helped keep a lid on unemployment, which peaked at 6.3 percent during the recession, high only by Iowa standards.
“It's tough to be an incumbent during a recession even though you weren't the one that made the recession.”Art Neu, former lieutenant governor
"We have lower unemployment because historically we have had high migration," says Dave Swenson, an Iowa State University economist. "We put the people we can to work. Those we can't, we say, 'take a hike.' They don't leave because we don't love them. They leave because we can't use them."
"There is a tremendous amount of demand for Iowa-raised talent," he adds, with accountants, health care workers and other professionals relocating to Midwest cities such as Kansas City, St. Louis and Minneapolis.
Iowa tends to be viewed by outsiders as an "American Gothic" landscape of barns, two-lane blacktops and an endless horizon of lush green acres. But the state's No. 1 industry (in gross domestic product) is manufacturing -- this is home to Pella Corp., Deere & Co., factories and meatpacking and pork processing plants. No. 2 is insurance and No. 3 is farming.
Iowa made a big push after the farm crisis to diversify beyond agriculture into insurance, banking and health care. The shift occurred in Carroll County, too, (population 20,000) which has a Pella plant, companies that produce jet fuel nozzles, fire and trash trucks, a winery and a giant warehouse that serves convenience stores.
Agriculture, to be sure, remains a huge business. About 86 percent of Iowa soil is in farms, according to Swenson. Most Iowa full-time farmers rent at least half their land, which has posted a dramatic increase in value.
The average cost of an acre of farm land, for instance, skyrocketed from $2,432 to $6,708 from 2000 to 2011, according to a survey conducted by Mike Duffy, an Iowa State economics professor. In Carroll County, the average acre last year was $7,921 -- though some recently sold for as high as $12,000 an acre.
Crop prices are up, too. A bushel of corn that was $2.22 in 2001 was $6.15 last year. And while the average farm income jumped nationally more than 50 percent since 2000, in Iowa, it was more than triple that, Swenson says. (Those numbers are not adjusted for inflation.)
Add to that some trade muscle. This year, Iowa signed a $4 billion soybean contract with China. It came in conjunction with a visit from Chinese Vice President Xi Jinping, who'd first traveled to Iowa in 1985.
As powerful as Iowa's ag economy is, what many people don't realize is that one reason the state is doing well is "it benefits tremendously from federal programs," says Steffen Schmidt, an Iowa State political science professor. That includes tax breaks, crop insurance, subsidies for wind power companies, ethanol mandates for fuel blending and government-supported biofuel and biotechnology programs.
That should boost the president in Iowa, he says, but "the Democrats seem incapable of making that narrative. They don't seem to know how to make any political gains out of that ... they've abandoned the field to the Republicans. ... The Republicans have made a case, which is widely accepted, that government is bad and that government spending needs to be cut back."
Schmidt argues that all levels of government have been essential to the state's health. "The thing that concerns me most," he says, "is we're not recognizing all the things our government supports that make it possible for private enterprise to be so successful."
Iowa's good economy, he adds, could mean social issues such as gay marriage and immigration (the state's Hispanic population increased from 2.8 percent to 5 percent from 2000 to 2010) may become more important for some voters. The state has a strong social conservative Republican base, and in 2010 three Iowa Supreme Court justices were ousted after they supported a decision legalizing gay marriage.
Even so, the economy looms large, especially among farmers who seem to regard their good fortune as being stamped with an expiration date. Many remember the disastrous 1980s when land values plummeted, banks closed and the thwack of the farm auctioneer's gavel was heard with heartbreaking regularity.
Matt Danner, part of a five-generation farm family that has worked the same land in this area for more than 120 years, was just a kid then but says he still recalls watching grown men cry at farm sales. At 33, he says this probably is the best time to farm he's seen in 15 years.
"It takes 10 good years to fix the five bad ones of the `80s," he says. "It's going to go the other way. It always does. There's plenty of history to prove it's not going to last long."
Ranniger, who farms 240 acres of corn and soybeans about 15 minutes from Carroll, is just as wary.
