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Old 02-05-2020, 12:06 PM
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How much credit/blame does any given president deserve for the economy?


People seem to vote for the economy. When it's up, they like the president. When it's down, they don't. The president has some influence over some aspects of the economy, but the economy is so complex that it is hard to attribute changes to any one particular cause. The Fed exercises some control over inflation, but they are a politically independent agency. Some policies, like tariffs, can affect trade and therefore the economy as a whole, but not the broad trends.

The economy has been improving for about 10 years or so, starting the turnaround under Obama and continuing the trend through the Trump administration. Does Bush deserve the blame for the turndown? Does Obama deserve credit for a turnaround? Does Trump deserve credit for keeping a trend going? Or would all of these things happened regardless of who was president?

I am defining health of the economy broadly as GDP growth and unemployment, not so much the stock market.
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Old 02-05-2020, 12:30 PM
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If the president does something direct and overt that causes a severe economic crash - such as launching a totally unneeded war against Iran - then he gets direct blame.

If it's something fairly out of his control, such as a global recession that inevitably pulls America down with it, then he should get off light.

As for the economy picking up steam, he can give it a sugar rush of tax cuts, etc. that will only temporarily stimulate it as a "high." Since that is only good in the short run, I'm not sure it is worth praise.
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Old 02-05-2020, 02:06 PM
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More or less the Prez can ruin the economy but he cant make it better.
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Old 02-05-2020, 02:41 PM
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Originally Posted by Velocity View Post

As for the economy picking up steam, he can give it a sugar rush of tax cuts, etc. that will only temporarily stimulate it as a "high." Since that is only good in the short run, I'm not sure it is worth praise.
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Originally Posted by Dr. Deth View Post
More or less the Prez can ruin the economy but he cant make it better.
Agreed. The government does not lead the innovation that generates economic growth. The government can make their policies more or less accommodating, but that has a limited impact on the overall economy. Regulations can contain some economic excesses that would have otherwise occurred, and keep more of a fair playing field so that people have confidence in the economy. But that is the whole government, not just the President.

The economy has regular cycles, and these can be interfered with by being accommodative or restrictive, but it just means when the cycle returns it will be more extreme than it would have otherwise been.

I wouldn't mind seeing a market downturn this summer, just to take some of the wind out of someone's sails.

Last edited by Mikemike2; 02-05-2020 at 02:42 PM.
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Old 02-06-2020, 10:46 AM
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A president can have alot of impact on the economy positively and negatively but most don't. A president can work with Congress to raise or lower taxes and spending. A president can negotiate trade agreements, can set regulatory policy, and can nominate and support people to the Federal Reserve who are good at monetary economics.

Most of those things require him to go through congress to get what he wants so a president either has to have a compliant congress or be uncommonly good at negotiations. The biggest impact on the economy is through the Federal Reserve but a president has a very limited scope of people to choose from, and the effectiveness is generally more a reflection of the state of monetary economics than the right person being chosen.

Most presidents nibble around the edges of policy and have almost no effect. Trump has done a little with tax policy, a little with trade policy, and a little with regulatory policy. The only impactful thing is likely to changing the corporate tax rate to be more in line with the rest of the world.

The last significant president was Reagan, who supported the Fed through ending inflation, passed large changes in tax rates, and then worked with Congress to pass the last significant tax reform.
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Old 02-06-2020, 11:15 AM
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Some of it is circumstance and luck, either good or bad. Clinton was president during the "dot com" boom, and that helped the economy until it bottomed out after he was gone.
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Old 02-06-2020, 11:20 AM
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Deserved or not, they get to take the credit, and will always be given the blame.
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Old 02-06-2020, 11:21 AM
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I'm assuming it'll take a few years for their policies to actually have an impact. So a lot of a presidents term is just dealing with the last president's policies.
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Old 02-06-2020, 11:54 AM
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Coincidentally I got this in my email this morning:
Quote:
Originally Posted by Freakonomics Radio
This week's Freakonomics Radio episode is called "Does the President Matter as Much as You Think?" We asked this same question nearly a decade ago. The answer then: probably not. But a lot has changed since then, and were three years into one of the most anomalous presidencies in American history. So once again we try to sort out presidential signal from noise. What we hear from legal and policy experts may leave you surprised, befuddled and maybe infuriated.
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Old 02-06-2020, 01:50 PM
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Some of it is circumstance and luck, either good or bad. Clinton was president during the "dot com" boom, and that helped the economy until it bottomed out after he was gone.
I don't know how to research this but I always suspected that Reagan also benefited from the economy's leap in productivity levels as a result of small businesses converting to computerized systems. That helped cover for him doing much the same as Trump is doing, propping a mediocre economy up with the nation's credit card.
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Old 02-06-2020, 08:03 PM
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The president has a lot of potential influence over the economy. But the real test of an administration's competence at managing the economy is not when things are going well and otherwise normal; it's whether they can foresee potential economic trouble brewing and, most importantly, the decisions they make in response to that situation, as well as the decisions they make if their worst economic fears come true.

As an example, it's not really fair to blame Bush for the conditions that actually led to the Recession of 2008/9, but it's absolutely fair to conclude that his team didn't realize what was happening when the recession started in 2007. The bank failures in the summer of 2007 should have been flashing and blaring alarm sirens, and it was only when Bear Sterns and Lehman Bros collapsed (more than a year later) that they realized we were in the middle of a crisis. Bush's team gets an F in that sense.

Having said that, they responded pretty well once they realized what they were dealing with. They led a bipartisan response and injected capital into the financial system just in time before the crisis reached the point of no return, doing so over the objections of a faction of House Republicans who would become the forerunner to the Tea Party, and ultimately, the part of Trump.

Last edited by asahi; 02-06-2020 at 08:04 PM.
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