I’m a political not an economics junkie, but I do understand one thing about the connection between the two. If an American president takes an economic hit early in his first term, he will be re-elected; if he takes it late he is a goner after four years.

Over the past four decades this has been an iron law. No other factor – war, peace, scandal, taxation levels, the quality of candidates – comes close to determining the occupant of the White House with such unerring precision.

Election years are all about how people feel about the future of the country, in which the economic cycle plays an overwhelming part. It is worth bearing in mind in this bizarre summer of 2009, with its short-term focus on the extent of the recession, the nature of any recovery and the raucous debate over healthcare reform, all now adduced to suggest that Barack Obama’s presidency hangs in the balance.

It is even being suggested, not only on the political right, that if Mr Obama has to raise taxes, as well he might to finance healthcare reform, he will suffer the same fate as the first President Bush, who did so in 1990 and lost the White House two years later.

This causal connection is illusory. As James Carville, Bill Clinton’s political guru, famously put it in 1992, “it’s the economy, stupid.” Mr Bush lost not because he broke his “read my lips, no new taxes” promise of the 1988 campaign, for all that it pained his Republican base, but because for much of 1992 the economy was in a cyclical downturn, about which he seemed to care little and which helped produce the damaging independent candidacy of Ross Perot.

Recent history provides further proof, without needing to go back as far as Herbert Hoover and FDR or into the 19th century. Richard Nixon took his economic hits in 1969-70 but the country was in much better shape as 1972 rolled round. Democratic disarray produced a particularly weak candidate, but the incumbent would surely have beaten any opponent, merely showing how paranoid Nixon was in the “dirty tricks” that characterised Watergate.

Jimmy Carter’s economic problems came late, in 1979-80, raising concerns about whether a president who dared to speak publicly of a “national malaise” knew what he was doing. The hostage crisis with Iran was merely the icing on the cake of his defeat.

Ronald Reagan took a mild recession in 1981-82 but the economy was humming along when he faced re-election. Mr Clinton inherited the tail end of the Elder Bush’s downturn in 1993 but, similarly, could claim credit for the recovery in 1996.

Classical economic theory holds that it is best to stimulate growth to combat recession, as both Messrs Reagan and Bush Junior did by cutting taxes. But the reverse Clinton prescription in the Budget Act of 1993, to increase them while reducing growth in federal spending, proved equally effective. Of course, monetary policy was probably more influential under all three.

No equivalent pattern is evident in the other factors popularly supposed to determine a president’s re-election. Opposition to the Vietnam war did persuade Lyndon Johnson to withdraw from the race in 1968, but victory in the first Gulf war in 1991, producing fleeting 90 per cent approval ratings, could not hand a second term to George H.W. Bush. The unpopular war in Iraq did not stop his son getting returned.

Serious scandals, such as Watergate, Iran-Contra and even, for argument’s sake, Monica Lewinsky, tend to explode, whatever their actual starting dates, in second terms when the incumbent is not running again. They may not help the designated successors; Watergate hurt Gerald Ford in 1976, as Lewinsky did Al Gore in 2000, though in ways more of his own making. They must be compared with the first-term, unserious ones, such as the Clintons’ Whitewater land deals, which never really grabbed the public imagination.

First-term policy failures are also not necessarily determinative. The Ford record was very respectable, even if his “whip inflation now” buttons were silly. So was Mr Carter’s – the Middle East Camp David accords, the Panama canal treaties, a trade round agreement – but it mattered little when the economy turned sour. The defeat of healthcare reform in 1994 doubtless contributed to the Republican Congressional landslide later that year but did not stop Mr Clinton’s comfortable re-election.

As it now stands, Mr Obama is treading a well-worn path. It matters less that he inherited economic problems (so did Messrs Reagan, Clinton and the junior Bush) than that they quickly became his. Economists should have a better handle than political junkies on whether his policies will lift America out of a particularly severe recession, or whether the recovery will be sluggish in creating growth and new jobs. But if the former, history suggests the election of 2012 should be a formality, no matter the attendant sound and fury. And of course, Ben Bernanke, the Federal Reserve chairman, has as good as declared the recession over and has been appointed to a new term in office.


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