"I look at it our time has finally come," he says. "But I can't help but remember worrying about paying loans back in the `80s" when his family skipped vacations for a decade and he'd patch a tire rather than buy a new one. "I was bound and determined to make it work. Tradition, I guess."
He, too, wonders about the future. "You have to ask yourself, 'What if this doesn't last?' Then we're in the same boat as the rest of the country."
Like the rest of the country, he and others in this pocket of west-central Iowa worry about national issues -- government spending, health care and debt, which was at or near the top of voters' concerns in polls conducted before the Iowa caucuses. Branstad, who waged a comeback in in 2010 for a fifth term 12 years after leaving office, made it a theme of his campaign. Romney mentioned it in a recent Iowa campaign appearance.
There are critics here of federal bailouts, particularly Obama's decision to help the auto industry.
"Government needs to stay out of more things rather than infuse itself in more things," says Mike Beardmore, a county supervisor whose stance might seem unlikely since he's a Chrysler salesman. Though the automaker was on the brink of collapse before the government rescue, he's convinced it would have survived, maybe with an investment from China or another foreign country. Beardmore also thinks the move won the president political points.
"I think Mr. Obama went to bed saying I've got to do something to save these jobs," he says. "I don't think he was laying his head on the pillow saying I've got to appease the unions. I think that was a side benefit."
At the same time, there are supporters here of the president's stimulus plan and other efforts to jump-start the economy.
“I do think [Romney] has a little more business sense than Obama does.”Alice Simons, businesswoman
"I would say Obama and his staff stepped up and made some tough decisions and put some money out there and kept things moving," says Drees, the contractor who says up half the projects he's worked on in recent years involved federal funds. "I was happy to see someone actually try to stimulate the economy with low interest rates, instead of waiting until more damage was done."
And there are folks on both sides of Obama's health care overhaul.
"The criticism I hear is they (the government) can't run a post office, they can't run our retirement, they shouldn't be able to run our health care," says Mark Nepple, manager of the local Bomgaars, a general merchandise store.
But others like the general premise of the program.
"I think 50 years from now when people look back ... Obamacare will be viewed as the start of something that was the right thing to do in our country," says Jeff Scharfenkamp, a city council member and president and CEO of Carroll County State Bank. "The system is not perfect by any means but ... you've got to get something out there."
These divisions reflect the political difference in a county that went for Obama in 2008 by about 3 percentage points. The local newspaper, the Daily Times Herald, has written positively about the president on its editorial pages as far back as December 2006, with a piece, "Why Barack Obama Can Win the Iowa Caucuses."
Doug Burns, a local newspaper columnist and paper co-owner who has interviewed Obama seven times, says the waning enthusiasm for the president is to be expected,
"In 2008, he was something of a blank slate," he says. "People could see in him whatever they wanted -- whether they were fairly moderate Democrats or Republican liberals, they were all finding something. There's no way a president who could appeal to that diverse of a group in theory could have lived up to that in practice."
Burns also says the stable economy cuts both ways; it could help Obama or work against him if voters are comfortable enough to focus on social issues in which they differ with the president.
Romney has his own hurdles.
Neu, the former lieutenant governor who jokingly calls himself "a really bad Republican," voted for Romney in the caucuses, saying he was the most rational of the GOP candidates. But he has problems with the former Massachusetts governor.
"You ask yourself sometimes with public figures is there an issue that they would go down for?" he says. "Is there something you believe in so deeply that you'd be willing to take a hit for? I don't see that with him."
Romney's private sector resume, however, has impressed Alice Simons, a businesswoman who owns three downtown stores.
"I do think he has a little more business sense than Obama does," she says. "The one thing that really bugs me in people criticize Romney for having money. ... I just want to see successful people. ... I guess what I'm saying if they have made their money in private business, why wouldn't we want somebody what has that sense and know-how?"
It's not economic issues, she adds, but the "constant battle" in Washington with both sides digging in without compromise that most frustrates her. "I think we just need to find somebody who can get along ... who has the ability to negotiate with the other side so that can we can get some things accomplished. ...
"Whether Romney can do it, I don't know."