TheMillerCircle.org

I am resending this earlier posting, as I have added a figure from the Hibbs equation, which you can visualize towards the bottom of the page. The accuracy with which Hibbs predicts the midterm elections, going all the way back to 1950 strikes me as conveying an important relationship, one that argues against an ideological interpretation of the 2010 election. Comparing the close proximity of the Hibbs calculation with the midterm election results provides too good a fit to deny the implication that it conveys, which is probably what sensible people thought anyway. Right?

Despondent though we may be with the outcome of Tuesday’s elections, it fell nicely into the predictive equation of political scientist Douglas Hibbs Jr; he has formulated an expression that predicts midterm elections in the United States, justified by studies of previous elections but  based on only three parameters, including (1) the number of House seats won by the in-party at the previous on-year election (in this case 2008), (2) the vote margin of the in-party’s candidate at the previous presidential election (2008), and (3) the average growth rate of per capita of real disposable personal income during the congressional term. He has studied our midterm elections from 1950 to 2006 and gets very high correspondence in his analysis. So, according to Hibbs, it’s the past and current trends in personal income growth that matter  most, together with the margin of victory for the last election. For the 2010 midterm election, he states “Given the partisan division of House seats following the 2008 on-year election, President Obama’s margin of victory in 2008, and the weak growth of per capita real income during the first 6 quarters of the 111th Congress, the Democrat’s chances of holding on to a House majority by winning at least 218 seats at the 2010 midterm election will depend on real income growth in the 3rd quarter of 2010. The data available at this writing indicate the that Democrats will win 211 seats, a loss of 45 from the 2008 on-year result that will put them in the minority for the 112th Congress.”  Since third quarter real income growth was poor, the estimates of house seats lost would be greater, as they were. Indeed, it was a loss of historical magnitude, but entirely consistent with Hibbs’ calculations.

The equation is as follows:

Hibbs U.S. Midterm Election Equation

How successful is this approach? The graph below shows how this equation (solid triangles)  matches the electoral results (sold circles) and illustrates good correspondence reaching back to 1950, and moving forward through the 2006 election. The majority needed to rule the House is represented by the line at 218 seats.

Midterm Party Elections and Hibbs Equation

Now this may be too much for most of you and it is a little thick for something transmitted in the morning, or at any time for that matter, but the historic accuracy of the Hibbs equation suggests that our midterm voting behavior places very heavy reliance on the growth of real income between election for the Presidency, in this case 2008, and the personal economic growth during the intervening 8 quarters (the last of which wouldn’t be available until after the election, so the final predictive result of the equation is not in, though the results clearly speak for themselves; more Democratic house seats were lost than predicted based on six quarters, but the seventh and eighth quarter data on income were not available when this estimate came out).

So, what does all this have to do with Obama and the Democrats? It’s quite simple–the election results have nothing to do with ideology, but everything to do with economic growth. On the one hand, it is unfair for the electorate to hold Obama responsible for sluggish growth when the Bush years created a recession that can’t help but be the biggest since the Great Depression. But, that’s the way the public has been voting since at least 1950. So the course is clear for Obama and the Democrats–they have to invest in growing jobs and the economy if they expect to do well in 2012.  Duh! It is clear that the stimulus package of 2009  was too small (even Larry Summers has admitted to that) and more than ever Obama needs someone in the White House who can speak forcefully about what is being done to create jobs. Neither Larry Summers nor Tim Geithner were/are effective spokespersons on this matter because they were/are tainted–they had responsibilities, especially Summers, for getting us into this fix in the first place. Obama needs a new financial person, a new team–one completely disconnected from the meltdown, who has the intelligence and the drive to articulate the need for expansion and not contraction of job creation. Elizabeth Warren would be an excellent person to fill the void, but she will be a little too peripheral and fully engaged in setting up the consumers protection agency established by the Dodd-Frank Bill. The Republicans who want to cut spending will only make things worse–we tried that under Hoover. It is silly to even mention that this strategy should be taken seriously. But, then again, it’s the Republicans.

Obama should take heart from the equation and not get too analytical about the downfall of Democrats–it was massive and yes there was something of a referendum on him during this past election and he is rightfully pondering its significance. But it’s the creation of jobs that will determine his fate in 2012 and he needs to understand that, like it or not, the 2012 election begins in January 2011 if not sooner. If he is every going to become a transformational President as historian Lawrence Goodwyn believes he can be, now is the time to make that left turn. Obama cannot afford to be overly cautious and overly cooperative with the Republicans. They are out to destroy his presidency and keep him as a one-term President. He needs to stand up, grab the brass ring and go like hell for a victory lap.

Obama needs two people speaking with the same voice on job creation and our economy. He needs to explain, by emulating FDR’s fireside chats, that the American economy has been hollowed out by shipping too many manufacturing jobs overseas and we must invest in developing a new economy aimed at saving energy, with more high tech investments, more research and less emphasis on approaching our problems through military solutions.  He is good at that sort of thing, but he needs to be honest and speak with clarity about how we got here and why jobs are not coming back very quickly.  But, he also needs another financial guru, either a better economic adviser or Treasury Secretary (not Geithner) who will have the press on his/her heels, but project the same message with force and continuous reminder of the historical precedence–my choice  would be Joseph Stiglitz as the new economic adviser and then someone cut from the same cloth to replace Geithner as Treasury Secretary. He needs to take the high ground away from the Republicans who are full of themselves right now, but who will also be heavily divided on many issues. Can Obama find a sufficient number of Republicans in the House to pass another stimulus package, but this one with less reliance on tax breaks and more investment in things that count, like education and energy? Probably not.  Can he get Reid to suspend the filibuster rule in the Senate to get things done? I doubt it. You can break the filibuster rule with a simple majority, but with such an evenly divided Senate, getting 50 votes to end it might be very challenging.  It is time for Obama and the Democrats to go for broke, something very new in the playbook.  If Obama tries to move to the center right and comes up with very little to show for it, he will be a one-term President and the Democrats are likely to sink further into obscurity. Then the dominance of American corporatism will be nearly complete. Far more rests on Obama’s shoulders than we might have imagined before the November 2010 election. In reality, it may be too much to ask of one person.  GW Bush and the Republicans have put us in a very deep hole and quick, easy solutions may not be possible. We have to give Obama a lot of credit for operating effectively in what he has achieved, even though many of us hoped that he would be more progressive. But we have to acknowledge that no other President, going back to FDR, Truman, Carter and all the way up through Clinton, was able to get through a healthcare bill and each one that tried ran into roadblocks from the Republicans and conservative Democrats. What got passed however, is a work in progress, not a final solution. The same can be said about the Dodd-Frank finance reform bill–it still allows too much wild speculation by big banks and they remain too big to fail and unrepentant about their actions. But for each of his successes, Obama has been too willing to compromise and too eager to please Republicans. We need to encourage him to take a trip down the yellow brick road and get reinforced with the courage he will need to make new lion-hearted decisions.

RFM