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Voters Are Better Off Than Four Years Ago

Alex Blow, Daniel Lewin |
November 7, 2012 | 8:39 p.m. PST

Contributors

Barack Obama won the election Tuesday night. (Barack Obama, Creative Commons)
Barack Obama won the election Tuesday night. (Barack Obama, Creative Commons)
Ronald Reagan, when he was running against incumbent President Jimmy Carter in 1980, introduced a line of attack to the campaign that would prove remarkably effective both for him and for future challengers to the presidency. The attack consisted of one simple, but incredibly powerful, question: “Are you better off now than you were four years ago?”

Voters are presented with a clear decision - did the incumbent president do his “job” and improve the lives of his citizens, the voters? Mitt Romney and his surrogates in the GOP posed this question time and again over the last few months in their attempts to paint Obama’s record as a failure.

It’s not difficult to see why they would do this - a large portion of the country would, in fact, have to concede that their personal response to that question would have to be "no." Painting the election as a contest about whether you are better off today than you were four years ago was quite advantageous for Romney. Unfortunately, it was also a largely irrelevant question this time around and, thankfully, voters realized that.

The effectiveness of this question for voters relies on three key assumptions which are not based in reality. In order for this question to have been an accurate condemnation of Obama and his administration, at least one of the following three points must have been true:

Everything was going swimmingly in 2009

When considering this question, voters are much more prone to consider their current situation than they are their previous one. Psychologically, the pain of today is much more mentally accessible than the pain of four years ago. Recall that when we last went to the polls to vote for our next president our economic situation was dire. Those who ask this question to attack the President rely on the public to forget just how disastrous things were four years ago.

The American Recovery and Reinvestment Act (ARRA) was the first (and arguably only) bill passed in order to combat the recession. The President, despite no support from the opposition party, passed the stimulus at a time when real GDP was contracting at a staggering annual rate of more than six percent and employment was falling by more than 750,000 jobs per month. Indeed, economists are not being hyperbolic when they argue that the 2008 crisis was, in many respects, as bad as the Great Depression and, in some cases, even worse.

A report by five economists in the Journal of Economic Policy sought to compare the financial crisis of 2008 with the Great Depression. During the first year of the crisis, the global decline in manufacturing was as severe as the first year of the Great Depression. Likewise, world trade fell faster in the first year of the crisis than in the first year of the Great Depression. The stock market crash most notably associated with Great Depression was actually less severe than the meltdown in global stock markets during the crisis. The report summarizes the comparison by noting that “policy makers were right to be alarmed in early 2009….the current economic crisis was a Depression-sized event.”

The first assumption, the backbone of the question’s effectiveness, is unequivocally absurd.

The President, and the president alone, has the power to immediately change economic conditions

First of all, our economic system is now a global one and in turn, the economic meltdown was felt globally. The Eurozone in particular has been in incredibly dire straits economically throughout Obama’s term. The President of the U.S. can have only a marginal influence on that situation at best, and until Europe and the rest of the world rebound it will be difficult for our economy to recover fully and thrive again. Some macroeconomic factors are not in our control as a nation, a fact that was surprisingly overlooked by both campaigns.

Regardless of the economic situation he inherited, it still would not make sense to entirely pin the economic situation at the end of his term on Obama, as though he were in control of everything that happened. While the executive branch clearly plays a significant role, the legislative branch has an equal, and sometimes even larger, role in shaping policy. Since Republicans re-took the House in 2011, the President has been unable to pass one single bill to speed along the recovery, most notably his second stimulus (The American Jobs Act). Voters attributed this roadblock to the extremist, hard-line, and uncompromising mentality of the Republican Party, and rightly so. It’s not as though Obama’s policy proposals have been that far left (they haven’t), or that he has been stubbornly unwilling to compromise (he was forced many times to compromise great portions of his agenda just to bring the GOP to the table). Rather, the GOP has stated publicly that it will refuse to work with Obama no matter how much he compromises. The beauty of our system of checks and balances is that it prevents one branch from becoming too powerful in comparison to its counterparts. The downside is that any of the three branches can sabotage governing and disrupt the entire process if they become desperate enough to ignore the consequences - this is exactly the course the GOP chose to pursue in the House, and it turned out to be a choice the voters rebuked.

