The Republican Economy
In a year, the presidential campaign will be entering its final, thunderous phase. The Republican hopefuls-Vice President George Bush, Sen. Robert J. Dole and all the others-must now be wondering: can the economy's strong performance continue that long? Democrats are surely asking the same question. The economy now belongs to the Republicans. Unless things change, the Democrats may need a miracle to recapture the White House.</br></br>Oceans of political commentary will flow between now and then. Issues and tactics will be analyzed. Much of this outpouring will be irrelevant. A presidential election is not usually a careful choice between opposing political ideologies. Nor do political strategists typically decide the outcome. Rather, a presidential election is a crude public referendum on the present and recent past. Prosperity now favors the incumbents.</br></br>There is nothing subtle about this. Since World War II, only unpopular wars and weak economies have consistently forced incumbent parties from the White House. The Korean and Vietnam wars cost the Democrats in 1952 and 1968. In 1960, Richard Nixon lost narrowly to John Kennedy; the economy was in recession. When Jimmy Carter beat Gerald Ford in 1976, unemployment remained high from the 1974-75 recession. Double-digit inflation was Jimmy Carter's chief liability against Ronald Reagan in 1980.</br></br>Of course, more than pocketbook issues matter in politics. But they are critical for middle-of-the-road voters. When there's a general sense of well-being, people are less eager for change. Other issues have less of an impact. Thoughtful Democrats know this and must have silently cheered last week when the Federal Reserve raised its discount rate-the interest rate charged by the Fed on its loans-from 5.5 to 6.0 percent. Higher interest rates could mean that the economic recovery is finally fraying at the edges.</br></br>Time will tell. But for the moment, the recovery endures. Commentators have termed the economy's performance this year "moderate" or "sluggish." One network television reporter recently called it "creaky." Language obscures reality. The recovery that began in late 1982 is now entering (in September) its 58th month. Of the nine postwar economic recoveries, only one-the 106-month recovery between 196l and 1969-has lasted longer, and arguably it was sustained by Vietnam war spending.