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Presidential Approval and Unemployment

John Judis believes that President Obama's fortunes, along with those of the congressional Democrats, are lashed to pretty much one thing and one thing only: job numbers. And he's got some graphs to prove it. Here are Ronald Reagan's approval numbers, plotted against unemployment.

reagangraph.jpg

Bill Clinton's fortunes:

clintongraph.jpg

The trends match, for the most part, perfectly. The implication is that Obama and the Democrats need to do whatever they can, as quickly as they can, to get jobs moving in a positive direction. If that means adding a bit to the deficit in order to pump much more money into the economy, then so be it. The deficit is an abstract concern that mainly represents fears about the economy. The best way to handle it is not to worry about the deficit, but to worry about the economy.

Speaking of the deficit, Brad DeLong and Paul Krugman made an interesting argument at a lunchtime event for the Economic Policy Institute. Accepting a much worse recession in the short term in order to slightly reduce deficits over the long term is a very expensive way to cut the deficit. For one thing, you lose a massive amount of economic activity. The deficit, of course, represents the government's finances. Adding one more employed worker to the nation's rolls does a bit for the government in terms of tax revenues, but it does a lot for GDP in terms of increased productivity. Multiply that by 5 million workers and you're talking about a major difference in aggregate economic performance for a minor change in long-term deficits.

Second, this is a good time to deficit spend. The government can borrow money at uncommonly low interest rates and pay it back in the future, when that money represents a much smaller portion of our total economy, and total tax revenues.The bang for the buck, both in terms of the price of borrowed funds and the economic impact those funds can make, is hugely favorable.

By Ezra Klein  |  September 30, 2009; 4:07 PM ET
Categories:  Economic Policy  
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Comments

The evidence seems quite selective. Why only those two terms? Reagan's approval took a noticeable hit when the Iran-Contra scandal broke, even though the economy was good at the time. Bush's approval went up sharply in September 2001 for obvious reasons, though the economy was in recession at the time.

Posted by: tomscarl | September 30, 2009 4:15 PM | Report abuse

DeLong and Krugman are exactly right. There is a time to worry about short-term deficits and debt, and now is not that time.

Posted by: cjo30080 | September 30, 2009 4:41 PM | Report abuse

What would really be funny is if Republicans came out against increased employment on the basis that happy workers tend to vote Democratic.

I don't know.

My head hurts.

Posted by: carolcarre | September 30, 2009 4:43 PM | Report abuse

These graphs also suggest that a president's baseline disapproval rate is really important. For Reagan, 7% unemployment coincided with roughly 30% disapproval, while for Clinton 30% disapproval matches up with 4% unemployment.

Posted by: jeb_mn | September 30, 2009 4:55 PM | Report abuse

I'm willing to take bets with anyone who's interested that if unemployment is over 7% in 2012 you'll be watching Mitt Romney sworn in as the 45th president in Jan of 2013.

They're wasting time defending the stimulus from February, instead of passing another one, this time aimed at creating jobs, I dont care if you have to pay people to dig holes in the ground.

Posted by: zeppelin003 | September 30, 2009 5:00 PM | Report abuse

The problem with the theory is that the US government is quickly running out of potential lenders: it's difficult to "deficit spend" unless a wealthy someone-else is willing to let you do so.

Savings bonds continue to be available to anyone who wants to help the government a little more! I've read many folks recalling history of the days of Franklin Roosevelt... those were days of big savings-bond buying. The Treasury offers details at its public debt website publicdebt.treas.gov.

Posted by: rmgregory | September 30, 2009 5:01 PM | Report abuse

rmgregory: it's not inconceivable that the government could run out of lenders. we'll know we're reaching that point when interest rates rise while TIPS suggests that inflationary expectations are held in check.

but that moment is not now. i don't have the time to track the reference, but in fact, american households have vastly upped their purchasing of government bonds. by and large, most of the treasury auctions have gone very well this year. interest rates have moved up and down modestly but within pretty well-defined ranges.

in short, there is no sign at this point of running out of lenders.

no, what we're out of is intelligent congresspeople....

Posted by: howard16 | September 30, 2009 5:10 PM | Report abuse

Nonsense. This country has an enormous amount of demand for US Treasuries, and always will so long as the Dollar is the reserve currency. For one thing, whether they like it or not, they're a captive audience! This isnt to say that the Chinese, Koreans, Japanese, et al like the way the greenback's hegemony, but so what. Life isnt fair.

Whats far more destructive to them is nagging deflation that goes on for years in the US. China would face an existential threat if Americans stop buying their salad shooters or crappy TVs for the indefinite future.

Posted by: zeppelin003 | September 30, 2009 5:14 PM | Report abuse

Oddly enough, the only thing Obama is not considering is the low taxes high interest rate strategies of the Reagan and Clinton administrations.

Instead he is getting his Carter on...

Posted by: gorak | September 30, 2009 7:47 PM | Report abuse

Ezra sez: "Second, this is a good time to deficit spend. The government can borrow money at uncommonly low interest rates and pay it back in the future, when that money represents a much smaller portion of our total economy, and total tax revenues."

I'm in favor of stimulus and deficit financing because the alternatives would be very hard on huge numbers of people.

BUT, the quote above is not correct. The Treasury is NOT selling long term debt, but short term debt. No one wants to buy the 30 year stuff. So that huge pile of low interest short term federal debt can easily turn into a budget-eating monster if we have to raise interest rates across the boards (ala Paul Volker in Carter/Reagan years with 18% + rates) to stop runaway inflation - a real prospect of over-large borrowing (ask Argentina!).

Try another argument next time. This one doesn't work.

Posted by: JimPortlandOR | September 30, 2009 8:30 PM | Report abuse

Seeing how Obama has nationalized (or is trying to nationalize) large swaths of the economy, is allowing the Bush tax cuts to expire, continues to drive the country deeper into debt, villifies CEOs, bankers, insurance companies, doctors, spewed billions to special interests via the stimulus, and hasn't done a damn thing to help small businesses, I'd say unemployment will stay in the double digits throughout 2012. Buh-bye dum-o-crats!

Posted by: johnhiggins1990 | October 1, 2009 12:25 AM | Report abuse

Wrong President with the wrong plan. All Obama had to do was concentrate solely on the economy for the first year and fix that, then all his other plans would have been so easy to implement. But being an inexperienced, far left liberal he blew it. Too late dems you're toast. Unemployment cannot recover without small businesses being created. Obama made sure of that.

Posted by: werb2 | October 1, 2009 8:53 AM | Report abuse

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