Site Presented By
Wednesday, Nov 25, 2009
There are few new jobs -- and even fewer new good jobs. But the economy is growing, and if history holds, George W. Bush will be reelected easily.
Feb 25, 2004 | For three decades, Ray Fair, an economist at Yale with a jones for predicting the future, has been forecasting the winners and losers of American presidential elections.
In the mid-1970s, after poring over economic data, Fair developed a mathematical equation that factors in economic growth rates, inflation and an incumbent's general record on economic matters to arrive at an estimate of the popular vote on Election Day. His model rests on a simple truth -- the prevailing economic conditions of an election year provide an excellent guide to voters' behavior in November -- and it is stunningly accurate. Fair's equation predicts the popular vote to within 2 or 3 percentage points for almost every presidential election since 1920. He forecast the toss-up in 2000, the reelections of Bill Clinton and Ronald Reagan, George H.W. Bush's victory in 1988, and Jimmy Carter's loss in 1980. And based on the current health of the U.S. economy, Fair predicts an easy win for George W. Bush in November.
But this year's economy is different from all the others. After nearly four years of Bush's presidency, many experts believe the United States is facing an unprecedented situation: The economy is recovering, but the number of jobs, and in particular, good jobs isn't. Could this be the year Fair's crystal ball breaks?
By historical standards, the U.S. economy is growing reasonably well, and as the incumbent president, Bush is well-positioned to benefit. The total economic output was up 3.1 percent in 2003; by way of comparison, in 1995, the year before Clinton's reelection, growth was 2.5 percent. In 1996, the economy grew by 3.7 percent, and analysts predict that output will grow by at least that much this year. Moreover, inflation and interest rates are currently low, and the stock market is up.
In campaign events across the country, the president is aggressively selling this record. "The last six months of growth have been tremendous," Bush declared in Florida Feb. 16, attributing the gains to his tax cuts. "Things are looking better for America."
If some of this sounds like news to you -- Why doesn't it feel like things are looking better for America? -- your skepticism is understandable. On paper, Bush's election-year economic record might look like a winner, but to voters, the situation seems much less certain. On Tuesday, for example, the Conference Board, a business research group, reported that consumer confidence "weakened significantly" in February. Recent polls show Americans to be tremendously dissatisfied with Bush's stewardship of the economy. They are worried about a host of issues, including budget deficits and rising healthcare costs, but they are mainly concerned with the dismal employment market. (Other polls suggest Bush will face a tough election fight. For instance, a Gallup poll taken at the end of January shows John Kerry beating Bush by 53 to 46 percent; according to Gallup, Gerald Ford was the only other postwar president to trail his challenger in January of the election year. Ford, of course, lost to Carter.)
The current situation has many economists baffled. Employment usually rises in an economic recovery, but in the last few months, despite strong economic growth, few jobs -- and fewer good jobs -- have been created. Some economists point to globalization, others to structural changes in the U.S. econonomy, but most agree that we've never been in a situation quite like this before, and they're not sure what will come next.
The lackluster employment market is the Bush administration's main economic weakness, and it is trying desperately to convince Americans that good times are just ahead. To that end, on Feb. 9, the White House Council of Economic Advisers released its annual Economic Report of the President, predicting extremely optimistic job growth this year. Despite the disappearance of hundreds of thousands of jobs in 2003, the CEA said that at least 3.8 million new jobs would materialize in 2004.
The White House seems to have expected the public to embrace its rosy jobs numbers. Instead, the pie-in-the-sky projection backfired, and economists across the political spectrum criticized it as being ridiculously out of touch with economic reality. Many wondered whether the report, which is prepared by economists, had been the victim of a "sexing up" by White House political operatives.
Administration officials are now backing away from the prediction. "I think we are going to create a lot of jobs. How many I don't know," Treasury Secretary John Snow told reporters on Feb. 18. Bush, too, refused to answer reporters who asked him whether he stood by the CEA's estimate.
It's obvious why the White House might have wanted to fool the public into thinking job growth would be stratospheric in 2004. As pundits are fond of saying, Bush is on track to become the first president since Herbert Hoover to preside over a net loss in jobs during his term. While many economists say that powerful economic forces like globalization and technological innovation are slowing down employment growth during the economic recovery, many also fault Bush's policies, especially his tax cuts.
"Those were not tax cuts structured for short-term job growth," says Jared Bernstein, an economist at the Economic Policy Institute, a left-leaning Washington think tank.
Still, if the White House hyped the jobs projection, it will prove to be an idiotic political strategy. That's because if Bush gets even modest job growth this year -- which is in line with what economists predict -- that won't be so bad for an election year, so why raise expectations?
