Cuts vs. growth
The political exigency of cutting government spending, which drove the debt-ceiling negotiations that took the country to the brink of default, runs exactly counter to what many economists say would help boost economic growth in the short run.
A look at the latest U.S. employment figures.
So the president is left arguing for measures that could help around the edges in the near term — such as extending the payroll tax cut and emergency unemployment benefits that are set to expire in December.
One worrisome sign for Obama: In only two presidential election years since the early 1950s have the consumer confidence indexes been as low as they are today. Those two years were 1980 and 1992, which also happen to have been the only two when an elected incumbent was defeated.
Choices and correlations
Of course, every election has its own set of issues and personalities — and in the end, every one is a choice between two candidates.
But scholars have found correlations between a president’s economic performance and his electoral one.
One that has gotten wide credence among political scientists is the so-called “Bread and Peace” model designed by Douglas Hibbs of the University of Gothenberg in Sweden, which finds that a president’s reelection prospects are tied to growth in disposable income and the number of military casualties resulting from U.S.-initiated foreign conflicts.
“If I had to bet today,” Hibbs said, “I’d bet that he will lose.”
Ray Fair, a Yale University economics professor who has developed another well-known model for predicting election outcomes, has also grown more pessimistic about Obama’s prospects.
“He’s got to get going pretty quickly,” Fair said. “Other than working on the payroll tax, he’s probably not going to be able to do much between now and the election to affect the economy, as a practical matter.”
Wall Street ended flat on Friday, which actually was good news, given its swan dive the day before. And the government announced some more hopeful signs: a dip in the unemployment rate and the news that the economy had added more jobs than it had since April.
But even as Obama pointed to that slight break in the clouds on employment, he noted: “We have to create more jobs than that each month to make up for the more than 8 million jobs that the recession claimed. We need to create a self-sustaining cycle where people are spending, and companies are hiring, and our economy is growing.”
And for his own sake, he’d better do it soon.
Staff research editor Alice Crites contributed to this report.
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