A little while ago, I had a very interesting discussion with one of my doctors (let’s just call him “Dr. D”). Dr. D says the president really has very little control over the economy. Oh, sure, elections are won and lost over the economy. And the president usu. tries to do what he can for the economy (cf. Pres. Obama’s failed stimulus package). But generally, the economy moves of its own accord.
I obviously don’t have a cite to back this one up. But rest assured, Dr. D is a very intelligent, well-educated man. And so I judge him to be a very reliable source.
The US GDP per year is at about $14 trillion. The US Government budget is about $3.7 trillion, or about 26% of the US GDP.
Now assuming that all checks and balances of the US Government are apportioned equally, and only the Executive and Legislative branches of the government have any particular control over the budget, then the US president controls half of the budget. That is to say, the President holds reign over 13% of the US economy.
But in practical terms, even the president and the legislature only have so many moves they can make. They would have a damned hard time telling the nation that they were just shutting down the military, the post office, etc. and sending everyone home. But on the other hand, there’s some large amount of impact the government has which isn’t even budgetary. Diplomatic pressure on China, since Nixon, to promote Capitalist markets and fewer human rights violations have opened up Chinese markets and Chinese labor to the US, perhaps saving us trillions of dollars over the last few decades. Given poor choices in diplomats or poor choices from Washington itself, none of that may ever have happened.
If you do a little searching, you’ll find we’ve done this topic several times before.
That’s a ridiculously facile analysis. Most of the budget is set and can’t be changed. And although the president submits a budget to Congress, it’s still Congress that has to approve it. And remember that all spending bills have to originate in the House.
I don’t know how to quantify how much control the president has over the economy, but perhaps the most significant thing he does that affects the economy is to appoint the Fed Chairman.
ETA: This post was written before I saw Sage Rat’s second post.
Depends on what you mean by control. If you mean “the GDP will grow 3% next year” then no. But the President - with the Congress and the Chairman of the Fed - has an awful lot of influence. Imagine if there was a president in office who was paranoid about inflation, and he convinced the Fed Chairman to raise interest rates in the middle of a recession. You’d see influence then. Clinton and company resolved several crises that could have been disastrous for the economy. Bush and Greenspan, through inaction, led us to the brink of collapse, but Bush and Paulson and Bernanke kept us from falling over the edge. This doesn’t have a lot to do with the details of spending, and the tools are pretty blunt, but they do exist.
Of course even when you consider all of the modern economic tools available for a President, the fact is that some Presidents are just going to have fewer options to affect the economy than others. For weal or for woe, Clinton simply did not have as much control as, say, Reagan did who had less than Bush.
The President is just a popular lightning rod for economic blame/credit because most people have a facile understanding of government and need a figurehead to channel their lack of social imagination. It’s never ‘Clinton’s appointment of Greenspan combined with a tech boom caused by Gingrich/Gore’s Internet policy along with a deadlock in new spending/tax cuts caused by a split Congress grew the economy higher’ it’s ‘Clinton’s Economy’. But that’s just the way things go, you know.
And it doesn’t help that various presidents and other pols like to announce: “I created ‘x’ number of jobs.” When the truth is that “x” number of jobs happened to have been created when they were in office.
The government has actually very few levers it can pull to tune the economy. All the levers are subject to secondary consequences, unintended consequences - and they aren’t exactly finely tuned levers to start with. And that’s the GOVERNMENT. Thats the President, Congress, and the Fed.
There is money supply, interest rates, government spending and tax policy. That’s it. Those are your tools as President. Now get enough in the House and Senate to agree with you on how to wield those tools - you need them for both tax policy and government spending, get the Fed to do what you want (you appoint them, but they are suppose to be independent) on money supply and interest rates, and controlling the economy should be a piece of cake. Oh, you also get your own personal charm and a pretty big podium.
I’m largely in agreement with the idea. The way we think about the economy is one of the things that’s changed completely since our country was founded. Back when, say, Thomas Jefferson was President, nobody expected him to “manage” the economy. In fact, the very concept of “the economy” barely existed in people’s minds back then.
Over time, the amount of power that the government has in fiscal affairs has steadily increased. However, I see little evidence that a President can actually influence the economy as a whole.
Who the president appoints as Cabinet secs, and the agendas they bring to the table (especially the more regulatory-oriented ones) has a huge effect on the economy, especially job creation. Not as much as tax policy, but it’s close.
I’m not so sure that tax policy has a larger effect than regulation. Of course, at some high level taxes will have a larger effect. Regulations can have many unforseen consequences that may not be easy to measure. Added expenses will cause job losses. Douglas Elmendorf claims Obamacare will cost 800,000 jobs.
Well, I would just add in conclusion (because I forgot to put it in my OP:)), that a couple of days ago, I heard Ben Stein say on the O’Reily Factor on Fox News the exact same thing (that the Pres. has little effect on the economy). Now I don’t mean to make appeals to authority my only argument. But… You know, besides being intelligent and well-educated too, Ben Stein is also a diehard conservative. So he would have nothing to lose by being truthful in this regard.
The president can propose to his party that they follow his lead . But not only do they not have to, but the Repubs will do everything they can to prevent him from succeeding. They have control of the house and they will filibuster in the Senate. That is where laws are passed and modified. The cabinet is a bunch of glorified clerks with no real power.
If only we could look to other countries and see if UHC was more or less expensive. Oh, wait, here it is: EVERY OTHER INDUSTRIALIZED COUNTRY IN THE WORLD HAS UHC AND PAYS LESS THAN WE DO FOR IT.
I agree with Voyager. The President has influence not control. The economy is like an elephant and the President is like its trainer. He can crack his whip or offer up some peanuts but ultimately the economy will decide whether or not it wants to do the trick.
If only the question were that simple. Is that your only metric? If you stop and think about it for a picosecond you would realize that cost alone means nothing.