For Halloween, Democrats Try Econ Fright Night

Oct. 25 (Bloomberg) — This Friday, Democrats have their own Halloween scare planned for the Republicans.

The third-quarter data on gross domestic product will be lower than the average for the first two quarters. In swing states such as Ohio, President George W. Bush's opponents will present the GDP number as evidence that Bushonomics is hurting workers and sending the economy into the graveyard.

There's a problem with this Halloween picture. Unemployment in Ohio last month was 5.3 percent, down from 5.9 percent in September 2005 and almost a full percentage point lower than the 6.1 percent in November 2004, when Democrats targeted the state for John Kerry.

Even the national numbers don't really make the argument. Suppose the GDP figure this week comes out at less than 2 percent, even close to 1 percent. That's low, but only relative to the 4 percent average of the first half of the year. This is growth, not graveyard.

What's more, the average worker in Ohio isn't doing so poorly either. In September, the average real wage for production workers increased about 2.2 percent compared with a year earlier. That is almost double the rate that made President Bill Clinton seem like the workers' invincible hero in the second half of the 1990s.

Republicans Should Win

You don't have to have a Halloween sensibility to recall the 2004 torture session in which Democratic Representative Carolyn Maloney of New York played the inquisitor with Gregory Mankiw, then chairman of the Council of Economic Advisers.

Maloney: "Has it been the most persistent jobs recession since the 1930s?"

Mankiw: "I haven't compared every single one."

Maloney: "You're a famous economist. Could you compare this and get it to us in writing?"

Mankiw: "Yes, we could."

With every drop in unemployment that comes, Maloney looks sillier.

If the rule is "it's the economy, stupid," then the Republicans should win in 2006. But they probably won't. The reasons are anything but economic: the war, the Mark Foley scandal, disillusionment at Republican spending. These are things that people feel strongly about, but that also contain a degree of emotion, controversy and illogic.

So why do Democrats persist in making the economic case? The answer is that economics is a logical arena, and Americans like to seem logical. So they pretend they are talking about economics when they are really talking about those other, vaguer impulses.

Not the Same

"Americans don't like not being on top," says Manjeet Kripalani, a scholar and my colleague at the Council on Foreign Relations. "Since 9/11, they haven't been the same, and that also gets expressed in their view of the economy."

The phenomenon also has a political dimension. For what seems like an eternity, President Bush and the Republicans have had two kinds of credibility working in their favor. The first is the incumbency. The second is that they are the party managing the war. Bitter Democrats, in Ohio and elsewhere, watched those advantages give the Republicans a victory again in 2004.

So Democrats and other Bush opponents are on the hunt for their own mantle of credibility. And what better mantle than the support of economists? Maloney's interrogation of Mankiw stood out precisely because Americans usually respect economists. Their very dryness makes them seem trustworthy. If economists say something is so, it must be.

Citizens' confidence in economics is also valuable, for the general assumption in this country is that Americans are most believable when they talk about money.

Economics Masquerade

So Democrats are donning "economics" as if it were a Halloween costume in the hopes of strengthening their non-economic political message.

Charting consumer comfort — a version of consumer confidence — back in the 1990s, pollsters from ABC and the Washington Post broke out responses by party. They found that Republicans were generally more satisfied with the buying climate and the economy than Democrats or Independents. But all three groups marched together. Everyone's comfort level bumped steadily higher over the course of the 1990s, without regard to who sat in Washington.

That unison began to break up this decade. Republicans said they were comfortable with the economy; Democrats and Independents said they weren't. The gap widened in 2002 and has stayed wide. This suggests that Republicans are hyping their econ-responses in order to help their party, and Democrats are doing the opposite.

In the Mix

Of course, Democrats are often lower earners, so maybe they have reason for dissatisfaction. But another ABC/Washington Post chart suggests politics are really at work.

Polled only on their personal finances, Americans have given just about the same response from 1991 to now. They are vaguely positive. Asked about the state of the economy in general — or something that can be blamed on politicians — the average citizen gives wildly varying answers. The stock market, GDP growth and interest rates were all in that mix. So was politics.

The politicization of economics is especially evident in the blogosphere, where supposed economic Web sites are really about economics and politics advancing the agenda of one or the other party.

This week will offer another chance to see political economics in action.

Formerly, Bush opponents said strong GDP numbers didn't matter because not enough jobs were being created. Now the relationship will flip. The jobs data will look great, the GDP less stunning. The critics will find a way to dress up this one too. You can count on it, as sure as Halloween.

(Amity Shlaes, a visiting senior fellow at the Council on Foreign Relations, is a Bloomberg News columnist. The opinions expressed are her own.)

© Copyright 2006 Bloomberg

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