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November 11, 2010


Brendan & co-authors wrote: ...voters rewarded the president's party when times were good and punished it when times were bad regardless of whether government was unified or divided. Thus, the 2010 election leaves Obama with less power to promote his economic agenda but all the accountability. If the economy is strong in 2012, he is likely to be reelected; if it is weak, he is likely to lose.

Granting this point, does divided government help of hurt Mr. Obama? I think it helps him Here's why:

Both parties want to achieve a strong economy, but they favor different means to get there. Divided government means that the Republicans have the power to force the President to use their economic agenda to a considerable degree. If the Republicans' economic approach is the more effective one, then including their agenda will make the economy improve more than it would have using a purely Democratic agenda. Then, according to the research quoted above, the President and the Dems will get the credit for that economic improvement.

Specifically, thanks to divided government:

1. Chances are the Bush tax cuts will be fully extended at least for a couple of years. Most people think that's good for the economy.

2. Cap and Trade is dead.

3. Card Check is dead. Either Cap and Trade or Card Check would have been terrible for the economy.

4. If another "stimulus" is enacted, Republicans will not allow it to be used to give away fortunes to Democratic constitutencies. A new "stimulus" bill is apt to focus more on real stimulus, rather than political payoffs. (However, I'm worried that the next "stimulus" might make as little economic sense as the prior one. It might simply allow Republican constituencies to share in the loot.)

Many of us welcome the possibility of gridlock. We believe that no legislation will be economically healthier than the activism of the last two years. I think the hope of gridlock is one reason the Dow Jones Industrial Average has risen 13% since the beginning of September.

Perhaps activism was also an economic negative in the post war period. It would be ironic if Truman won, not because of his attacks on the "do nothing" Congress, but because doing nothing was the right economic medicine and Truman got the the credit when it worked.

Great paper Brendan, I wonder how much of an effect there would be if HCR was not a legislative priority? In theory that would be one less "costly vote" for dems in competitive districts but I suspect the effect would be greater than just looking at roll call votes as there might be a guilt by association factor.

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