The Magazine

The Economy and the Election

If the past is any guide, Bush looks formidable.

Apr 12, 2004, Vol. 9, No. 30 • By JAMES PIERESON
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These factors, significant as they are, are nearly matched in importance by the simple fact of incumbency. According to this model, an incumbent running for reelection starts out with an advantage of about 4 points, other things being equal. Obviously, an incumbent has many advantages: He has already won an election; he carries the trappings and symbolism of the presidential office; and he can control the agenda to a certain degree. Incumbency alone may explain why Clinton won reelection in 1996 with a modest economic record, but Gore lost in 2000 with a stronger economy.

WHAT, THEN, does Fair's model have to say about the outcome of this year's presidential contest?

The news is, in fact, very good for President Bush. In a note posted on his website (fairmodel.econ.yale.edu) on February 5, Fair predicts that President Bush will receive 58.7 percent of the two-party vote in November, more than enough for a comfortable victory. This prediction is based on a forecast of 3.0 percent growth in the first three quarters of this year, an average inflation rate of 1.9 percent over the course of his term, and three quarters of economic "good news" through the first quarter of 2004. Since growth is forecast to be strong during the second and third quarters as well, the president's hand will only be strengthened (in terms of this model, at least) as we move closer to the election.

In this case, the conclusions from the statistical analysis accord with those of basic common sense. Incumbents riding a strong economy are always difficult to unseat, provided that they run aggressive campaigns highlighting those favorable conditions. An incumbent president in wartime has other factors working in his favor. The polls suggest nothing like the margin for President Bush that the model predicts, but it is not out of line to expect a fairly decisive victory for the president in November.

Democrats, of course, will point to weak growth early in his term, along with job losses, but these attacks are likely to lose their force as favorable economic news is reported during the campaign. The president, meanwhile, will be able to point to solid economic growth that began in mid-2003 and is expected to continue at least into next year. "Stay the course," he will argue, much as Ronald Reagan did in 1984, stressing that his policies are working.

Yet we know that economic conditions alone rarely decide presidential elections. There is, obviously, the crucial issue of terrorism and the war in Iraq. It is possible to envision both good news and bad news on these fronts. The handover of sovereignty may help stabilize Iraq; more leaders of al Qaeda may be captured; we may be spared further terrorist attacks on our soil. The public might then reasonably conclude that the president's policies are working--in which case it would become all but impossible to defeat him. Still, one must entertain the possibility that events will move in the other direction, in which case the foreign policy questions may overwhelm the economic factors in electoral importance.

Nevertheless, it seems unlikely that the economy will prove an impediment to George W. Bush's reelection. The flurry of attention focused on the export of information technology jobs is but a diversion from the big economic picture, which looks to be highly positive, particularly in light of the March jobs report. Given current forecasts and assuming a sharply focused campaign that highlights recent economic gains, President Bush should be able to use the economy as an asset in his bid for reelection.

James Piereson is executive director of the John M. Olin Foundation.