Democrats v. the Economy in 2010

Nobody expects the Democratic Party to actually gain seats in November. So let's set the bar lower: is this shaping up to be an OK year for Democrats? I still don't think so. But here's Dan Gross in a very interesting Slate piece:

"Assuming recent trends continue, the U.S. economy will be in its sixth quarter of GDP growth, and the rancor of the health-care debate will be a distant memory. While not producing nearly enough jobs, the economy will be producing a sufficient number to bring the unemployment rate down. Should the stock market simply move sideways, it'll still be 70 percent higher than its March 2009 nadir. Is this a setup for an electoral wipeout?"

It seems to me that the Democrats are going to lose, and most indications from both history and the economy suggest they will lose significantly. This is partly a matter of political equilibrium and partly a matter of economics. Presidents lose congressional seats in midterm elections. This is basically a law of nature on par with gravity. It happened to LBJ in 1966 (-4 Senators/-47 Representatives), Nixon in 1974 (-5/-48), Carter in 1978, Reagan, Bush, Clinton and Bush. The midterms of 1998 and 2002 are the only years to see presidents see net gains in Congress, and you can basically chalk those up the best economy of the century and worst terrorist attack in history.

Now let's turn to the economics. Gross' paragraph is totally accurate, but you could also write another totally accurate paragraph that goes like this:

Assuming administration projections hold, Democrats could be going into the November facing the highest unemployment rate in an midterm election year in the last half century. The Council of Economic Advisers projects that joblessness won't dip below 9 percent by November. The last time unemployment was around 9 percent in a midterm election year was in 1982, and Reagan lost 26 seats in the House. What's more, as political scientist Seth Masket found, there is a statistically significant relationship between rising disposable income and House seat gains. So file this story under Bad News for Incumbents: personal income fell in 42 states in 2009. Add the horrific housing market, whose pain is concentrated in primetime states like California and Florida, and you've got the makings of a tough summer for Democrats.

To be clear, there is no way to know if Dan is wrong. He's been a torchbearer of optimism throughout the recession, and he's been right more than a lot of prognosticators. I just wanted to rain on the parade a bit.