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Reagan's first term offers measuring stick for Obama

By Dan Balz
Washington Post Staff Writer
Sunday, August 22, 2010; A02

Throughout this long year, President Obama's advisers have sometimes looked to Ronald Reagan for comparison and inspiration. If the Gipper could survive a deep recession, low approval ratings and an adverse midterm election in his first two years and win reelection handily two years later, then Obama could easily do the same, they reason.

Obama's presidency has looked like Reagan's in some broad ways. Both men succeeded unpopular presidents of the opposite party. Both offered big and bold plans -- Reagan with massive tax cuts, Obama with a massive stimulus package and national health care -- that set the country in a new direction. Reagan's goal was to shrink government. Obama's efforts have enlarged government.

Both presidents were forced by events that preceded their elections to contend with economies in serious trouble. Both saw the unemployment rate rise sharply during their first two years in office -- under Reagan, the rate hit 10.8 percent by November 1982 -- and both saw their approval ratings decline as the numbers of jobless grew.

For much of this year, Obama and his team have taken some solace from the fact that Reagan's approval ratings were even lower at comparable points in his presidency. That is no longer the case. In the past week, Obama has hit a new low in his approval rating, according to Gallup's daily tracking. It now stands at 42 percent, virtually identical to Reagan's in August 1982. (Both Bill Clinton and Jimmy Carter dipped below 40 percent during their second year in office.)

Republicans suffered significant losses in the House in Reagan's first midterm election, giving Democrats an even larger majority. Most Democrats are braced for a similarly bad night this November.

Vice President Biden told the Democratic National Committee on Friday that Democrats would retain their House and Senate majorities. "If it weren't illegal, I'd make book on it," he joked. Every independent projection, however, shows the House -- and possibly the Senate -- clearly in jeopardy at this point.

What then for Obama?

Alan Abramowitz, a political scientist at Emory University and author of "The Disappearing Center," said the most important thing to remember about a midterm election is that it indicates nothing about future elections.

"It doesn't predict either the next presidential election or the next congressional election," he said. "We won't really know what may happen in 2012 until we get into 2012."

Whatever the outcome in November, and whatever interpretation is placed on the results, the real question for Obama is what happens to the economy afterward. On that measure, comparisons with Reagan are discouraging for the current president.

The economy rebounded significantly during Reagan's third and fourth years in office. The unemployment rate declined, although not spectacularly. It was still at 8.3 percent in December 1983 and at 7.5 percent in August 1984 as the general election campaign was entering its final months.

More important, however, was the rise in gross domestic product, which experts say is a far more reliable political indicator. The U.S. economy experienced a growth surge in 1983 and 1984 that helped set the stage for Reagan's gauzy "Morning in America" ads and prepared the ground for his huge reelection victory.

The economy began to grow rapidly in the first quarter of 1983 and continued through the 1984 election. The quarterly increases were 5.1 percent, 9.3 percent, 8.1 percent, 8.5 percent, 8 percent, 7.1 percent and finally 3.9 percent in the third quarter of 1984.

Real disposable income, another politically sensitive indicator of the public's mood, also rose significantly during those two years. Larry Bartels, a political scientist at Princeton and author of "Unequal Democracy," noted that real income grew by more than 6 percent in 1984. "Is anyone forecasting that sort of growth in 2012?" he said.

No one is. To the contrary, the outlook for 2011 and 2012 is far more modest. The Congressional Budget Office said in its latest forecast last week that the pace of growth in the coming years "is likely to be slower than usual" compared with past recessions.

The report noted that recessions caused by financial crises linger longer because of the shattered confidence of consumers and businesses. It went on to state: "In addition, under current law, both the waning of fiscal stimulus and the scheduled increases in taxes will temporarily subtract from growth, especially in 2011."

Drawing a direct comparison to the growth rates of 1983-84, the CBO report projected growth of only 2 percent in 2011 and about 4 percent in 2012-14, with the unemployment rate falling to about 8.8 percent by the end of next year.

That signals trouble for Obama and his team. But they still have some time to adapt. Politically, the most sensitive period will be early 2012. "It's only what's happening to the economy in the year of the election that matters," Abramowitz said.

Growth rates this year have been better than those in 1982. But public confidence remains weak. Starting next year, Obama doesn't need growth rates of Reaganesque proportions, but he could be in serious trouble if the economy is not growing steadily and at a rate of somewhere between 3 and 4 percent by early 2012.

Lynn Vavreck, a political scientist at UCLA and author of "The Message Matters: The Economy and Presidential Campaigns," said Obama and his advisers will have to swallow any significant losses in November and quickly put those results in the rearview mirror. "The only thing they should be focused on is growth," she said.

But she added a caveat. If the president and his team conclude that the economy will not be growing at a politically safe pace -- clearly above 3 percent -- by early 2012, then they need to start thinking about finding some other issue big enough to build a reelection campaign around.

"They have to refocus the whole election off the economy," she said.

Obama enjoys one clear advantage, according to Abramowitz. The public is generally inclined to reelect a president whose party has just recaptured the White House. In the 11 elections for a president whose party had regained the White House, the incumbent won 10 times. The only exception was Carter in 1980, who lost to Reagan.

If Democrats lose substantial numbers of seats in November, Obama's advisers will probably take heart from Reagan's example, according to Bartels. But the recession this president inherited is nothing like the economy of Reagan's time, and the divisions in the country are, if anything, deeper and more virulent. Obama will need the economy to snap out of its slump far more robustly than current forecasts predict before he can feel confident about the road ahead.

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