« Robbing From Your Friends | Main | The Flinchers » A Simple Question08 Mar 2008 11:24 am David Leonhardt writes: "If history is a reliable guide, the recession of 2008 is now unavoidable." If that's right and we do see a recession this year, would there be any historical precedent for the Republicans maintaining control of the White House? I know a couple of examples of incumbent parties losing despite a strong economy (1968, 2000) when special circumstances (Vietnam, Nader/Florida/electoral college) intervene, but has an incumbent party ever rode a recession to victory? Comments (34)
Is there a precedent where the media love one candidate, and the corporations that control the media desperately want one candidate to be in power? 
The real fear is what it will mean for governance. One of the problems with running massive deficits when the economy is doing well -- it's even harder to balance a budget when the economy is doing poorly. Thankfully, the Democrats seem to recognize that it would be impossible to balance the budget, so they're not running on it.
it's even harder to balance a budget when the economy is doing poorly. Thankfully, the Democrats seem to recognize that it would be impossible to balance the budget Hmm, Bill Clinton ran on a promise to balance the budget in '92, when the economy was pretty bad. And even tough he couldn't manage it until the economy turned good again, he started working toward it immediately.
I don't think historical precedents mean much: in the last ten years the Radical Right has taken almost complete control of the traditional media and has utterly perfected the art of blaming everything that goes wrong ("your fault; my fault; nobody's fault") on the Democrats. Despite the fact that the Republicans are 93% responsible for the current mess Joe Klein and David Brooks will be writing about how the Democrats caused the recession and the rest of the media will follow their lead. Also, I have seen on the milblogs that the campaign to blame the Democrats and libruls for "destroying the military" - which is to say, making needed rationalizations and spending cuts - is already ramping up. Cranky
Cranky writes: "I have seen on the milblogs that the campaign to blame the Democrats and libruls for "destroying the military" - which is to say, making needed rationalizations and spending cuts - is already ramping up." What, again? They blamed the post-Cold War downsizing on Bill Clinton, even though it was Dumbya's daddy and Dickless Cheney (not my term, though it fits - it was the common way to refer to him in the military at the time) who started it. If conservatives weren't filled with shit they'd be hollow.
> What, again? They blamed the post-Cold War Bingo on your first ball. When that is mentioned the response is "Cheney made good decisions; Bill Clinton put gays in the military and ... and ... and...". The problem is that that sort of argument resonates with a chunk of the population. Cranky
A strong economy in 2000? Negative GDP growth in the 3rd quarter of 2000 is a strong economy? Would that MY would adopt such ludicrous standards for our current situation. The 2000 election seems like the right comparison. A weakening economy didn't hurt Gore, who won more votes than the other guy, if in the wrong places. If the Republicans couldn't tie the Clinton/Gore economic downturn of 2000 on Gore, why think that the current slowdown can be pinned on McCain, who isn't in power?
Cranky: "When that is mentioned the response is "Cheney made good decisions; Bill Clinton put gays in the military and ... and ... and...". The problem is that that sort of argument resonates with a chunk of the population." Yes, the chunk that thinks "intelligent design" is good science, that Saint Reagan won the Cold War, and that Dumbya Bush has been a good president. The fucking idiots, in other words.
By the time of the 2000 election the economy might not have been in a recession yet, but the dot-com bubble had already burst. March 2000 is when the Nasdaq peaked. As for this year, if we are in a recession now, it's possible it will be over by November's election. As the IBD notes: "It takes, typically, about a year for Fed rate moves to start kicking in. That means that by this summer, the economy should be hitting on all cylinders. At the same time, checks from the federal government's $160 billion stimulus package will go out later this spring."
Thomas writes: "A weakening economy didn't hurt Gore, who won more votes than the other guy, if in the wrong places. If the Republicans couldn't tie the Clinton/Gore economic downturn of 2000 on Gore, why think that the current slowdown can be pinned on McCain, who isn't in power?" The problem for McCain and the GOP is that 2000 was seen as a mild downturn and Clinton was viewed as a successful president by most voters. The current downturn has much deeper roots and there are several serious problems with the economy. And then there's the awesomely failed presidency of Dumbya, whic has been a series of fuck-ups punctuated by major catastrophes. If McCain can overcome these factors then the American public is a lumpen mass of hopeless morons and the Republic is finished. I don't think that's the case. As for why it should be pinned on McCain, he's been giving Dumbya big, sloppy kisses for two years.
