Conclusion:
Bush to win.

Background:
This blog's preferred predictive model is based on the work of Margaret Fisk, author of the 1976 work The Gambler's Bible. With some tinkering to account for results post-1976 (thanks Jacques Black) what is clear is that the 2004 Presidential election is likely to be decided by three issues:
  1. Will the traditional Republican vote-getters of foreign policy and limited wars hold up?
  2. Will voters perceive the static unemployment rate in 2004 as a Bush failure?
  3. Will Kerry suffer from the Nader Effect?
Discussion:
For Kerry to win, it's an all or nothing task. If the model holds, Bush needs but one of the three issues to be resolved in his favour to win.

It is difficult to see Iraq providing votes for Bush. However, that's a non-American view influenced by the international press. It is not entirely obvious that wavering amongst early supporters of the war will translate into significant anti-war electoral opposition for Bush.

More complex is the economy. There is no question that the Bush administration applied great stimuli in 2003 to the economy. The effects have been mixed though positive, with the real beneficiaries being equity markets:

  • Real income per capita growth 2001 to 2003 is over 6.5%; and 2000 to 2003 (including Clinton's final year) is 8.4%
  • Stocks bounced over 20% in the calendar year 2003 but are treading water in 2004
  • Credit is still cheap (and the Federal Reserve signaled its intent to keep it that way)
  • Consumer spending is strong
  • On the other hand, job creation has been patchy, and it is the rate of unemployment that unsurprisingly correlates most with Electoral College votes won by incumbents in election years.

Developing that last point, unemployment has stood at 5.6% for every month this year bar one. It is well down from the June 2003 rate of 6.4%. Is it conceivable that US voters will punish the President for this, even if accompanied by a potentially skillfully waged "Two Americas" campaign? At worst the effect ought to be neutral but with no benefit for the Democrats.

Finally, the Nader effect. Only wild-eyed optimists would argue that this is anything but a potential vote-loser for the democrats. Can Nader be completely co-opted by them? Perhaps, but it is a net non vote-winning factor for Kerry even if accomplished: he'll only collect votes he ought to pick up anyway.

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2 comments

  1. Lion of Yonibana // 7/17/2004 07:19:00 AM

    I think the biggest question for President Bush’s chances in November 2004 is this, "Does the 9/11 shock present a new equilibrium in the political economy?" If the answer is yes, 9/11 changed everything, President Bush will be re-elected in spite of arguably over-reaching his hand with the invasion of Iraq or having at best a mixed record on the economy at home. If 9/11 proves to be a temporary shock that does not result in a permanent change in the political and economic trend of the past fifty years, his re-election will be more uncertain.

    In the prism of 9/11, I believe more Americans respond favorably to the question: Is the world better off with Saddam Hussein gone from power? In other words, the President will walk away with more if we split the difference on the question of whether or not there was a rush to war in Iraq. This would be true, even after you add the dilemma of a moderately unstable – say current trends continue – post-invasion Iraq up to election eve.

    On the economy, too, that question looms large. The price of security, I daresay most Americans will conclude, is even higher post-9/11. Thus, in spite of large deficits, modest gains in employment during the President’s term, and mixed results overall for the President's economic policies, he can successfully make the case to voters that his priority was changed to one of protecting the nation by the events of 9/11. Just like Iraq, if we had to split the difference, I believe the President will again walk away with more.

    This, of course, begs the question, "What does it have to do with the challenger, Senator John Kerry?" Or perhaps phrased differently, “What does Senator Kerry have to do to wrest the reigns?” Well, everything. He has to offer a significantly better vision or plan to eclipse President Bush’s post-9/11 stature with voters and persuade them between now and November 2, 2004 to change the quarterback. If 9/11 changed the political calculus, then voters will need a lot of evidence to part with the bird in hand.

    Perhaps a better sports analogy is that of a boxing challenger against a champion: It is often the case that the challenger must knock out the champion outright to win. It is possible, of course, that Senator Kerry has time yet to deliver the knock out punch or have it delivered for him by extraordinary events in Iraq or the economy. Better still for Senator Kerry if voters have really not focused on the elections as yet and that when they do, they look beyond 9/11. But I think it is safe to call the champion ahead on the cards at the moment.

    There is another important question about the impact of 9/11: What effect will it have on all the punditry and political forecasting models that no doubt are based on trends and events of the last fifty years? Once again, if we are in a new equilibrium in the political economy, we would have to revise our forecasting models; but there is an inherent irony in the fact that we can really only revise our models after we observe the effect 9/11 may have had after November 2, 2004.

  2. RJH // 7/28/2004 05:14:00 PM

    Lion, thanks for the comment.

    I don't think 9/11 is a political-landscape changing factor; but I agree that most Americans beleive getting Saddam out was Good. The most interesting part of your comment is about Kerry and the accompanying boxing analogy. He has to use his Thursday convention speech to Show Me The Money. So far it's all been about Bush weakness. Kerry has to do Something to get beyond the close poll margin he enjoys now. Can he do it? I tend to doubt it.

    I believe that current forecasting models still work well. If so, the latest jobs data in the 17 key battleground states will help Bush immeasurably, whatever Kerry says. Only Michigan, W Virginia and Ohio show declines in job growth and they are manufacturing states out of kilter with service sector growth.

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