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Democrats Could Fare Even Worse Next Time If They Don’t Fix Economy

To win, you need independent voters and they go with economic sentiment: the Democrats have two years to get that right

By now, it is clear to most analysts of the United States' midterm election that the economy played a huge role in the Democrats' losses. It is also pretty clear that the vote was a protest vote by people reacting to economic troubles, rather than an attitudinal change in the electorate towards a conservative political agenda.

This can be seen from both pre-election polling data and exit polling. For example, 58% of voters said that they were "trying to send a message about how dissatisfied they are with things in Washington". But voters were more likely to agree with Democratic positions on social security, trade policy and other issues. This despite the fact that an "enthusiasm gap" lowered Democratic turnout. As comedian Jon Stewart prodded Obama in his recent interview on the Daily Show: how did we go from "hope and change" to "please, baby, one more chance?"

But with such a volatile electorate, it is worth examining the outcome in more depth. Political scientist Douglas Hibbs has looked at midterm congressional elections in the US since 1950, and found that 92% of the variance can be explained by just three factors. The first two are just measures of how many seats and votes that the president's party had prior to the current election. The third is a measure of how the economy has done since the last election.

The president and his party have no control over the first two variables: these are basically just measuring the fact that, the better it did in the previous election, the president's party will lose more seats in this one. This is partly because, for example, if the Democrats win more seats, they inevitably have some representatives who are more vulnerable because they hold districts with more Republican voters.

Ignoring for a minute that the president and the Democrats could have done a lot more to fix the economy, Hibbs' model would project about a 41-seat loss for the Democrats in this latest election. Since the Democrats lost about 63 seats, they still did significantly worse than would be predicted. But most of their loss could be explained just by the votes they came in with and the state of the economy. And that was enough to lose the House (the Democrats had a 39-seat majority before the election).

Why does the economy play such a huge role in congressional elections?

Well, of course, it is very important to most people, who have to worry about their future employment prospects, retirement savings and other features of their lives that are dependent on the overall state of the economy – even if they currently have a job. But there is another reason: since the two major parties each have a base that will mostly vote for their candidates, most elections are being determined by "swing voters" – about 35% in this latest election.

Most of these voters are choosing a representative with very little information – most of them know little or nothing about the candidates or how they stand on the issues. The performance of the economy is one of the few politically relevant realities they do know something about: they can see what is happening in the labour market and other everyday indicators. For this reason, they will tend to punish the incumbent party and the sitting congressional representatives if they perceive the economy is doing badly.

In reality, the Democrats could have done a lot more to fix the economy – or at least, they could have tried. After subtracting the state and local government budget tightening, the stimulus provided by the American Recovery and Reinvestment Act only made up for a small fraction – about one-eighth – of the private spending that was lost from the bursting of the real estate bubble. This was the Democrats' fatal mistake.

Will they make the same mistake going forward?

Barring unforeseen circumstances, such as a steep decline in the dollar (which would boost economic growth by reducing imports and increasing exports), the next two years do not look good for the US economy. Even the White House is projecting a figure of more than 8% for unemployment in 2012. If President Obama and the Democrats decide to find common ground with the Republicans on deficit reduction, it will likely make the economy weaker still.

Of course, since the Republicans now have the House, the Democrats have a chance to frame the likely poor economic performance as the GOP's fault – depending partly on what the Republicans do. And President Obama may get lucky and find himself up against someone like Sarah Palin in 2012. But betting on your opponents to defeat themselves is not a good strategy.

The latest conventional wisdom is that another, more adequate stimulus package is off the table now that the Republicans control the House. But the president and his party had better find a way around that. At the very least, they would have to fight very hard for what is needed – as they did not do in the last two years – and make it extremely clear that Republican obstruction is the obstacle to economic recovery. Otherwise, the most likely result in 2012 will be a repeat of what we just saw – only with more losses for the Democrats, including possibly the presidency.

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Mark Weisbrot

Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC. He is also president of Just Foreign Policy. He is co-author, with Dean Baker, of Social Security: The Phony Crisis. E-mail Mark:

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