February 17, 2004
THE UNSCREWABLE POOCH (via mc):
Economy May Work in Bush's Favor: Housing Boom, Tax Cuts Buoy Many Voters, Despite Job Losses (Jonathan Weisman, February 17, 2004, Washington Post)
As the presidential election hits its stride, candidates seeking to unseat the president have fixated on the still-sluggish labor market, hammering their contention that as long as jobs remain scarce, voters are not about to salute the economic recovery that Bush has been hailing.But other facets of the economy may prove far better indicators of the sense of well-being that voters will bring to the ballot box in November, economic forecasters say. The booming housing market has given even struggling workers the ability to latch onto a tangible talisman of personal progress. Wage growth has been nearly stagnant, but thanks to Bush's tax cuts, disposable income has risen. And after nine quarters of slow but steady growth, the economy as a whole is poised to take off, giving some shaky households a sense of optimism about the coming year.
"The economy is really going to help the president this time around," said Joel Prakken, an economist with Macroeconomic Advisers LLC, whose political forecasting model predicts Bush will win in a romp in November. "I'm not saying [the Democrats] can't find pockets where they can play the economy card, but it's going to be tough." [...]
"Assuming the electoral structures of the past are going to continue into the future, Bush is almost for sure going to win," said Ray C. Fair, an economist at the Yale University School of Management who has been projecting election outcomes for decades. But, he added, "If there's any time the equation goes bonkers, it's probably times like this." [...]
Global Insight Inc., another forecasting firm, does look at unemployment rates, but the more important factor is income growth, said Nariman Behravesh, the firm's chief economist.
"In the end, it is disposable-income growth that really drives things," he said. "It's a pocketbook issue: How fast is my income growing?"
And there, Bush has himself to thank for Global Insight's prediction of his 6.5-percentage point victory.
Weekly wage growth has been sluggish since 2001, rising 8.2 percent since Bush came to office, 4.1 percent if adjusted for inflation, Labor Department statistics show. But three successive tax cuts -- coupled with the slowing economy -- have helped bring personal tax payments down by 19 percent since 2001, according to the Commerce Department. Disposable income in that time has risen 11 percent, in large part because of falling tax payments.
"In the end, if they've got money in their pockets, it doesn't matter if it came by hard-earned work or tax cuts. That's where the president may have played his cards very well," Behravesh said. [...]
[N]o matter how bad the labor market is, the vast majority of voters have jobs, and for them, incomes are rising, stocks are recovering and interest rates remain low, said Fair of Yale. For the president, the traditional signs lead to reelection.
Especially dangerous for the Democrats at a time of such prosperity is the idea of playing to the pockets and pitching a "Two America's" battle. They're essentially telling the vast majority that they are in the Democrat crosshairs and elections aren't typically won by threatening the majority. Posted by Orrin Judd at February 17, 2004 9:56 AM
I agree with the general conclusions, and I am hopeful that the "economy" as an electoral "variable" could be reduced to "No matter how bad the labor market is....."
However, expect the Dems to be the beneficiaries (that means the rest of us suffer) of a developing (and perverse) change in the labor market dynamics that appears to be allowing the unemployment rate to edge down without what would have recently been the requisite amount of new jobs created: before, about 200K+ per month, now only 100K may be needed. The reason is not the cliche "labor force shrinking because people are disillusioned", but rather the suspect is much lower immigration since 9/11. Greenspan appears to be one who believes this is what is going on, and not an undercounting of jobs, which is what the other labor surveys suggests.
The bottomline is that the Dems could have their cake and eat it too: crow about jobs not being created in huge numbers, even when they are "not needed"; and oj's buddy Al Greenspan tightening even as the Dems claim jobs are not growing fast enough. Where all this to materialize, real life experiences would be all that would be in the way of the jobless recovery spin. I trust real people to see life in real terms...but some counter spin would not hurt. (And if lower immigration take-up of jobs is real, for God sake ensure the nativist constituents know about it!)
Posted by: MG at February 17, 2004 11:29 AMThe magic number is 11,000 (DJIA).
In a generally improving economy, my guess is that anyone truely worried about the unemployement number is already firmly in the dem camp.
Bush needs to excite the folks watching their 401K's. If the DJIA goes back below 10,000, he's in trouble. Above 11,000 my bet is we're looking at 50-0, no matter who the dems nominate.
Posted by: Chris B at February 17, 2004 12:02 PMAnother factor to watch will be the polls after April, when people realize how much they are saving as the first real effects of Bush's tax cuts kick in.
Posted by: jd watson at February 17, 2004 12:59 PMInteresting that Behravesh differentiates between money coming from hard earned work as opposed to tax cuts. The tax cuts just let you keep your own money.
Posted by: Richard at February 17, 2004 1:11 PMInteresting that Behravesh thinks there's a big difference between money earned from hard earned work as opposed to tax cuts. Seems to me, they are the same thing - the tax cuts just let you keep more of your own hard earned money.
Posted by: rcc at February 17, 2004 1:13 PMJust heard from a stealth Democrat that his taxes are lower but he worries about his grandkids. That's the way they'll continue to spin it.
Posted by: Genecis at February 17, 2004 1:20 PMHis grandkids are my kids, and I'm sure as heck more concerned about winning the war on terror than about whether the unemployment rate is 5.6% or 5.5%, or who will make the deficit larger.
I guess where I live, 9/11 means a little more than just some obscure anniversary. How many more dead moms and dads does it take before we finally hear that old Democrat refrain, "Do it for the children"?
Bottom line is that if Bush were a Democrat, he would be hailed as the greatest leader this nation ever had. It's too bad that most on the left are so morally and intellectually bankrupt that they can't recognize it.
I find it hard to imagine that the center of this country is going to stick their heads into the sand come November and say, “I agree with Sen. Kerry, this terror thing is exaggerated, let’s just get the UN to handle it, they have the expertise and determination to do what’s right”!
Genecis - Does he have grandkids?
Posted by: pj at February 17, 2004 2:05 PMLook for a flood of unexpected dollars in the pockets of millions of surprised taxpayers in the coming months. In my case, a $6000 tax bill literally disappeared by virtue of the lower marginal rates, lower dividend and cap gain rates, the child credit, generous Section 179 depreciation, and two sizeable tax credits for higher education.
Posted by: curt at February 17, 2004 9:50 PM"I find it hard to imagine that the center of this country is going to stick their heads into the sand come November and say, “I agree with Sen. Kerry, this terror thing is exaggerated, let’s just get the UN to handle it, they have the expertise and determination to do what’s right”!"
Mike, never underestimate the allure of abdicating responsibility.