A Republican Y2K Problem

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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 betransformed into a simple rule of thumb: if there is a recession less thantwo years before a presidential election, the incumbent party loses theWhite House, but if no recession occurs during that time period, theincumbent party wins. As rules of thumb go, this one holds up awfully wellunder the test of time. Over the past quarter century, it's predicted theoutcome 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 theincumbent party, was thrown out of office even though the economy was sevenyears into recovery. That, of course, was attributable to the loss of 13percent 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 thenext 20 months, the scandals surrounding the Clinton presidency will causeDemocrats 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-Watergateelection of 1976, and that one stayed within the historical pattern. Therecession that began in November 1973 and lasted until March 1975 penetratedthat important two-year window. The Republicans, theincumbent party, lost the election. Pocketbook issues influenced the resultin 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 largepercentage of the vote in 2000, just like George Wallace did in 1968.Judging from the last few elections, the only third party with the numbersto make an impact is the Reform Party. But their vote totals have beendropping, not climbing, and absent a run by Minnesota Governor JesseVentura, they're unlikely to have any major impact in 2000. And if he didrun, 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 eightyears of Bill Clinton that they'll take it out on Al Gore in the 2000election and deny him a step to the top rung of the ladder. But as much asit may gall the Republicans, James Carville's battle cry from the campaignof 1992 will probably prevail. When it comes to presidential elections,"It's still the economy, stupid." If there's a recession in the remaining20 months before the 2000 election, history suggests that the Republicanswill capture the White House. If not, history is on the Democrats' side.

Vern McKinley

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