Greetings, and thanks to Lynne for allowing me to do a little posting here at Knowledge Problem.
Pundits, politicians, and friends of mine have been picking over the exit poll data that have shown a remarkable turnout among core Republican voters, especially evangelical Christians. A lot has been made about how this election fundamentally changes the way the Democrats have to do business because they have to reach out to voters on values rather than rely on their core issues.
While that may be true, I think we’ve really all lost sight of something important here. Bush won an election he SHOULD HAVE WON by a slightly lower margin than history would suggest. The economy mattered, just like it has for 132 years, in presidential elections. Don’t kid yourself and buy into this “the economy is awful,” crap. Unemployment is at historical lows, inflation is on life support, GNP growth has been great. By any measure, we’re in great shape compared to the economies our fathers, mothers, grandfathers, and grandmothers faced. In virtually every election since the end of the Civil War incumbent presidents in comparable situations have won re-election.
As a background for this check out this article I did 5 years ago on the impact of the economy on U.S. presidential elections since 1872 for Political Research Quarterly. For those of you with lives who choose not to read it, the basic gist is easy – the economy has mattered since 1872 because politicians have campaigned on the economy and voters have linked economic performance to political activity.
I’m libertarian and the assertion that politicians can “manage” the economy bugs me. But I don’t deny political reality. Politicians have spent a lot of time convincing voters that they can create jobs and “grow” the economy. I certainly agree that they can do a lot to kill off economic growth, but I take issue with the conventional view that economic prosperity is linked to government management of economic policy.
However the broader point I’d like to make is that 2004 represents a return to the historical patterns that we did not see in 2000. You may remember that forecasters in political science got a lot of flak in the press because they got 2000 wrong. Most models, including mine, predicted a healthy Gore victory in the popular vote, which was quite small. I should say right now that I’m not a forecaster per se. My interests have always been in the underlying theory of why voters use the economy, not so much what we can predict on election day from that. Because that’s the case I argued to several journalists that 2000 might have been the beginning of a fundamental change in how voters react to the link between presidents and the economy.
Take yourself back 6 years. Clinton was in the middle of his term. The economy was humming along, and Clinton was in the midst of a huge scandal regarding his, well, appetite. The Republican Congress was preventing him from either “managing” the economy or passing any large spending programs. The guy who most people pointed to for the success of the American economy was Alan Greenspan, who is not elected. In short, I thought it was quite possible that voters would have looked at the 2000 election as a fundamental break from the notion that actively managed fiscal politics mattered for economic growth. We had, I thought, seen the emergence of a monetary model of politics where voters would no longer reward and punish incumbents based on growth and prosperity.
Now let’s think about the past four years. Any illusion that the government is not trying, aggressively, to manage the economy is gone. Bush has laid claim to the legacy of FDR and LBJ by taking full responsibility for economic growth three ways. His tax cuts and huge increases in domestic spending are fundamentally Keynesian and reinforce the idea that the government can spend it’s way out of this “soft patch.” Second, he’s started huge transfer programs to select groups to help “save” jobs. Third, he’s gotten us into a war which typically spends a lot of money and creates a lot of jobs. And he talked about all three a lot during the campaign. In short, any monkey can now see a link between government policies and the economy, and what did we see last Tuesday? An incumbent, running on a relatively strong economy won re-election because he took credit for successfully managing the economy. Sure he said we need to get more job creation, but let’s be serious, this is not 1980.
In summary I think Democrats should probably take it easy on themselves and realize that this election was a long shot from the beginning. Iraq is no Vietnam, and GNP growth has been very robust. However the electoral map they face gives me pause. Republicans are clearly in a much better position in the long run. They’ve stolen the Democrats monopoly on spending money domestically and have a strong religious base. But to me it’s an open question what a recession will do to the base. Furthermore, how long will fiscal conservatives stay with the GOP if we get four more years of oceans of red ink? This much I do know, the economy still matters a lot, and that ought not to be lost on both sides in 2008.