By Andrea Hopkins
CINCINNATI, Nov 3 (Reuters) - White House budget director Rob Portman can point to plenty of good economic news that should have helped Republicans on the campaign trail this year, but the body count in Iraq kept getting in the way.
"The war has dominated the news, so when the economy gets better, as it has in the last six months and you have good numbers to show, we can't get that through," Portman said in an interview during a campaign stop in Cincinnati.
An hour later, on a door-to-door swing through the suburbs with imperiled Republican incumbent Rep. Jean Schmidt, Portman came face to face with the problem.
"I'm working for Jean, trying to help her get re-elected. We've got to keep taxes under control," Portman told independent voter Joan Foreste, 53.
"I tell you what we've got to do, we've got to get a new president," the homemaker replied. "We shouldn't be in Iraq, they've been crazy over there forever. We're not going to fix it."
Nearly 4 million jobs have been created in the past two years, the unemployment rate is at a 5-year-low, the Dow Jones industrial average is near a record high and wages are finally growing faster than inflation.
But constant bad news from Iraq, where the U.S. death toll reached 104 last month -- the highest in nearly two years -- and persistent voter concerns about pocketbook issues like the high cost of health care and college tuition have neutralized whatever traction President George W. Bush's Republican Party had hoped for in Tuesday's congressional election.
Polls show Democrats headed toward winning control of the House of Representatives and possibly the Senate from Republicans.
Two major polls this week showed an increase in approval for Bush's handling of the economy, but more people still disapprove, and the president's overall rating is mired below 40 percent.
"The economy I believe has been a strength," said Martin Regalia, chief economist of the U.S. Chamber of Commerce, a business lobby group. "But you can't turn Iraq off and say forget it, let's focus on the economy."
TAXES
When Republicans have campaigned on the economy this year, it has been about taxes -- the tax cuts implemented by Bush and the tax hikes Republicans say Democrats will impose if they gain control of Congress.
But Democrats have promised to cut taxes on the middle class and have succeeded in convincing some Americans Republicans only help big business and the very rich.
"We need to take care of people better. The Republicans try to say business will take care of people, but the profits are not making their way down," said pediatric nurse practitioner Peg Hallman, 55, a lifelong Republican who said she would vote Democratic next week.
A raft of corporate scandals in recent years has also made it tough for Republicans, whose ties to big business have been attacked by Democratic populists like Rep. Sherrod Brown, who is leading Republican incumbent Mike DeWine in Ohio's U.S. Senate race.
The success of the anti-business message dismays some.
"Republicans look after business better than Democrats. If you don't have business, you're not going to have jobs," said Alan Woods, 69, who runs a trucking business.
Case Western Reserve University political analyst Alexander Lamis said taxes had always been a Republican strength and that "people who are really concerned about not paying any more taxes ... will go Republican every time," Lamis said.
Even such age-old assumptions may fall victim to voter dismay over the Iraq war this year.
"I think we're just being gouged, taxed to the limit," said Jean Arnold, 62, a nurse. While she said she usually "leans Republican," she is opposed to the war and unhappy with the president.
"I think we should have stayed out of Iraq," she said. "Bush has kind of put me off the track."
