Who will get the ‘Recovery Presidency’?
Julie Schmit reports that the housing market is at, or very near, its bottom. After falling by 9 percent last year, single-family housing starts are expected to jump by 37 percent in 2012. Prices could still fall a bit, but by 2013, we should be in a real housing recovery.
In a play on the administration’s widely mocked “recovery summer,” Matt Yglesias has dubbed this period the “recovery winter,” arguing that the economy is making a real turn toward a sustained recovery. I’m more skeptical. I think we’ll see headwinds in 2012 that will keep a lid on the recovery, at least for the first half of the year. But there’s no doubt that the pressure toward a recovery is building in the American economy. The next president, whoever he is, will enjoy a “recovery presidency,” and so too will his party. And that makes the 2012 election really, really important.
To rip a little from this column, the pat story behind FDR’s victory and the ensuing decades of mostly Democratic dominance is that the president got the policy right and the politics followed. Whatever you believe about FDR’s policies, a more international perspective will disabuse you of the notion that the golden age for the Democratic Party was an ideological triumph rather than an accident of history. As Larry Bartels, a political scientist at Vanderbilt University, has written, globally, the pattern is clear: Whichever party was in power when the Great Depression hit was booted out of office, and whichever party was in power when the global recovery took hold reaped huge political benefits.
“In the U.S.,” wrote Bartels, “voters replaced Republicans with Democrats and the economy improved. In Britain and Australia, voters replaced Labor governments with conservatives and the economy improved. In Sweden, voters replaced Conservatives with Liberals, then with Social Democrats, and the economy improved.
“In the Canadian agricultural province of Saskatchewan, voters replaced Conservatives with Socialists and the economy improved. In the adjacent agricultural province of Alberta, voters replaced a socialist party with a right-leaning funny-money party created from scratch by a charismatic radio preacher ... and the economy improved.
“In Weimar Germany, where economic distress was deeper and longer-lasting, voters rejected all of the mainstream parties, the Nazis seized power, and the economy improved. In every case, the party that happened to be in power when the Depression eased dominated politics for a decade or more thereafter.”
The 2008 economic crisis was not nearly so deep as the Great Depression — in part because of an aggressive policy response — and so the recovery is not likely to be so remarkable, nor the political benefits so dramatic. But they’re still likely to be present. And because a recovery is likely within five years, whichever party wins the White House in 2012 is likely to get the credit, and so too will its policy agenda.
You can see how this will work. If Romney wins the presidency and the economy begins to rebound, Republicans will argue, and America’s experience will seem to show, that they were right all along: The stimulus was useless and the regulatory uncertainty the Obama administration created with its health-care plan and its talk of cap-and-trade and all the rest kept businesses from investing. Of course, if Obama keeps the office, that argument will be largely discredited, and he’ll be able to make the case that he and his party steered the country through incredible choppy waters despite relentless obstructionism from the Republicans — oh, and in 2014, he’ll also give 32 million Americans health-care insurance, just another little side project he got done while saving the economy.