With the surprising and shocking news appearing that President Obama is going to run for re-election, it is timely that Ross Douthat has an op-ed column in the New York Times today discussing the meagre Republican field. It seems as if every possible “good” (or potentially competitive) candidate may stay out of the race.
My guess is that these candidates are thinking strategically and pondering a 2016 run instead. Why? Because the incumbent President is in a solid position to win the next election despite his controversial policies. The economy – due to the business cycle and the domestic policy stability that the 2010 elections pretty much guaranteed – is likely to improve in the next 20 months. The state of the economy and upward trends in the economy (real growth and stock market increases) are significant predictors of incumbent party candidate success according to a plethora of political science studies. As political scientist Michael Lewis-Beck noted in Newsweek last year: “The media and the popular mind really think that candidates and the campaigns make a huge difference. But it’s not as big a difference as the fundamentals operating behind the scenes every day.”
However, for Obama, two looming problems exist even in the realm of “fundamentals”: unemployment and inflation.
Unemployment could be an issue for Obama in purple Midwestern states where things may not get better fast enough. Inflation, though, might not have as much bite. According to research by Joe Stone and Steve Haynes, inflation is more of a concern in high income states where the rich see inflation as a threat to their wealth. However, many of these states are pretty solidly blue ones in which any vote share decline due to wealth preservation concerns by voters is likely — assuming I’m right about the blueness of rich states – to be swamped by the margin of victory given partisan advantage and the number of Democratic voters happy with Obama and his policies (perhaps excluding foreign policy).
Put these two things together and Obama as single-minded re-election seeker should hope for economic stability (if he wants to play it safe) or inflation (if he gets worried about Electoral College considerations). Inflation could lead to short-term artificial heating of the economy (assuming that rational expectations theory isn’t true and there is a lag before people catch on and the vertical Phillips Curve is once again borne out) leading to short-term unemployment drops all the while only ticking off voters in rich states who are either Republicans already or satisfied rich-state wealthy Democrats.
As for those potential Republican contenders, this all might mean they would be wise to stay out and keep their powder dry. However, we should remember that a lot can change and economists would be rich if they could make point predictions about the future state of the economy. Bill Clinton made the wise move to jump into a race that many thought ahead of time would be easily won by George H.W. Bush (though as Stone and Haynes note, duration of the party in power can hurt an incumbent. Bush likely suffered from this after 12 years of Republican rule).
So it might be unwise to try and be too strategic about when you run — time and events might pass you by. Christy and Daniels, if lucky enough to see Obama ousted by the guy running in 2012 since 2008 (Romney), might not be nearly as likely nominees in 2020 as they would be this year!*
* Daniels would be over 70 years old in 2020 and thus really unlikely to be in the running.