The President and the Economy

[Peter Suderman]

Do a president's economic policies matter?  According to John Stossel and Tyler Cowen, not so much. Here's Stossel:

The presidential candidates have been repeatedly asked how they would "manage the economy." With the exception of Ron Paul, every candidate has accepted the premise that this is something the president of the United States should do.

Or can do.

Nonsense.

Democrats act like the president is national economic manager. Republicans pay lip service to free markets, tax and spending cuts, and less regulation -- before proposing big programs to achieve "energy independence," job training and a cooler climate.

And here's Cowen, making a slightly more tempered argument:

This election is certainly important. But based on the historical record, it isn’t likely to result in a major swing in economic policy. Fundamentally, democracy is not a finely tuned mechanism that can be used to direct economic policy as a lever might lift a pulley. The connection between what voters want, or think they want, and what ultimately happens in the economy, is far less direct.

Voters may be concerned about the economy, but there is little evidence that the electorate, as a whole, really wants to engage in close consideration of economics.

There's truth to all this, but let me offer a qualified disagreement. It's certainly true that presidents don't have as much power over the economy as they claim or as press coverage often attributes to them.  No president is going to be able to stride into the Oval Office and single handedly fix -- or, for that matter, destroy -- the American economy. It's too big, too complex, and significant changes generally require the support of Congress.

On the other hand, the president is still quite obviously an incredibly influential figure when it comes to the general direction the country's economic policy will take. What the president says and supports is hugely influential as far as what policies are introduced and the details of how they're crafted. A president may not be able to control every wave and current, and may not even always have his or her hands on the rudder, but one shouldn't make the mistake of thinking that the president isn't playing a major part in steering the ship. So while a president's economic promises may overstate the case, they're far from being all talk.

In a pleasantly ornery speech (telling the largely pro-war and anti-immigration crowd in attendance exactly what he thought of their ideas) at CPAC a few weeks ago, Robert Novak said that, for all his disagreements with McCain, he knew there would be clear differences (in his view, improvements) in domestic policy between a McCain presidency and the presidency of any Democratic candidate.  That strikes me as the right way of thinking about it. The president, in other words, isn't our national econ policy deity, but is hardly powerless, and anyone concerned with economic policy would do well to keep a candidate's stated economic views in mind when heading to the polls.