Ezra Klein writes yesterday about the effects of deficits and the economy on growth, with cameos from political scientists Larry Bartels, Gary Jacobson, Michael Lewis-Beck, and Seth Masket. He also discusses some of my graphs from this previous post, which showed how presidential election outcomes depend much more on the economy than on the size of the deficit.
The motivation for Klein’s article is this:
bq. With merely five months before the election and the outlook grim for Democrats, we’re starting to hear rumblings of a fight within the White House. The political side, we’re told, wants to focus on the swelling deficit, which it believes is contributing mightily to the public’s sense that the economy isn’t being effectively managed. Karl Rove, who’s been on the political side of a White House himself, agrees with them: “People’s concern about the spending and the deficits and the debt and the out-of-control government have been growing and growing and growing,” he said on Fox News. “And it’s one of the key drivers in the 2010 election.”
See also Jackie Calmes’ reporting in the NY Times:
bq. In Mr. Clinton’s day, the economic team, asserting that a credible commitment to fiscal responsibility would reassure financial markets and lead to greater long-term growth, won the argument in favor of deficit reduction, helped by moderate Democrats in Congress. These days, the Obama political team has the edge, again in the cause of emphasizing deficit reduction and with an assist from Congressional Democrats nervous about the midterm elections.
Do Obama’s political advisors and “nervous” Congressional Democrats — not to mention Karl Rove — really think that the deficit will cost them votes in the midterm election?
In my last post, I argued that (1) the public cares far more about economic growth and jobs than the size of the deficit; (2) there is nothing approaching majority support for deficit reduction when alternatives like tax cuts and spending on jobs are presented; and, as Ezra notes, (3) the public does not punish incumbent presidents for running up the deficit, they punish them for weak economies.
To that, let me add two further points. First, as this Gallup poll suggests, the deficit is much more of a concern for Tea Party supporters than anyone else. That is to say, concern about the deficit is strongest among those least likely to vote Democratic.
Okay, fine, but couldn’t Democrats still lose votes at the margins? My second point: historical elections data suggest that this is unlikely. Below I plot House seat losses for the president’s party against the percentage change in the federal debt from the previous year.
The line summarizing this relationship is nearly flat and the relationship itself is statistically insignificant. The story is also the same in midterm years only and in Senate elections. Contrast this with the well-known relationship between economic growth and midterm seat losses.
In congressional elections, just as in presidential elections, the president and his party are not punished for running up the debt. They are punished for a weak economy. To the extent that Obama and congressional Democrats face a trade-off between increasing the deficit and stimulating the economy, stimulus is the smart political choice.