The economy, presidents, and elections

My cousin-in-law posted this article in a comment on the blog a few weeks back (thanks!), and I wanted to call attention to it because the author makes a very good point about the economy and U.S. presidents. It’s especially relevant given the focus on the economy in President Obama’s State of the Union address last night.

http://www.bloomberg.com/news/2012-01-12/economists-scoff-at-obama-romney-job-creation-commentary-by-ezra-klein.html

Ezra Klein describes how Republicans blame every economic woe on President Obama. The president, in turn, takes credit for every economic success. Klein then explains:

To buy much of this requires you to hold deeply ridiculous beliefs about the American economy. You must believe that Obama bears responsibility for events that predate his presidency and deserves applause for the demand created by aging cars and worn- down machinery. You must believe that Congress, which controls fiscal policy, and the Federal Reserve, which controls monetary policy, bear little or no responsibility for the economy, but that the president, who controls neither fiscal nor monetary policy, is the primary driver of job creation. You must believe that governors have absolute power over state economies and that global demand is irrelevant. You must also renounce belief in Christmas — or at least its influence on the consumer-driven economy.

Klein then interviews a number of economists who all agree that U.S. presidents ultimately have very little, if any, major influence on the state of the economy. For the most part, they argue, economic performance is driven primarily by forces outside of the president’s control. (I would take this with caution, though. I’ve read opinions from many other economists, including one who won the Nobel Prize, who disagree.)

Either way, this leads to one of the great ironies of American politics: economic performance is the key determinant of the outcome of presidential elections, and presidents ultimately have less control over economic performance than they or their opponents commonly believe. 

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