Before November 2, polling data indicated that the Bush-Kerry contest would be close, especially in the popular vote. In the end, Bush won by 3 percent -- a moderately comfortable margin. Most people wonder why the president did so well. That's the wrong question; we ought to be asking why he did so poorly.
History shows that economic conditions strongly influence the outcome of presidential elections. Incumbents running with a strong economy (e.g., Reagan in 1984, Clinton in 1996) do well; those who preside over poor growth and high inflation lose (e.g., Carter in 1980, Bush in 1992).
Economists have taken to using economic conditions to estimate the share of the vote going to an incumbent president, and their estimations have proved remarkably accurate in the past. But not this year.
Though the economy was sluggish in Bush's first three years in office, it has been quite strong in 2004, with solid growth and low inflation. Using those data, Yale economist Ray Fair expected Bush to garner 56 percent of the presidential vote. But in fact, he gained only 51.5 percent. Why did Bush do so poorly despite the resurgent economy? What happened to those 5 million missing Bush votes?
We must conclude that Iraq is the reason for Bush's subpar performance. Polls show that a majority of voters had decided that the war's costs in blood and treasure have not been worth its supposed benefits. The daily news from Iraq added to the concerns about the president's foreign policies. Voters that would have gone for Bush on the economy ended up voting for his opponent.
Some in Washington will say that the president's strong stand on terrorism pulled him through the election. That's true to some degree; those who worried about terrorism tended to support Bush. But Iraq policy is different from national security policy, and it was President Bush's Iraq policy that caused him trouble on Election Day.
What does all this mean for a second Bush term?
The president considers himself the CEO of the executive branch. Votes are to a president what profits are to a CEO -- they form his political capital that lead to the "profit" of his legacy to the nation.
Imagine a CEO whose advisers recommended a business strategy that led to $5 million in losses. Once the strategy's failure is recognized, the CEO would immediately change course to restore profitability to his company. President Bush needs to revise his policy in Iraq to attract the support of those 5 million Americans who should have voted for him.
But Iraq has turned out to be as much a "people problem" as it is a policy problem for the president. The neoconservative faction among his supporters argued that he should invade Iraq because, among other reasons, building democracy in the Middle East would succeed politically. But the neoconservatives were wrong, and their advice cost President Bush millions of votes (as well as other costs for the nation).
Advisers who give bad advice are harmful to a president who needs all the support he can get to enact his second-term agenda. Bush looks formidable right now in the wake of his reelection and Republican gain in the Congress. The time will come, however, when he will need the support of those 5 million missing voters.
That support would certainly be helpful if he chooses to make good on his pledge to reform Social Security. Giving people ownership over their Social Security deductions and the opportunity to invest that money would be a lasting legacy of this administration and a gift for future Americans. I also would be good politics right now; unlike Iraq and using government to enforce morality, Social Security reform would unite the president's base. If Bush could add the 5 million missing voters, he would have a powerful coalition for change
By reputation, President Bush does not flinch from hard decisions. At this moment of personal triumph, he needs to ignore the easy way forward and ask a tough and far-from-obvious question: Why didn't he do better on Election Day? The correct answers to that question are essential to the success of his second term and to fashioning an enduring legacy for George W. Bush.