For three decades, knowing the state of the economy was enough to know who would win. Yet here’s George W. Bush defying conventional wisdom. In most national polls he leads Al Gore, who–assuming the standard political advantages of a flourishing economy–ought to sweep to victory. By and large, Americans aren’t giving Gore much credit for the boom. A recent Washington Post/ABC poll asked which candidate people “trusted” more to handle the economy. Bush actually won, 48 to 38 percent. Last week’s NEWSWEEK Poll asked a similar question and gave Gore a slight edge, 44 to 41 percent.
Theories abound to explain this puzzle. One is that it’s temporary and that Gore will reverse it. Another theory is that rising stock ownership (about half of households now own shares) has made voters more sympathetic to Republicans. Then there’s the possibility that people have split credit between the White House and Congress. Interviewing door-to-door in the Midwest, David Broder and Daniel Balz of The Washington Post found evidence of this. “The Republicans’ taking over [Congress] in ‘94 really made Clinton more conservative, or at least middle of the road,” said an accountant in Pennsylvania.
The reticence to vote good times–if it continues–actually makes sense. Presidents have only modest powers to influence the economy. If you’re looking for issues where a president can make a difference, the economy normally shouldn’t rank high on your list. Consider President Clinton as a case in point. Few presidents have been so blessed by the economy. As a candidate, it was his biggest ally. In 1992 unemployment averaged 7.5 percent. As president, the boom has helped preserve his popularity against scandal.
But Clinton didn’t create the boom, whose critical characteristic is low inflation. This has (so far) pre-empted one standard type of recession: rising prices push up interest rates, and a slump ensues. The Federal Reserve, corporate management and new technologies deserve the credit (to the extent that it can be assigned) for this. Companies achieved new efficiencies that held down prices. Alan Greenspan advertised his loathing of inflation. What Clinton did mostly was to leave Greenspan alone. As for bulging budget surpluses, they’re more a consequence of the boom than a cause.
Historically, it’s the same story: presidents can’t control the economy. Surprises, for good and ill, often intrude. In the 1930s Franklin Roosevelt couldn’t end the Great Depression. Even in 1940 unemployment averaged almost 15 percent. In 1971 Richard Nixon tried to stymie inflation with wage-price controls; once controls were removed, prices exploded. In 1974 inflation was 11 percent; the result, perhaps inevitably, was a severe recession.
Of course, presidents sometimes matter enormously. Their ideas and policies alter the political and intellectual climate. FDR showed that bigger government could coexist with free enterprise. In the 1960s Presidents Kennedy and Johnson advocated activist government policies–loose credit, expansive budgets–to reduce unemployment. In practice, these policies proved disastrous. They raised inflation and, by making the economy more unstable, unemployment. Between 1969 and 1982, there were four recessions. In the 1980s Reagan reverted to more traditional anti-inflation attitudes. This helped the Fed (under Paul Volcker) suppress double-digit price increases. The economy has become less turbulent. Since 1982 there’s been only one recession.
No great doctrinal disputes divide Bush and Gore over managing the economy. There are no splashy theories (“supply-side economics,” “industrial policy”) to rev up economic growth. It’s already revved up. Both candidates seem to accept the prevailing consensus, which is to trust the Fed and to rely on private markets to create more jobs and higher living standards. In a sense, this bland agreement is misleading. It doesn’t tell us how either man might react to a recession, which could happen. But then again, they probably don’t know either.
Where does this leave us?
Well, precisely where–with a little luck–we ought to be. Gore isn’t scoring many points on the economy, and he shouldn’t. By the same token, he shouldn’t be held accountable for any bad economic news (a dip in stock prices, some negative statistics) between now and November. We ought to concentrate on the issues where presidential views and character actually count.
There are plenty. On budget surpluses, Gore would spend more, Bush tax less. The differences might not much affect the economy; but they would alter people’s incomes, the size of government and (perhaps) the country’s social peace. Who would be more farsighted in refashioning Social Security and Medicare to deal with the retirement of the baby boomers? There are contrasts in approaches to social and educational policy. Again, Gore prefers greater spending; Bush, more personal responsibility and voluntary effort. What about the Supreme Court? Who would best cope with a foreign or domestic crisis? By temperament, who would most strengthen trust in government and restore public service as a worthy pursuit?
No campaign can answer all these questions. But people can get a feel for differences on matters where the president has genuine power and influence. In this year and time, it’s not the economy.