Economic conditions have not improved

One of the main charges that the Romney campaign leveled at President Obama was that he failed to improve the economy while in office. Similar to the first assumption, this assumes that the only direction for the economy to go from January 2009 was up. Essentially, it fails to look at the contraction while examining the recovery. Two Harvard economists, Carmen Reinhart and Kenneth Rogoff, make this point in their article “This Time is Different, Again.” They point out the difference between a systemic crisis, during which the entire financial system is at risk of collapsing, and a cyclical recession, the typical boom and bust cycle that occurs in free markets. The recovery, though frustratingly slow at times, was what would be expected after a systemic crisis. Reinhart and Rogoff note that whereas after cyclical recessions (such as the one Reagan dealt with in the 1980s) the growth in GDP tends to follow a V shape, after systemic crises, “recovery is more U or nearly L-shaped.” When viewed under the appropriate lens, the recovery under the President starts looking a good deal more successful.

We are inarguably heading toward a recovery. The effects of the President’s policies were felt almost immediately upon him entering office - “After declining at an annual rate of 4.9% in the first quarter of 2009, GDP fell at a rate of 0.7% in the second quarter, and then rose at a rate of 1.6% in the third quarter and 5% in the fourth.” This 9.9 percent swing in GDP growth was a positively stunning turnaround, one of the largest three-quarter swings in American economic history. Furthermore, unemployment today is at 7.9 percent, the lowest rate since before the Great Recession, and the Dow Jones Industrial Average is hovering around the 13,000 mark. In fact, “the United States has performed better in terms of output per capita and unemployment than in the previous crises, even if one excludes the Great Depression.”

So...

When a candidate asks voters, "Are you better off than you were four years ago?" the implication is fairly obvious, even when left unsaid - no, you are not. Last night, to the surprise and disappointment of the GOP, voters indeed asked themselves that question and decided, after thoughtful consideration, that yes, they were in fact better off than they were four years ago. It can be trendy sometimes to denigrate the intellect of the American electorate, but you have to hand it to them this time around – they refused to fall for scare tactics and misinformation. They refused to punish a president who had pulled our economy back from the brink of disaster and turned it around. As Howard Fineman said on MSNBC last night, “This was the referendum that Mitt Romney wanted on Barack Obama. And guess what? Barack Obama won the referendum. And that's pretty darned emphatic.”

Pretty darned emphatic indeed.

 

Reach Contributor Alex Blow here.

Reach Contributor Daniel Lewin here.



 

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Comments

Katherine Schott (not verified) on November 16, 2012 6:43 PM

In depth and articulately presented argument. Both these contributors back argument with fact - and I, as a reader, appreciate that.

Your rating: None Average: 5 (1 vote)
Anonymous (not verified) on November 7, 2012 11:12 PM

The awkward moment when the Dow Jones Industrial Average plummets a day after Obama is reelected...

Your rating: None Average: 1 (1 vote)
Alex Blow (not verified) on November 7, 2012 11:42 PM

Gobama is right. It is not enough to just state something without explaining it. Especially if you are discussing the expectations of investors. Basically you just confirmed one of the main points of our article: context is everything.

Your rating: None Average: 5 (1 vote)
dlewin on November 7, 2012 11:48 PM

It's all about context! The world isn't a black and white, 2-D object, as much as the GOP and their supporters wish it was.

Your rating: None Average: 5 (1 vote)
Gobama (not verified) on November 7, 2012 11:36 PM

The awkward moment when investors are now anticipating a protracted fight for the sake of a fight by House Repubs over addressing the looming fiscal cliff. The fact that the market realizes the GOP is insanely (literally) uncooperative with Obama, and wouldn't have been had Romney been elected, is hardly a condemnation of this president or his administration and would seem to me to reflect more negatively on the GOP.

Your rating: None Average: 5 (1 vote)

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