More on Obama’s reelection chances

November 10, 2010

Megan McArdle says I am being a tad too pessimistic about Obama’s reelection chances if unemployment is at 8.5 percent or higher two years from now:

I’m not quite as pessimistic as he is about Obama’s chances, but if unemployment really is at 8.5%, I have to think that he will at the very least face a really tough campaign battle–yea, even if Sarah Palin is his opponent.  Unemployment was 7.7% when he took office.  I think he’s going to have a hard sell if four years later, it’s almost a full percentage point higher.  If we put the car in D, how come it’s not going anywhere, Mr. President?

It will be particularly hard if it’s not changing fast.  Unemployment was much higher under Reagan, hitting almost 11% at its 1982 peak.  But the rise was short and sharp, the decline equally dramatic; by June 1984, unemployment was back down to 7.2%.  We’ve already spent as many months above the 9% unemployment line as Reagan did, and it doesn’t look ready to drop below that level in the next few months.  Reagan was dealing with a pure monetary recession:  Volcker raised interest rates dramatically in order to get inflation under control, and as soon as he loosened his iron fist, the economy bounced back.  This recession is vastly more complicated, with fiscal, regulatory, and other problems that still need to be worked out.  I would be very surprised if we saw any sort of dramatic bounce in the next eighteen months–and the next eighteen months is what matters, because most political analysts I’ve talked to think that after about June, an improving economy doesn’t help the incumbent.  George H.W. Bush had a fabulous third quarter, economically speaking, and still lost to Clinton.

That doesn’t mean that Obama can’t get re-elected if unemployment is 8.5%.  But I don’t think any president since Roosevelt ever has–and if unemployment hadn’t hit nearly 25% under Hoover, I doubt Roosevelt would have won re-election either.  If I were the Obama administration, I’d be praying like hell for something in the low sevens.

Megan is absolutely right that recessions after financial crises tend to be nasty beasts. That argues against a 2011-2012 boom like the one Reagan had in 1983-1984 when GDP growth averaged 6 percent and the unemployment dropped by more than three percentage points.  There have also been some polls showing Obama trailing possible GOP contenders like Romney and Huckabee. Then again, Intrade still gives Obama a near 60 percent chance of a second term. And I have yet to meet the GOP consultant whose best-case scenario is anything much better than an extremely close contest.

One comment

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This is just my general opinion — general meaning there are so many factors who knows — opinion speaks for itself.

There are three basic scenarios for 2012.

Employment above 9% …
In this case, Obama is toast. The democrats are toast. And the higher it stays above 9% the broader the bloodbath will be.
Seriously, if unemployment is 9.6% and the republicans think they will benefit from this anger they are mistaken.
The bloodbath will be hard, vicious and all encompassing and you will probably see more than a few Independents running and winning.
Interesting thing is the higher the unemployment the better for Mitt Romney.
Of all candidates Dem or Rep, he is the only one with the business chops for turnarounds … and successfully pulled a turn around in MA.

The conversation will be all about the economy. And if it is all about the economy. Obama has lost. because truth is he failed.
It doesn’t matter who caused the economy, who stalled, who worked, who didn’t.
As CEO it is his job to fix it regardless of the circumstances. And if the dialogue is about how/why he wasn’t able to fix it, he is fired.

Employment above 8% …
Here Obama has a who knows chance. Part of the who knows is whether it is closer to 9 or 8. Part of it is whether it is Romney/Huckabee ( or Christie? ) or whether it is a Gingrich/Palin/TP choice.

Here the convo will be about the progressive agenda ( HCR ) as well as the economy.
But the economy will be “our methods would make it FASTER recover”.

Under 8% …
Economy will be off the block.

But I am not sure Obama is “safe”.
The republican candidate will run on the platform “Elect me and give me 3 more senators. And we will repeal HCR and every other progressive thing this man has shoved down our throats.”

Simple clean and clear.
This is why Obama can NOT pull a Clinton.

See in 1996, they couldn’t run against HCR. It failed.
HCR will be the gift that keeps on giving until the people actually speak in a way that can not be spun to claim “Oh they are just scared.”

I personally think the last is the best. Not just because millions more would be working.
But seriously … if unemployment drops down to a reasonable ( from here ) 7.6% and Obama loses the election anyways?
Then since the dialogue was … elect me and we will repeal the Obama agenda.
Then the progressive agenda is clearly repealed. And Progressives will need to regroup, think about how to convince voters to change their minds, etc.

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