It often gets presidents elected. In 1992, then-candidate Bill Clinton said “It’s the economy, stupid”. Jimmy Carter also reportedly lost on the issue of the economy, in 1980. While four years later, again just reportedly at the time, Ronald Reagan won in a landslide.
Certainly you can’t argue with the results, if it got your guy in that election year. But my question is simply, Does the president really have that much to do with the economy?
I am not disputing he may have a little. After all, he nominates the federal reserve chairman. And that certainly has something to do with the economy. But my question simply is, does he, the president, really have as much to do with the economy, as voters often give him credit for? The two above examples are good models of what I am talking about.
However, due to a four year cycle, often a president gets unfairly credited for a good economy or unfairly blamed for a recession. But such things as reputation, words, taxes, tariffs, budget priorities do have a big impact.
Bill Clinton never ever said “It’s the economy, stupid.” That was a slogan James Carville posted in campaign headquarters to remind staff to stick to the message. It wasn’t even made public until The War Room documentary about the campaign came out years later.
The President can’t directly do much to control or direct the economy. But his policies and laws Congress passes can shift its direction enough to have large effects.
It was obvious to me in 1988 that Reagan’s economic policies would crash the economy. I thought that if a Democrat got elected to replace him, the new president would be blamed for Reagan’s fiasco and then the Republicans would take the presidency for the next 20 years. In fact, Bush won, got the blame, and Democrats have taken the popular vote six of the next seven times.
After the crash of 2008, a giant stimulus package was needed. What we got was large, and the stock market has more than recovered, but a much bigger one would have made it better sooner and helped other sectors. Both Obama and Congress can be blamed for that. Tax cuts and tariffs are currently sending the deficit spiraling and have the potential to erode jobs when the effects are fully felt. They are wholly the work of the President, backed by Congress.
Think of the President as setting the rules for the game. The players then operate on their own but some games are more winnable than others.
The Slate Political Gabfest had a lengthy discussion on exactly this topic on Thursday, in the context of, “Does Trump deserve any credit for the current state of the economy”.
The answer was ‘a little’, with lots of caveats. I think John Dickerson made the most salient point in that some elements of the business community will feel optimistic and make certain decisions just from “their guy” getting elected, irrespective of whatever he actually does. Another point was that actual measures being taken, such as various forms of deregulation, may have a positive short-term impact and then hurt us later on.
In any case, I have no doubt that if Hillary Clinton had been elected, we’d be hearing a lot from conservatives about how she had no right to take any credit for a good economy. It was all the foresight and wisdom of the GWB administration, and only now coming to fruition. But with Trump in office, it’s of course all due to him.
In 2008 while Bush Administration policies can be blamed for not dealing with the housing bubble, Bush himself at least did not get in the way of the experts dealing with the crisis, and stood against his party in doing so. You have to give him some credit for that. When the next one comes we may not be so lucky.
Specially when one remembers that we now have a president that does have plenty of experience dealing with many business bankruptcies where he and his family still come ahead when the end takes place.
The general consensus opinion seems to be that presidents do not have much effect on the economy. That certainly does not stop them from taking credit for a good economy any chance they get (they all do that) and shifting blame if the economy is bad. That is not to say they have no effect, just that their power over it is pretty limited.
In the end, as the figurehead of the government, the people will lay good or bad economic news at the president’s feet.
Now a President that thinks “trade wars are easy to win”, unilaterally goes to renegotiate global treaties (NAFTA, WTO, etc), starts trade wars that escalate, well then I think we can say the President can have quite a large negative effect. And should own it, too!
A President has very little effect on the economy. Monetary policy is controlled by the Fed. The president appoints the Fed Chairman and some members of the board, but for the last 38 years the Fed board has been very independent and reflects the consensus of macroeconomists.
Fiscal policy is controlled by Congress and most Presidents have not been politically skilled enough to lead Congress and their influence is just around the margins.
Regulatory policy is controlled by the executive branch but within limits set by congress and it is very slow to change. The number of regulations is so huge that the marginal impact of the regulation changes over one term can’t have a huge effect in an economy as big as America’s.
The focus on the president is just an atavistic instinct left over from the time when people thought that if there was a drought it was because of the king.
True. Too many people are far too ignorant of how economies work to understand anything other than “the economy is good/bad right now” and “______ is the President.”
So, when the policies of this President and his lackeys in Congress cause the economy to crash in 2021-22, people will no doubt blame the Democrat elected in 2020, just as many blamed Obama for the trainwreck he inherited in 2009.
I don’t think most people were ornery about the bailout on the grounds that it wouldn’t be efficient ; rather it was the “unfairness” of ostensibly rewarding the very people who caused the crisis in the first place and the moral hazard it established that people took issue with. And to his credit, Obama at least took some steps to rein in the banking industry and avoid a repeat of the “fuck it, we’re too big to be let fail !” fiasco.
Of course Dodd-Frank was recently drawn and quartered and dingoes have been appointed to head as many baby-safety related departments as could be thought of ; so all bets are back on now…
Initially, the president has little impact on the economy; it’s rather the cumulative effects of hiring decisions and policies on everything from central banking (interest rates and lending), treasury policy, taxation, regulation enforcement, and trade. In the first 12-24 months, the incoming president might have some impact but he’s probably still dealing with whatever his predecessor left behind and the economic circumstances of the day. But over the course of 4 years, and certainly over the course of 6 to 8 years, the president is going to have a profound economic impact on the economy. Congress is a factor, and then there is, of course, the economic situation of the day. But yes, the president does have a lot to do with the economy.
Generally the president has the most power in the first two years of his tenure. They have the strongest mandate and are the most popular right after their first election usually. The president’s party generally loses alot of seats in the first midterm election so he has much less power to get things through congress. Most of the time a president gets one big domestic accomplishment their first year and then struggle. Clinton had a stimulus package, Bush had No Child Left Behind, Obama had Obamacare, Trump had the tax package. Reagan is the only recent president who had a significant domestic accomplishment in his second term, the tax reform bill.
I would also submit that the public is susceptible to messages about the health of the economy. In other words, in spite of the objective health of the overall economy, a skillful politician who is not an incumbent but is running for office will sell the notion that the economy is in bad shape (and that they will fix it.) Once the politician gets elected they can pivot to talking about how the economy is doing better now!
IMHO the perception of how the economy is doing is more important that how it is actually doing. Barring a stock market crash, massive layoffs, and and actual bread-line depression, people really don’t know how the economy is doing and rely on leaders telling them.
The perceptionof the economy is also very partisan. Republicans are much more likely to say that the economy is good and they are confident than Democrats and the reverse was true when Obama was president.
Just another example of how partisanship rots the brain.
The cite says the difference in economic outlook is even greater. Which all makes sense without having to blame rotten brains. If you are a liberal, and a liberal is running the country, you tend to think the economy must be doing pretty well and will get even better.
