CNN’s Candy Crowley made a noteworthy comment on the air last night, and we’ve heard similar remarks from other media figures quite a bit lately. The subject was President Obama’s prospects for a second term.
“He has to buck history, number one, a president with that kind of high unemployment rate has never been re-elected at 9 percent.”
At first blush, the observation is plainly false. Franklin Delano Roosevelt won a second term when unemployment was at 17%.
In fairness, though, Crowley probably just misspoke, and meant to refer to the post-Depression era. But even if we give her the benefit of the doubt here, the observation is largely pointless.
As a factual matter, it’s true that every president since FDR who’s won re-election has seen an unemployment rate below 7.2%. Will the unemployment rate fall below 7.2% by Election Day 2012? No one, anywhere, believes this is even remotely realistic.
But the context matters, and the media routinely pretends it doesn’t exist. No president since FDR has won with a high unemployment rate because no president since FDR has had to govern at a time of a global economic crisis like the Great Depression or the Great Recession. The U.S. has seen plenty of downturns over the last eight decades, but financial collapses are fairly rare, produce far more severe conditions, and take much longer to recover from.
Of course the unemployment rate won’t be below 7.2%. Under the circumstances and given the calamity Obama inherited, that’s impossible.
The more relevant question is what Americans are willing to tolerate and consider in context. In 1934, during FDR’s first midterms, the unemployment rate was about 22%. The public was thrilled — not because a 22% unemployment rate is good news, but because it had come down considerably from 1932. By 1936, when FDR was seeking re-eleciotn, the unemployment rate was about 17%. How can an incumbent president win re-election with a 17% unemployment rate? Because things were getting better, not worse.
That’s obviously the challenge for President Obama. The numerical thresholds are largely irrelevant — comparing the current economic circumstances to what other modern presidents have dealt with is silly. The more relevant metric is directional — are things better or getting worse by the time voters head to the polls, and if worse, who gets the blame.
What’s more, let’s also not lose sight of sample sizes. CNN’s Crowley made it seem as if no American president has ever won a second term with this high an unemployment rate. But even if we limit the analysis to the post-FDR era, as Dana Houle explained a couple of months ago, “Since FDR only Eisenhower, Nixon, Carter, Reagan, Clinton and the two Bush’s have been elected president and then sought reelection. It’s hard to draw big conclusions from a sample of seven.”
If the media is preoccupied with this metric, it will shape the public’s perceptions and help drive the campaign. Here’s hoping news outlets come to realize how incomplete this picture is.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, September 4, 2011
This week, House Majority Leader Eric Cantor (R-VA) released a memo outlining the House GOP’s supposed “jobs agenda.” In addition to being an assault on organized labor and recommending the elimination of environmental regulations that save tens of thousands of lives every year, the document proposes reviving some of the GOP’s favorite tax cuts, including the so-called “20% Small Business Tax Deduction.”
This particular idea made an appearance in both an “economic plan” that Cantor and House Speaker John Boehner (R-OH) presented to President Obama in 2009 and the GOP’s 2010 Pledge to America. The policy would allow businesses to deduct 20 percent of their income from their taxes, and in Cantor’s words, “immediately free up funds for small business people to retain and hire new employees, and reinvest in and grow their businesses.”
However, as Citizens for Tax Justice pointed out in 2009, there is little reason to think this tax break would be anything but a boondoggle:
The Republican plan proposes to allow a “small business” to take a tax deduction of 20 percent of its pretax income, whether the small business is a corporation or a sole proprietor. The plan defines a “small business” as one with 500 or fewer employees. It makes no distinction based on income. A “small business” making $100 million would get to deduct $20 million of its income right off the top. (Apparently, a company with slightly more than 500 employees would have an incentive to lay off staff to qualify for the tax break!) [...]
A business tax cut is just about the least effective stimulus measure Congress could possibly enact. The tax cuts put more money in the hands of business. But there is very little correlation between a corporation’s cash position and its plans for investment—whether expanding capacity or hiring new employees. Businesses invest in expansion when they believe there will be an increase in the demand for the goods and services they provide. If they don’t anticipate a sales increase, they won’t expand no matter how many tax breaks the federal government gives them.
And the Center for American Progress’ Christian Weller noted in 2010 that, while the credit is restricted to business with fewer than 500 employees, it’s still “an ‘upside-down’ tax break that gives the largest benefits to those who already have the highest incomes” because the amount of the deduction is contingent on which tax bracket a business files in (the higher the tax bracket, the more the deduction is worth):
A deduction reduces the taxable income and thus the taxes that somebody has to pay. A business owner with lots of business and other income will thus get a government subsidy of 35 cents for each dollar in deduction, while a small business owner in the 15 percent tax bracket will get 15 cents for each dollar in deductions…Larger businesses could easily use this windfall to outcompete smaller businesses. A larger business owner with a 35 percent marginal tax rate will get a benefit that is 133 percent greater than the benefit that a smaller business owner with a 15 percent marginal tax rate gets for each dollar in tax deduction.
But for the GOP, this idea is so good that it’s worth bringing up over and over again.
By: Pat Garofalo, ThinkProgress, September 3, 2011