The narrow victory by Senator Hillary Clinton over Senator Barack Obama, by a margin of 39 to 36 percent, appears to make the Democratic contest a two-candidate race. Both Obama, who won the Iowa caucuses last Thursday, and Clinton have huge campaign war chests that will take them through February 5, when 20 states hold primary votes.

The result upended the pre-election polls, which had predicted a comfortable Obama victory by a margin of at least 10 percentage points. Former Senator John Edwards of North Carolina trailed with 17 percent, New Mexico Governor Bill Richardson received 5 percent, and Congressman Dennis Kucinich 2 percent.

The primary victory by Senator John McCain of Arizona leaves a splintered Republican field. McCain defeated former Massachusetts Governor Mitt Romney by 37 to 32 percent. Romney, by far the best-financed Republican candidate, was the runner-up for the second consecutive contest. He also won poorly attended Republican caucuses in Wyoming.

The winner of the January 3 Iowa caucuses, former Arkansas Governor Mike Huckabee, finished well back in third place, with 11 percent. Former New York City Mayor Rudolph Giuliani, once the frontrunner in national polls among Republicans, finished a poor fourth with 9 percent, while Congressman Ron Paul received 8 percent. Former Senator Fred Thompson trailed with only 1 percent.

According to exit polls Tuesday, McCain owed his victory largely to voters who were registered independents. Registered Republicans split their votes nearly evenly between McCain and Romney.

The defeat was a serious blow to the viability of the Romney campaign, whose strategy was based on winning in Iowa and New Hampshire, the two earliest contests. The former governor of neighboring Massachusetts had been leading in opinion polls until a few weeks ago. As he did in Iowa, Romney spent more on television advertising in New Hampshire than all his rivals combined. Romney’s focus now is on the January 15 Michigan primary, where his main rivals will be McCain, who won the contest in 2000.

There was little comfort in Tuesday’s results for any of the other Republican candidates. Giuliani had been leading in state opinion polls last spring and summer, but he plummeted as McCain rose and ended up virtually conceding the primary. He spent much of the New Hampshire campaign at events in Florida, whose primary is January 29.

Huckabee left New Hampshire for South Carolina, where Republicans vote January 19, hoping that a large turnout of evangelicals and Christian fundamentalists will produce a victory over McCain, likely his closest rival there. Thompson is expected to pull out of the race if he does as poorly in South Carolina as he has in Iowa and New Hampshire.

This means that at least four Republican candidates—McCain, Romney, Huckabee and Giuliani—are expected to contest the 20 state primaries to be held on February 5.

The outcome of the Democratic primary suggests that Clinton benefited from a growing concern among working class voters over the state of the US economy. Clinton was the only candidate to raise the growing danger of recession in Saturday’s televised debate, and exit polls showed that the economy was the number one issue of those who turned out to vote, whether they cast a Democratic or a Republican ballot. A staggering 98 percent of those who voted in the Democratic primary said they were “very” or “somewhat” worried about the economy.

Clinton ran ahead of Obama in the working class industrial city of Manchester, New Hampshire’s largest, and there were significant class and economic distinctions between their voters. Clinton led Obama by sizeable margins among those with family incomes less than $100,000 a year, among union members, among those without college degrees, among those who felt that the state of the US economy is poor, and among those with children in the home. Her largest margin was among single working women.

Perhaps the most striking distinction between Clinton and Obama voters concerned feelings about their family’s economic futures. Those who said their families were “getting ahead” backed Obama by 48 to 31 percent. Those who said their families were “falling behind”—a much larger group—voted for Clinton by 43 to 33 percent.

There was a significant age difference in the nearly evenly divided vote. Clinton’s entire margin of victory came among voters aged 65 or over. Among those aged 18 to 64, the two candidates were virtually tied. There were fewer younger voters as a proportion of those voting—18 percent were under 30, compared to 22 percent in Iowa. But the proportion of the elderly was down even more: they comprised 13 percent of the Democratic voters, compared to 22 percent in Iowa. This in part reflects the difference between a primary, where working-age voters can more easily get to the polls, and a caucus, which involves a greater commitment of time.

The exit polls suggested that voters did not make much of a distinction among the principal Democratic candidates on the issue of the war in Iraq. Despite Obama’s frequent claims of early opposition to the war, voters who favored the quickest possible withdrawal of US forces in Iraq backed Clinton by 41 to 34 percent.

In her victory speech, Clinton reiterated the economic appeal adopted by her campaign in the last several days. She referred to meeting “people who’ve lost their homes to foreclosures, people who work but can’t pay their bills, young people who can’t afford to go to college.”

Embracing a populist appeal she had avoided in Iowa, Clinton went on to declare, “The oil companies, the drug companies, the health insurance companies, the predatory student loan companies have had for seven years a president who stands up for them. It’s time you had a president who stands up for you.”

In demagogic fashion, she pledged, “There will be no more invisible Americans,” adding that she advocated, “Government of the people, for the people, by the people, not just for the privileged few.”

The effectiveness of such appeals as an electoral tactic does not obviate the fact that this kind of rhetoric is completely bogus and cynical. Clinton, like all of her fellow Democratic and Republican candidates, is a representative of the class of millionaires and multi-millionaires who dominate US political and social life.

The Democratic Party has been for many decades the favored instrument of the ruling elite in times of widespread economic distress, employing populist demagogy to one degree or another to focus public anger on particular companies or industries, diverting the working class from any broader struggle against the profit system as a whole.

It is notable in the 2008 campaign that Obama, while constantly invoking the theme of “change,” has largely downplayed the economic populism embraced by Edwards in Iowa and now taken up by Clinton in New Hampshire. In his concession speech Tuesday night, in a typically vague formulation, he declared, “We’re ready to take this country in a fundamentally new direction,” without ever specifying what that direction was. He said little about the economic issues that are increasingly overshadowing the presidential campaign.