Commentary

A Republican Y2K Problem

By Vern McKinley
March 31, 1999

The current economic recovery, which began in March 1991, is now eight years old. It thus surpasses in length the Reagan recovery, which lasted from November 1982 to July 1990 and helped President Reagan to become the first president since Eisenhower to serve two full terms. Obviously, the length of the current recovery has helped President Clinton stay in office, and it will likely allow him to become only the second president since Eisenhower to serve a full eight years. But what do our economic good times portend for the presidential election in 2000?

The relationship between economic vitality and electoral success can be transformed into a simple rule of thumb: if there is a recession less than two years before a presidential election, the incumbent party loses the White House, but if no recession occurs during that time period, the incumbent party wins. As rules of thumb go, this one holds up awfully well under the test of time. Over the past quarter century, it’s predicted the outcome of every presidential contest:

  • Nov. 1996: Recession 5 years prior; incumbent party wins.
  • Nov. 1992: Recession 20 months prior; incumbent party loses.
  • Nov. 1988: Recession 6 years prior; incumbent party wins.
  • Nov. 1984: Recession 2 years prior; incumbent party wins.
  • Nov. 1980: Recession 4 months prior; incumbent party loses.
  • Nov. 1976: Recession 20 months prior; incumbent party loses.
  • Nov. 1972: Recession 2 years prior; incumbent party wins.

In fact, you can go back more than 40 years and this rule of thumb holds up, with just one exception. In the 1968 election, the Democratic party the incumbent party, was thrown out of office even though the economy was seven years into recovery. That, of course, was attributable to the loss of 13 percent of core Democratic voters to the presidential bid of George Wallace.

One could argue that even if the economy does not slip into recession in the next 20 months, the scandals surrounding the Clinton presidency will cause Democrats to lose the White House in 2000 regardless of whom they nominate. But the only clear precedent we have in this century is the post-Watergate election of 1976, and that one stayed within the historical pattern. The recession that began in November 1973 and lasted until March 1975 penetrated that important two-year window. The Republicans, the incumbent party, lost the election. Pocketbook issues influenced the result in 1976, and it is likely that they will influence the result again in 2000.

It can be argued that a third-party candidate might draw off a large percentage of the vote in 2000, just like George Wallace did in 1968. Judging from the last few elections, the only third party with the numbers to make an impact is the Reform Party. But their vote totals have been dropping, not climbing, and absent a run by Minnesota Governor Jesse Ventura, they’re unlikely to have any major impact in 2000. And if he did run, Ventura would be more likely to draw off Republican votes in any case.

Some Republican pundits are hoping that the public will be so sick of eight years of Bill Clinton that they’ll take it out on Al Gore in the 2000 election and deny him a step to the top rung of the ladder. But as much as it may gall the Republicans, James Carville’s battle cry from the campaign of 1992 will probably prevail. When it comes to presidential elections, “It’s still the economy, stupid.” If there’s a recession in the remaining 20 months before the 2000 election, history suggests that the Republicans will capture the White House. If not, history is on the Democrats’ side.

Vern McKinley writes regularly on financial and regulatory issues for the Cato Institute.