MoeLarryAndJesus, Cranky
Fred hopes: "As for this year, if we are in a recession now, it's possible it will be over by November's election. As the IBD notes: "It takes, typically, about a year for Fed rate moves to start kicking in. That means that by this summer, the economy should be hitting on all cylinders. At the same time, checks from the federal government's $160 billion stimulus package will go out later this spring."" The cons have been saying all along that the economy was GREAT, that there was no need for concern, blah blah blah. Gotta love "if we are in a recession now." And the low dollar and the high cost of oil and the housing downturn and the subprime crash and employment losses and the decaying manufacturing base - all GOOD things! Dumbya Bush says it's all good and they love him, so they agree! Bushpigs seriously think the country is better off than it was in 2000. They're malignant morons who hate America and want to sell it off in big chunks to the Chinese and the Saudis.
Cranky says: "I am just warning you what is coming. The blamestorm that will start in 2009 (assuming either HRC or BO win) will make Katrina look like a spring rainshower." No question about it. Cons are never responsible for anything. Dumbya fucked up on multiple fronts and he'll scoot out of town and if things aren't set right by February 2009 cons will pretend he had nothing to do with it. Unless, of course, McCain wins - then cons will blame it all on the Democratic Congress. Because conservatives never fail!
No, Moe, the 2000 downturn wasn't seen as a mild one; it wasn't seen at all. It was denied by lying liars like you until the shift change. But it did happen, and it didn't actually seem to hurt Gore. Reading your crap, I'm worried I might catch whatever disease has destroyed your ability to reason. Why do you bother writing on economics--it only hurts your cause.
Hmm, Bill Clinton ran on a promise to balance the budget in '92, He promised to cut the budget deficit in half. But then he did balance the budget, and was well rewarded by Greenspan.
Two points: 1) incumbents winning in a recession is only a relevant question since the time that the government came to be seen as responsible for managing the economy. Say from around the early 1930s. There are examples in the late 1800s, but the voting public didn't see the state of the economy as relevant to how they voted. 2) what is relevant for electoral purposes is not whether the economy is in a recession. It is whether people feel like the economy is in a recession. Which lags by a quarter or two.
Thomas replies: "No, Moe, the 2000 downturn wasn't seen as a mild one; it wasn't seen at all. It was denied by lying liars like you until the shift change." Bullshit, Tommy. was working in the mortgage industry at the time and the downturn was quite obvious. There's no point in denying such things. That's why cons have looked so incredibly stupid over the past couple of years, as they've been pretending that all is well economically. The weak 2000 economy did indeed hurt Gore, in that it made people more likely to give a listen to an idiot from Texas. Economic issues were quite central to their debates. One particular howler was when Dumbya upbraided Gore for the high cost of gasoline, which was of course well under $2 per gallon at the time. Since you still support the Bushpigs, I don't need any lectures from you on anything. You're a proven idiot with a poor track record. Kill yourself before you vote again and you'll be doing your country a service.
One can quibble about whether the 2000 economy could actually be described as strong, but the economy under Clinton was undeniably good. If you invested $100 in the stock market when Clinton was inaugerated in 1992, by the time the 2000 election was held that investment would have grown to about $359, or $285 after adjusting for inflation. Invest the same $100 when Bush was inaugerated, and today you have $118, which is worth only $96 after adjusting for inflation. The stock market is only one measure of economic activity, but it's one that favors Bush. By shifting a large amount of the tax burden away from investors and onto workers, Bush made stocks more attractive, so you would expect stock prices to rise faster under Bush than they would if stock prices were being driven by economic fundamentals alone.
WJ, I haven't looked this up, but as I recall the elections of 1840 and 1898-92-96 had a lot to do with the electorate voting out the incumbent party due to recessions/panics, or whatever they called it at the time. I think this might also have been true in 1876 (although there was a lot else going on), but that election got stolen in Florida (and a couple of other places) -- although that is one of the things in US history about which one feels most ambiguous.
Well, now I understand the subprime meltdown, at least. We had flim-flam men like Moe pushing crap at unsuspecting innocents. Just like he does here. Kenneth, do you think everyone who reads this page is a moron? If not, then why would you write such obviously unpersuasive crap?
Perhaps my memory is bad, but my recollection of the mood in 2000 concerning economic matters was that the public was still fairly optimistic, which is quite unlike the mood today. Now you have a subprime crisis, deficits, and record gas prices.
Your memory is correct, jason, but then in 2000 we still had competent adults in charge. This time around we've had worthless morons running things into the ground for 7 years, with another 10 months to go. That's a very good reason to be pessimistic. Al Qaeda my ass. The true terrorists to worry about are the Bushpigs and their remaining supporters.
...but has an incumbent party ever rode a recession to victory? This is potentially very worrying. If there's an elephant stage right you need to make disappear, you need a damn big puff of smoke stage left. It's basic stage magic. The incumbent party still has the ability to make damn big puffs of smoke, almost ad libitum. Who will be their Galtieri?
