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The Economy And The Election: '82 All Over Again

At the White House on Thursday, the president urged Congress to pass legislation aimed at helping small businesses.
Ron Sachs-Pool
Getty Images
At the White House on Thursday, the president urged Congress to pass legislation aimed at helping small businesses.

For Republicans running for office, bad news could be good news -- politically.

A sign of tough times that may work to some candidates' benefit.
Justin Sullivan
Getty Images
A sign of tough times that may work to some candidates' benefit.

Leading economic indicators have been mixed of late -- but often bad. Thursday, the Labor Department announced that new jobless claims rose for the third straight week, suggesting that employers are still laying off workers. Unemployment has remained stubbornly above 9 percent for the past 15 months.

Democrats, who control the White House and both chambers of Congress, will bear the brunt of the blame this November. It's probably too late for people's attitudes about the economy to change enough to help the party's chances.

If anything, people's sense of how things are going is growing more grim. "Unfortunately for Democrats, Americans are becoming even less positive about the economy than they were in the spring," says Frank Newport, editor in chief of the Gallup Poll. "Even if the economy is seen as taking off in a positive direction in September, it may be too late."

It Coulda Been Worse

There are some positive numbers out there, including low inflation and interest rates, and stepped-up manufacturing. But these are all swamped by the numbers that hit people where they live. House prices and the stock market are still down roughly 30 percent off their peaks.

'Things would have been worse without them' -- that's an unmarketable slogan.

Personal income is rising, but only by minuscule amounts. Total wages and salaries actually decreased in June. And nearly everyone feels poorer than they did before the collapse of the housing bubble in 2007 and the financial markets a year later.

"People are feeling poorer because they are poorer," says David Wyss, chief economist with Standard & Poor's, "and everybody's nervous that we're not turning around quick enough."

President Obama toured the country this week, making the case that his economic efforts -- notably, last year's $800 billion stimulus package -- had helped move the country from recession to recovery.

But his message has not exactly been a ringing celebration of better times. Obama keeps emphasizing that full recovery is still going to take a considerable amount of time. And his underlying argument -- that his policies have staved off more drastic conditions -- has not done much to convince many voters of their wisdom.

" 'Things would have been worse without them' -- that's an unmarketable slogan," says Gary Jacobson, a political scientist at the University of California, San Diego.

Democrats In A Box

Obama and congressional Democrats are in a bit of a bind. They are unlikely to get credit for any further solutions they propose -- such as the $26 billion package enacted last week to help fund Medicaid and teachers' salaries.

The very programs the federal government has pursued to aid the economy -- the stimulus package, the bailout for car companies, the Troubled Asset Relief Program for banks that was enacted under President George W. Bush -- have become lightning rods themselves. Further ambitious efforts are unlikely. Even a recent extension of unemployment benefits proved to be a tough sell. With budget deficits and the federal debt rising fast, Republicans -- and some Democrats -- are making the case that the nation can't afford more spending. The counter-argument is that if there isn't another round of stimulus spending, the economy may just get even worse. And deficits might continue upward anyway as costs of so-called social safety nets grow further.

"They have something of a problem because some of the opposition to the Democrats and the Democratic strategy in general is that the Democrats invoke big government too often," says Newport, the Gallup pollster. "When they try to help the economy, they attempt to do something through government, and that's what sets off their opponents on the other side."

Reagan, another president who faced a tough economy during his early years in office.
Michael Evans
The White House/Getty Images
Reagan, another president who faced a tough economy during his early years in office.

1982 All Over Again?

Elections are always about the economy, to a greater or lesser degree. When it's doing well, incumbents take credit and some of the public's attention shifts to other issues. When the economy is bad, other issues that might have been prominent are crowded out, such as gay marriage, immigration and Afghanistan. And the party in power pays the price.

That was certainly the case in 1982, the last time the unemployment rate was at double-digits. Republican President Ronald Reagan pleaded with voters that year to "stay the course," but instead they unseated 26 House Republicans.

"With 1974" -- when Democrats gained 49 House seats -- "everybody thinks about Watergate, but actually the economy was at least as much a problem for Republicans," says Jacobson, the UCSD political scientist. "A lot of serious research says the economy was way more heavily in people's minds than anything that happened with President Nixon."

Too Late To Change Minds

When a weak economy tops the political agenda, it's generally too late once summer nears its end to change voters' perceptions. That proved to be the case in 1992, when the economy turned brighter before the election. The upturn didn't come in time to save President George H.W. Bush from defeat.

Given the economy and the number of marginal or Republican-leaning seats that Democrats picked up in 2006 and 2008, experts say it's certain that the GOP will make gains this year.

"When the economy is faring poorly, the president's party almost always takes a big hit in midterm elections," says Alan Abramowitz, a political scientist at Emory University. "When you have the combination of a weak economy and a president with mediocre approval ratings, they will have greater than average losses."

Possible GOP Stumbles

The only real suspense comes from the question of whether Republicans will pick up enough seats to win control of a congressional chamber. Most political forecasters predict that the GOP will gain between 30 and 50 seats in the House -- either more than enough seats for a majority, or tantalizingly just short of their goal.

"The conventional wisdom is that Democrats are going to get creamed," says Bruce Cain, a political scientist at UC Berkeley.

But Cain says he's still not convinced that the economy will have such a "devastating effect." The reason is that Republican voters in many primaries have nominated candidates who may be too conservative to succeed in the fall. That may cost the GOP some seats they otherwise could have won, such as the one occupied by Senate Majority Leader Harry Reid (D-NV).

Republicans have not been as strategic about recruiting candidates who break with party orthodoxy in ways that suit their particular districts as Democrats were in 2006 and 2008, Cain suggests. Many contests could turn on the quality of the candidates and local issues, giving Democrats a chance to hold on -- as was the case with recent special elections in New York and Pennsylvania.

"If the economy is not so overwhelmingly bad, then these tactical mistakes on the part of the Republican Party will come back to haunt them," Cain says. "They'll get less reward from the circumstances than you would expect."

But Cain says it's clear that Republicans are going to make gains this year. Any winnable seats they fail to pick up because of poor candidates are likely to matter only at the margins.

"And," he adds, "if the economy is bad enough, and there's a national wave against the Democrats that is so strong, based on a feeling that Obama expanded government and drove up the deficit to unacceptable levels, then it may not matter who the Republicans have nominated."

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