An Observation about the Weather with Implications for the AJA and the 2012 Election

September 10th, 2011 at 1:47 pm

I just returned from a run on the first nice day here in the DC area after a week of seemingly endless, and even fatal, rainstorms.

The contrast between day after day of rain and the beautiful, early fall weather here had everyone out on the streets feeling great.  Dogs smiled like crazy on their walks, baby’s chortled and wiggled their fat little toes in their strollers, and all the joggers I passed smiled broadly as we finally got our endorphins swimming around again.

Which of course made me think about the political-economy dynamics of the unemployment rate.

It is sometimes said that the President’s re-election bid will be thwarted by the high unemployment rate that will certainly prevail about a year from now, when people start deciding in earnest which way they’ll vote.

But what if more than the level of unemployment, it’s the change that matters?  We’ve been stuck so long in neutral, with trivial job growth and the unemployment rate stuck between 8.8% and 9.2% this year, that steady movement in the right direction might be enough to convince wavering voters that we’re finally moving in the right direction, so why change horses?

BTW, this makes the American Jobs Act that much more important, because if this analysis is correct, you don’t get the “delta” you need (i.e., unemployment doesn’t start to come down) with current fiscal policy.

You couldn’t help but wonder this week if it was ever going to stop raining.  So when it did, everyone was elated.  I suspect the same dynamic will apply to voters feelings about the economy a year from now.  What we don’t know is whether that economy will still be rainy or whether the sun will be at least peaking through.


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10 comments in reply to "An Observation about the Weather with Implications for the AJA and the 2012 Election"

  1. Fr33d0m says:

    Sounds like wishful thinking, but I don’t doubt an upswing in good news would create a similar effect in approval numbers on the left.

  2. Tom says:

    I’d like to think this is true, but the GOP will certainly agree with you and use it as a reason to vote against the AJA, so we won’t get to find out. So the real political question will be: Who will the voters blame for the continued high unemployment? Congress or the White House?

  3. D. C. Sessions says:

    The unemployment/reelection connection is widely accepted, but Nate Silver did some digging on it and came up with a most a very weak connection.

  4. Jim says:

    “But what if more than the level of unemployment, it’s the change that matters?”

    Stating the problem this way is exactly why the democrats and Obama are in trouble. With our technology there can be no excuse for accepting anything less than consistent widespread prosperity. One of thecentral problems is that economists who like to label themselves “Keynesian” have forgotten or perhaps never even read Keynes himself. We don’t need to bow to the financial markets, we have complete power as a democracy to bring full prosperity now. That we don’t is only because the “investor” class has infiltrated all the key institutions of democracy.

    I wrote a post today down those lines.

  5. Sharon says:

    A nice run along Sligo Creek or Rock Creek can lift the spirits, but I’m not sure that your sunny afternoon signals Congressional passage of the AJA.

    I have a sneaking suspicion that the tax cuts will survive but the aid to states and infrastructure spending are going to get axed.

  6. Lee A. Arnold says:

    Mr Bernstein I agree with you and if the President has finally found a policy initiative that is also a good, long, intense campaign issue, while AT THE SAME TIME the Democrats start pointing out that the Republicans won’t agree to initiatives they have agreed to many times in the past because they WANT the President to fail — and we keep banging on this for 14 months — we may see some good results.

    • David says:

      The trick is in the “keep banging on this for 14 months” part. No evidence so far that Obama is capable of staying intense and focused for 14 weeks, let alone 14 months.

  7. Dennis says:

    I agree with Mr. Arnold; if the GOP allows the AJA to pass, much of the credit will have to go to President Obama, and it becomes a positive campaign in which the president runs on his considerable record. If the GOP refuses to let it pass, Obama has still taken the initiative, and the voting record of the GOP becomes a winning issue for the president. Voters, including many Democrats, have been unhappy with the president for not being a more forceful and decisive leader; this is an opportunity to change that impression and show the president as a leader who’s willing to stick his neck out for something seen as desirable by his base without alienating those fickle independent voters. The GOP need not pass this legislation for it to be a boost for the president; if he shows enough scrappiness, it will be to his advantage even if the legislation itself fails.

  8. Ron E. says:

    No one economic number or change in that number will decide the election whether it’s unemployment, GDP growth, etc. The small undecided chunk of the electorate that will decide the election does not have many economics bloggers or readers of economics blogs in it. If these people feel like we have turned the corner and are starting to come out of our long economic problem, then they will vote to re-elect. If not, most will vote to give the other guy a try regardless of who wins the GOP nomination. These are not high information voters who will care about what Rick Perry said about Social Security in his book or how many people Mitt Romney laid off when he worked in the private sector decades ago.

    The real number to watch is the right track / wrong track in national polls. If the right track rises into the high 40s or higher, Obama has a good shot. If it’s around 19% like it is now, he’s toast.

  9. davesnyd says:

    If the AJA is critical to the President’s success, why isn’t it larger? If it really only moves the jobs number by about a point, why not double or triple it? Pushing money to the states is a quick and easy way to get things done; enlisting private contractors to pave highways and repair bridges and rebuild schools ought to be doable, too.

    If public spending “crowds out” private investment, then why isn’t the private investment (with record honey pots in Wall Street coffers) moving the economy? What are they doing with that money if not investing in new equipment and new hires? If they’re putting it “in the bank”, why aren’t the banks investing? If they’re putting into T-bills, then why not tax it, get the money without having to repay it, and use it for highways/bridges/schools?

    If we borrowed, say, $1T and used it, our cost would be about $20B a year– if I understand correctly. Assuming that most of that $1T goes to profits and personal income and gets taxed at an average amount of about 16%, won’t that generate $160B of Federal revenue (and, more or less, a similar amount at the state level)? Or is that revenue already figured into the net cost of the AJA?