Market Overview

Stronger Economy Helps Obama, Social Conservatives

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As Benzinga reported earlier today, the economy is showing signs of life and may be headed toward a turnaround.

Like almost all things economic, this development has a potential political angle as well. Much of the pre-election planning for Republicans and Democrats (as well as other parties and independents) has been centered on the idea that the economy, come election time, will still be crummy.

Republicans were planning on using this fact to hammer home the idea that Barack Obama is incompetent and that his economic policies do not work. Democrats were going to argue that they have a better plan, but that Republicans in Congress won't let them pass most of it, so they can't get anything done that will put us on the path to recovery.

But what happens if the economy fixes itself? What happens if consumer confidence stays high, unemployment goes down, the housing crisis goes away, and things are somewhat better? How will that change the primary season and the general election? Who will that help and who will that hurt?

Barack Obama: Obama would be the biggest beneficiary of a stronger economy, regardless of how it came to be stronger. Most presidential re-elections, barring scandal or major upheaval at home (like LBJ dropping out in 1968) are a referendum on the economy. If the economy is doing well, the president gets re-elected. If not, he likely doesn't get re-elected. It's the most reliable predictor of political results we have for President. It's safe to say that if the economy continues upward, Obama could glide to re-election. At the very least, he would be helped.

Incumbents in Congress: Right now, voters are in the mood to punish incumbents of both parties. Congressional approval ratings are less than ten percent, which means 90 percent of us would like to choke a Congressman or two to death. While we've seen electoral waves wipe out large numbers of seats for one party or the other, we haven't seen one up and swallow BOTH parties at the same time. That becomes less likely to happen if the economy stabilizes and starts growing again. How, exactly, this will play out in terms of the makeup of the next Congress will depend on local, individual races more than a giant national wave, which makes it harder (this far out) to predict who will control the House and the Senate after the next elections.

Mitt Romney, Ron Paul, and Newt Gingrich: Good economic news hurts all three of these men running for president, as it undercuts one of their central reasons for being chosen as the nominee: that they would be a better president for the economy than our current one. Of these three, it hurts Romney the most. He would almost certainly not get the nomination, and if he did, he would lose. Gingrich has some other talking points he can offer, but much of his non-economic talk is just, well, talk. As for Ron Paul, his reforms would take some selling — and the American people might not be in the mood for major changes if things are (at least temporarily) working. It's sort of the "if it isn't broke, don't fix it" mantra.

Social Conservatives Oddly enough, a strong economy helps social conservatives running for president far more than it helps economic conservatives. If the economy is suddenly not as big of an issue, Republican voters might turn their votes toward someone who talks about different issues that they care about — social issues. This could boost someone like Rick Perry, Michele Bachmann, or even Rick Santorum...especially if any of the above does well in Iowa's Caucuses next month. Think back to the 1992 race, when the first George Bush was running for re-election. He was nearly unseated in the primary by Pat Buchanan based largely on social issues. We could see a similar surge among social conservatives if the economy truly is better.

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Read more of my stories at Benzinga. You can also reach me by email john@benzinga.com or on twitter @johndthorpe.

 

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Posted-In: Barack Obama Election 2012 GOP 2012 Mitt RomneyNews Movers & Shakers Politics General Best of Benzinga

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