“Are you better off than you were four years ago?” That’s the question Ronald Reagan famously used in 1980 to end Jimmy Carter’s hopes for a second term as U.S. president. And that’s the question Republicans Mitt Romney and Paul Ryan want on your mind going into November.
But four years ago, George W. Bush was still president. So perhaps a better question would be, “Are you better off than you were three years and eight months ago?” That brings us back to the beginning of February 2009, the first full month of Barack Obama’s presidency. Since then, the economy has experienced a net loss of about 316,000 jobs, or -8,000 jobs a month. Real weekly wages are up by 0.6 percent. The Standard & Poor’s 500 Index has risen 74 percent.
Yet it’s a little odd to blame Obama for the first few months of his presidency. After all, he entered office amid a convulsive economic downturn. Blaming him for, say, the 724,000 nonfarm jobs lost in February 2009 is like blaming firefighters for the damage done by a blaze while they’re getting out of their truck.
Romney, the Republican presidential nominee, agrees. “We ought to give whichever president is going to be elected at least six months or a year to get those policies in place,” he told CNBC’s Larry Kudlow in July. So let’s extend one year to Obama for his policies to take effect. Now the clock begins at the start of February 2010. Since then, the economy has added, on net, about 4 million jobs, an average of 132,000 jobs a month. Real weekly wages have risen by 1.5 percent. The S&P 500 has risen 34 percent. Overall, that’s a better record.
According to most political scientists, however, that’s not the record voters care about. Instead, voters tend to focus on the year leading up to the election. Just ask George H.W. Bush or Carter, both of whom had positive economic records over the full course of their presidencies but were plagued by economic trouble during their reelection campaigns.
With a couple months to go before this November’s election, we can get a rough idea of what Obama’s election-year record will look like by measuring the 12 months that ended July 31 (which is the most recent month for which we have jobs data). In that year, the economy added about 1.8 million jobs, or an average of 153,000 jobs a month. Real weekly wages rose by 0.6 percent. The S&P 500 rose 12 percent.
All this factoring, however, perpetuates the myth of the imperial president. It not only assumes that everything that’s happened in the economy is a result of the president’s policies; it assumes that lawmakers quickly and smoothly bend to the president’s will, translating his preferences into policy. But no one who has spent time in Washington these past few years would use the words “quickly and smoothly” to describe the workings of the U.S. Congress.
The reality is that the president is not a dictator, and the policies in place today only partially reflect his preferences. Obama wanted substantially more stimulus over the past two years than he was able to tease out of Congress. If it had been up to the White House, Congress in 2011 would have passed the American Jobs Act, which most economists think would have produced substantially better job growth in 2012. Similarly, Obama would have preferred to sign a clean debt-ceiling increase in 2011 rather than see Congress use the occasion for a protracted budget fight, creating economic uncertainty that derailed the economy. And the White House would have much preferred a euro area that didn’t spend the past three years roiling global financial markets by creeping repeatedly to the brink of collapse.
If Obama had been able to control just these three situations, it’s reasonable to assume that the economy would have added millions more jobs under his administration.
Yet even if we accept that the economy would have performed better under Obama’s preferred policies, that doesn’t tell us how it would have performed under Romney’s policies. This, of course, is the crucial counterfactual: Would the Republican approach have created more and better jobs?
It’s hard to say what the Republican approach would have been. Romney supported some kind of financial rescue along with some kind of fiscal stimulus, but he has never said exactly what kind. He has given conflicting statements about bailing out the auto industry. At one point, Romney said that without Obama’s intervention, “things there would be better,” but at another point, his aide Eric Fehrnstrom said Romney’s “position on the bailout was exactly what President Obama followed.” On rescuing the housing market, Romney’s position has flipped from “Don’t try to stop the foreclosure process” to “The idea that somehow this is going to cure itself by itself is probably not real.”
Absent the details, it’s impossible to come up with even a vaguely credible estimate of where a “Romney economy” would be today, and that’s before you factor in the inevitable negotiations with Congress.
Even if you could answer all that, how valuable would that knowledge be? The past four years presented an extreme set of problems. The president had to save the financial system, break the economy’s free-fall, manage a global recession, decide whether to intervene in the U.S. auto industry and make a range of momentous decisions that few presidents have ever confronted.
The next four years will present very different challenges. It’s possible that Obama was the right president for the past four years but would be the wrong president for the next four. Or that the past four years would have been the right time for a private-equity genius but the next four years are the wrong time for someone who has taken Grover Norquist’s pledge never to raise taxes.
Which suggests that the question “Are you better off than you were four years ago?” is fundamentally mistaken. If you’re not better off four years after a fire destroyed your home, that doesn’t mean the fire department did a bad job. Even asking, “Are you better off today than you were three years ago?” is a largely frustrating exercise, riddled with questions about the counterfactual.
But there is a clear question for voters to ask, and to vote on: Which ticket will do the most to make you better off four years from now?