The Accidental Coolidge

Contemporary assessments of presidents are notoriously difficult.  Political passions are too immediate and too intense for objective analysis.  Even the popular ones receive disapproval ratings in the 40-45% range.

A few months ago Obama was compared to FDR on the cover of Time, more recently he’s been compared less favorably to FDR’s immediate predecessor (Hoover):  someone not quite up to the job and whose successor is going to reap the benefits of the economic rebound whenever it comes.

Even after the passage of a little time, assessments can be colored by either who’s doing the ranking or the categories on which they’re ranked.  By way of example think of how slight alterations in computer formulae can swing the BCS rankings (how much weight to give to strength of schedule, what constitutes a quality road win…), or consider how biases can influence judging anything from the Olympics to a beauty contest.  The various “scholarly” rankings of presidents are shaped by who is surveyed and which criteria they’re instructed to use when scoring.  Results vary.

My own personal opinion is that with rare exceptions the economy operates on a cycle largely independent of Presidential actions.  (Moreover, there is a widely accepted lag of 18 months between presidential action and economic results.  It takes time for interest rate changes or fiscal policy to work its way through to the actual economy.)  As a result Presidents generally are remembered in the public consciousness by one sentence that tends not to speak to economics:  George Washington is Father of the Country, Abraham Lincoln saved the Union and freed the slaves, TR was an energetic Trustbuster who practiced gunboat diplomacy, FDR won the war and got us out of the Depression (…or did he?), Truman made very tough decisions and was unappreciated at the time, LBJ’s Great Society was undone by Vietnam, Reagan won the Cold War and restored confidence at home.

Given my own immediate political passions, I’m inclined to think the current President is validating all his predecessors dating back to kindred spirit Jimmy Carter (although he is more liberal than Carter and already has accomplished more).  He certainly makes me think better of Bill Clinton.

When President Clinton left office I thought he’d be remembered as the least consequential two-term president in our history: 8 years of satiating appetites, wasted opportunities, and a failure to notice the gathering storm of radical Islam.  He could have been Nixon going to China on our entitlement problem:  New Democrat cuts a centrist deal with wide support across the political spectrum.

10 years later, I think the assessment holds up but deserves to have a little bile removed.  He was more like an Accidental Coolidge – forced by circumstances to stay out of the way of a remarkable economic boom.  Chris Matthews once asked, yet did not himself answer, if Clinton might be remembered as one of the luckiest presidents:  the economy dotcom boomed as he entered office and tech-bubble-popped the day he left.

The economy was growing at 4.5% in 4Q92 when he was elected – the 7th successive quarter of growth 2 months before he took the oath, several months before his policies passed in Congress, plus another 18 months as mentioned above…

UPDATE 9/29/10:  Stephen Moore in WSJ “Political Diary”

“Presidents deserve credit for what happens during their time in office,” says economist Arthur Laffer. “The Clinton years were unquestionably one of the most prosperous eras in American history, but the fabulous bull market rally of the 1990s did not kick off in January 1993 when Mr. Clinton was elected.”

On the contrary, as charts prepared by CNBC’s Larry Kudlow show, the Dow Jones sat at about 3,900 in early November 1994. The bull started roaring only after the midterm elections swept into power Newt Gingrich and the first Republican-controlled House in nearly fifty years. The Dow rose to more than 8,000 by the summer of 1997 and more than 10,000 by 1999. Equity values more than doubled in the 30 months after the Gingrich revolution. The net worth of the nation rose by roughly $10 trillion.

The bond market was also impacted. Interest rates hit their high in early November 1994 and subsequently fell over the next two years by nearly 250 basis points, or from nearly 8% to just above 5.5%.

Newt Gingrich and Bob Dole were not economic wizards. Analysts generally credit the bull market to “gridlock” — a GOP Congress acting as a check and balance on Bill Clinton’s agenda, which had sprinted left once he was inaugurated.

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