"The current downturn has much deeper roots" This is certainly true, and it's also true that economic upturns often have much deeper roots. For example, I remember when an economist at an investment company I worked at in the late 1990's was asked how long that boom would last, he (of course didn't know the answer) suggested that it would be long lasting, because it was the result of a confluence of factors with long roots: e.g., the development of proto-Internet technology beginning in the 1960s, the conquest of inflation beginning in the late 1970s, etc. Of course he (and a lot of others) didn't realize at the time that we were in the middle of a huge bubble, and much of our economic growth (and tax revenues) was driven by an unrealistic and unsustainable spike in asset prices (pull up some old charts for JDSU or CMGI, for example). The pain of the bursting of that dot-com bubble was ameliorated for years by the acceleration of the next bubble, in real estate. Now the feds will either allow the inevitable adjustments to occur (which will require Americans to increase their savings rates, lower their consumption, and will involving shrinking of our current account and trade deficits), or they'll instead try to inflate a third bubble. I'm guessing they'll go for the 3rd bubble option, which will be in "green" technology.
Anybody who thinks this recession will be "over" by November is an idiot. Recessions go on for a year or more. It takes nine months or more for any stimulus or correction to go through the system, and the stimulus package today is ridiculously too little to deal with the massive meltdown in assets that is going to occur. We'll be lucky if this recession is over two years from now. Most people who are clued in are calling this one the worst meltdown in fifty years. The job loss last month was the fastest job meltdown in decades.
Robert Reich, illustrious/brillant, stated on an Air America Radio interview on "Clout" a few moments ago that the U.S. now has a 20 % chance of having an actual depression...
Re: There are examples in the late 1800s, but the voting public didn't see the state of the economy as relevant to how they voted. Not true. The economy has been a factor in elections at least back to the 1830s when Van Buren was blamed for the Panic of 1837 and the severe downturn that followed, destroying any hopes he had for reelection in 1840. Re: Anybody who thinks this recession will be "over" by November is an idiot. In purely statistical terms in could be over. But the publuic would see it that way, just as the public was still convinced we were in a recession in 1992, and more recently, well into 2003. Another jobless recovery (the pattern ever since the early 90s) will probably keep the economy on the front burner politically until the next congressional elections after this one.
"One can quibble about whether the 2000 economy could actually be described as strong, but the economy under Clinton was undeniably good. If you invested $100 in the stock market when Clinton was inaugerated in 1992, by the time the 2000 election was held that investment would have grown to about $359, or $285 after adjusting for inflation. Invest the same $100 when Bush was inaugerated, and today you have $118, which is worth only $96 after adjusting for inflation." The best measure of the economy is the economy itself (GDP). Stock prices are generally driven by expectations of future earnings. In the late 1990s, those future earnings expectations got so unrealistic that stocks like Cisco were trading at 50x earnings, and stocks with no earnings whatsoever were trading at ludicrous prices. Some historical perspective is in order here. The bull market of the late 1990s was the biggest stock mania since the late 1920s, when new-fangled inventions such as radio were the dot-coms of that day; similarly, the stock market crash that began in March 2000 was the worst in 70 years. After the 1929 crash, the Dow didn't reach new highs (not adjusting for inflation) until 1954.
Re: the stock market crash that began in March 2000 was the worst in 70 years.
"Is this true? It's my understanding that the crash of 1987 was the record-holder, but since it was followed by a fairly rapid rebound and no long term economic damage, it's generally forgotten." I should have used "bear market" there instead of "crash". The 2000-2002 bear market was the worst since the bear market that followed the crash of 1929 (the second worst was probably 1973-74).
More important than whether we are in a recession or not is the perception that we are. I'm reminded of 1992 when Bush kept arguing that the economy was getting better, that the recession was ending, etc. In fact he was right, as later statistics showed, but the public perception that we were in recession, that the economy sucked, completely controlled the election and sunk Bush's chances for re-election.
"Recessions go on for a year or more. It takes nine months or more for any stimulus or correction to go through the system" The last two recessions lasted three quarters each. It can take 6 to 9 months or more for monetary stimulus to work its way through the system, but the monetary stimulus started back in September of 2007, with the Fed's 50bps rate cut. Fiscal stimulus has a more immediate effect, since consumers often spend part of their rebates shortly after they get them.
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Heads in the Sand
1956? I think GDP growth was low in '55 and negative in '56. But people seemed to think "recessions happened", it wasn't that bad, and hey, at least the former general figured out what to do in Korea.
Posted by Nicholas Beaudrot | March 8, 2008 11:34 AM