Unemployment and Midterms

By JOHN HARWOOD

Published: November 29, 2009

If they crave comfort, Democratic candidates can grab onto this: political science research finds little historical connection between unemployment and midterm Congressional elections.

Getty Images, left; Associated Press, right

The parties of Harry S. Truman and Dwight D. Eisenhower lost a comparable number of House seats in midterm elections in 1950 and 1954 despite differing unemployment rates.

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The latest on President Obama, his administration and other news from Washington and around the nation.  But neither the Obama White House nor outside Democratic strategists count on that evidence to protect them in the midterm elections of 2010. That is why, in a week when the Senate begins debating health care and President Obama reveals his new war strategy for Afghanistan, the White House “jobs summit” may be just as important politically. It represents the beginning of the Democratic effort to decide which new initiatives may be most effective in stimulating new hiring, and how aggressively to pursue them.

Economists say that even robust additional steps beyond the $787 billion stimulus package will only marginally reduce joblessness next year — perhaps by one percentage point. But any sign of pre-election progress may prove crucial to the Democrats’ effort to keep a stormy election season from becoming a hurricane.
Loss of Seats Is the Norm
In the 15 midterm elections since Harry S. Truman won the White House in 1948, the sitting president’s party lost House seats 13 times. The exceptions were in 1998, when Democrats benefited from a robust economy and a backlash against the Republican drive to impeach President Bill Clinton over the Monica Lewinsky affair, and in 2002, when Republicans capitalized on President George W. Bush’s post-Sept. 11 fight against terrorism.
So both parties expect the Democrats’ House majority, now 258 seats, to shrink. Less clear is whether the highest unemployment in a generation will expand the loss to well beyond the average, 22 seats in each midterm election since 1950.
After matching data on joblessness and elections, Seth Masket, a political scientist at the University of Denver, asserted in a recent blog post, “There’s not much evidence unemployment has any effect at all.”
Reagan-era Republicans lost 26 House seats amid the high joblessness of the 1982 recession. Yet Democrats lost a comparable number under Mr. Truman in 1950, as did Republicans under Mr. Bush in 2006, when unemployment remained low.
But that conclusion hardly reassures Mr. Obama’s party. The 1950 and 2006 contests were driven most by national security worries; the economy is expected to dominate 2010. And the major 1982 Republican defeat coincided with the last time unemployment cracked 10 percent — until now.
“What does seem to matter is economic growth,” Mr. Masket observed, particularly pre-election growth in disposable income. Forecasters predict only moderate overall growth of less than 3 percent in 2010, with high unemployment limiting gains in income.
‘It’s All About the Change’
Of the 38 Democratic-held House seats that the political handicapper Charlie Cook deems as in jeopardy, 16 lie in states that had unemployment rates of 10 percent or higher in October. Three of eight endangered Democratic Senate seats are also in those states.
But pollsters say unemployment now shapes views of the economy for voters nationwide. Democratic strategists consider it crucial to demonstrate a positive turn due to Mr. Obama’s policies before the election.
“People need to see that point of inflection,” said Mark Mellman, who advises Democratic House and Senate candidates. “It’s all about the change.”
Other analysts say that on unemployment, all inflection points are not created equal. One variable is how fast joblessness declines; another is whether it falls back below 10 percent.
“Anything in double digits, they’re not going to get any credit for that,” said Daron Shaw, a political scientist at the University of Texas who advised Mr. Bush’s 2000 and 2004 campaigns.
The history of turning points in midterm elections colored by sharply rising unemployment does not settle the argument.
In 1954, Democrats blamed President Dwight D. Eisenhower and the Republican-led Congress as unemployment, which averaged 2.9 percent the year before, rose to 6.1 percent in September. The rate began decreasing in October; Mr. Eisenhower’s party lost a comparatively modest 18 seats.
In 1958, a deep recession drove unemployment from the 1957 average of 4.3 percent to a peak of 7.5 percent in July. Its subsequent decline could not save Mr. Eisenhower’s party from a staggering 47-seat loss.
A 2010 defeat that large would give Republicans control of the House. Mark Zandi, an economist, predicts that under current policies, unemployment, which stood at 7.6 percent as Mr. Obama took office in January, will peak at 11 percent next summer and fall no lower than 10.5 percent by Election Day.
That grim outlook propels the White House search for ways to increase employment more rapidly. Mr. Obama and Congressional Democrats must weigh the uncertain benefits of additional spending against the costs, economic and political, of further widening the budget deficit.
As with health care and Afghanistan, they have no comfortable options.