Political analyst Donna Brazile (Photo credit: AP Images)

The state of the economy and the unemployment rate, the rising cost of healthcare and gasoline prices will likely prove decisive issues when a narrowly divided American electorate goes to the polls in November to choose a candidate for president.

That much was agreed to during a panel discussion on issues that will influence the outcome of fall campaign. The debate, hosted during a general session of the Association for Advanced Life Underwriting, being held in Washington, D.C. April 29-May 2, pitted Donna Brazile, a political analyst affiliated with the Democratic Party, against former Republican Governor of Mississippi Haley Barbour.

The debate was moderated by Ron Insana, a reporter for Market Score Board Report and a former senior analyst at CNBC.

“The country is about evenly divided between both political parties,” said Brazile. “The American people will ultimately decide the election based on the state of the economy and their comfort level with the character and leadership qualities of the two candidates.”

Barbour acknowledged that much of the media currently favors an Obama victory. He noted also that only one incumbent president since 1896–President Carter–has taken the White House following the term of a president representing the opposing political party, then lost his bid for reelection.

Insana pointed out, however, that no president has won reelection with the current rate of unemployment– over 8%-nor with a low level of consumer confidence.

Brazile predicted a close race, with the President winning by potentially less than one percentage point of the voting public. She said also the fall election season is likely to be accompanied by “outrageous amounts” of campaign spending and “vicious” attack ads from super political action committees (Super PACs) endeavoring to sway independent voters in critical battleground states like Florida, Ohio and Pennsylvania.

“At the end of the day, the result will be too close for comfort,” said Brazile. “Obama will not win with over 10 million votes; nor will he get anywhere close to the 365 Electoral College votes he secured in 2008.”

Barbour agreed that winning over a small percentage of independent voters will prove crucial to the winning candidate. To that end, he said, the Democratic Party and affiliated labor unions will “carpet bomb” independents with attack ads contending that Governor Romney is a rich man who is out-of-touch with average Americans.

Brazile said that Obama will have to convince Americans that the next four years will be better than the last three of his presidency. She added that the financial sector, manufacturing and regional business activities are already rebounding.

Barbour countered that the president remains vulnerable on several policy issues. Among them: rising healthcare costs for businesses; an unacceptably high jobless rate; and high commodity prices, most especially for foreign oil. He said the president could easily double production of oil, to the tune of an extra 4 million barrels per day, by permitting greater drilling in Alaska and the Gulf of Mexico.

Barbour added the president also has yet to demonstrate a willingness to put forward a budget that will reign in growing federal deficits and that secures bipartisan support in Congress.

“The president has asked for the largest tax increase in American history,” said Barbour. “How do you expect employers to create more jobs when the president is holding a $1.5 trillion tax increase over their heads.

“When you go down the list—taxes, spending, deficits, national debt, energy policy–the President is vulnerable on a whole range of issues that will come before the voters,” he added. “And Americans are of the view that we’re spending way too much as a nation.”

In rebuttal, Brazile noted that the national conversation about the budget has been one-sided, focusing too much on spending cuts without compensating revenue increases. To bring spending and revenue properly into balance under the Budget Control Act, which calls for $2.2 trillion in cuts over 10 years, Congress needs to consider tax additional tax increases.

“We should all be concerned about the federal deficit,” she said. “But we need to have a balanced conversation that includes both tax spending cuts and revenue gains.”

Brazile disagreed with Insana, who questioned whether the president had thrown the Simpson-Bowles deficit reduction commission “under the bus” last year by not adopting the commission’s recommendations, which called for $4 trillion in spending cuts over 10 years, as well as reforms of the tax code and of entitlement programs like Medicare.

“Discretionary spending and tax revenue [as a percentage of gross domestic product] are at their lowest levels in 60 years,” she said. “Revenue is down 70% from what it was 50 years ago.

“We can all argue how much lower we need to go in terms of spending,” she added. “But I think President Obama has put forward a balanced approach to solving the current fiscal crisis.”

One area that is ripe for additional spending cuts, she said, is the Department of Defense budget. She noted that defense spending now stands at $700 million–well above the $285 billion in spending when President Clinton left office in 2001. Fueling the rise is increased spending on healthcare for veterans in VA hospitals; and expenditures of $2 billion per week in Afghanistan.

Turning to speculation on the candidates’ choice for vice president, Barbour suggested that Romney will likely pick this summer a “safe” running mate. He did not think, however, that Romney would tap someone who adds strength in particular geographic regions.

“Do no harm is most often the nominee’s chosen route because it is the safest in a close election,” he said. “Some of the VP candidates being discussed [who might meet the safety requirement] include Lamar Alexander, Mitch Daniels, Tom Ridge and Marco Rubio.”

Turning to Obama’s running mate, Brazile rejected Insana’s suggestion that Secretary of State Hillary Clinton and Vice President Joe Biden would swap positions–thereby positioning Clinton for another presidential run in 2016.

“I don’t think the president will make this swap,” she said. “It would produce too much chaos [in the run up to the Democratic Party Convention].

“As to Romney,” she added, “I agree that he will not pick a candidate for geographic reasons or to boost support among particular voting blocks. He’ll pick someone based on his or her experience in government or business–someone like [former Ebay CEO] Meg Whitman.