On the principle that we’ll remember it if he’s right, and forget it if he’s wrong, Chris Sheil predicts electoral defeat for Bush and Howard in 2004. A loss by Howard is certainly a possibility, particularly if the housing market tanks rapidly, but I think the odds in favour of Bush are strong.
Now that Saddam has been captured, I think Iraq will be, at worst, neutral for Bush. I think a substantial US pullout is on the cards once the June deadline is met. If there are genuine elections and a reasonably stable government by that time, it will be reasonable to claim ex post that the benefits of the invasion exceeded the costs. Even if this isn’t the case, the Republican base and much of the swing vote will be satisfied with shooting Saddam and pulling out.
On the economy, I think there’s probably enough momentum in the recovery to carry Bush through to November even if long-term interest rates rise substantially (as they ought to, in view of the CAD and budget deficits). Again, I see this as a near-neutral issue rather than a big winner for Bush.
The big advantage for Bush is that, given his political position, he doesn’t face a budget constraint. Bush can promise more tax cuts and more military expenditure while matching the Democrats on any domestic expenditure issue that has electoral bite. Of course, this will imply unsustainable budget deficits, but it’s already clear that no-one outside the Democrat camp is going to call him on this. The NYT Op-Ed page may not like the deficit but its news columns are sticking to “he said, she said”. If the Republicans say they have a magic money tree, that will be reported in the headline and any refutation will be buried in the body of the report.
It’s politically impossible for a Democratic candidate to match Bush on this, and even if this weren’t the case it would be most unwise. The adverse consequences of chronic deficits won’t emerge for a few years yet. For Bush that means, in effect, that the problems can be left to his successors. But for a first-term Democrat it would spell disaster. And the worst possible outcome would be for a Democrat to try and outbid Bush, then lose anyway.
If a victory is not to prove worse than a defeat,the Democrats have to run on the complete repeal of the Bush tax cuts (this is Dean’s position and, I think, Gephardt’s also). Unfortunately, I don’t think it will be possible to win on this platform.
While I’m linking to Chris, I’ll note that he picked up the slack while I was off air with this post which was better than what I would have written on the same point.
John Quiggin 
Let me admit first that I haven’t actually crunched the numbers. But it seems to me on the face of it that they shouldn’t need to go all the way back to the pre-2001 tax scales to reign in the US deficit. For one thing Bush’s spending record means there must some fairly easy savings to be made on the outlays side, especially in Defence. And even if I’m wrong and in fact you do have to take all the tax cuts back to get the budget under control the Dems don’t have to admit so – GWB won’t be in a position to criticise anyone else’s maths on the hustings.
So why be silly enough to promise to repeal ALL of the cuts? Far better to run the line of “we could and can afford to help godfearing working families but those presents to GWB’s rich backers were and are totally unaffordable. They’re a threat to national security”.
If the June deadline is met. To my mind and with current activity in Iraq maintaining a status quo, it seems a game call to say the US will be out of Iraq by June.
I cannot predict a Bush defeat or a Bush victory. Too much can change in a year. America may pull out of Iraq before 2004, but I doubt it; the British have indicated they’ll be there until 2006. The economy may recover, but will the jobless numbers dwindle? The later will be far more important in determining the election.
However, I predict that the race will be close; it will come down to one or two states between each party. Most will remain as they were in 2000: the North East, Great Lakes and West Coast going Democrat, and the South and the bulk of the Praries/Mountain remaining Republican. One can model the phenomenom as a big Mackerras Pendulum – albeit with unequal weights for different states. (Usually, such a model would be useless, because there would be little pattern between subsequent elections. Not this one: blue states have got bluer, and red states have got redder.) John Zogby thinks that Florida and Arizona will be the pivotal states; I alledge it will come down to whatever swing it is in Ohio.
As for who gets the Democratic nomination – 80% chance Dean, 19% Clark, and 1% Vermin Supreme.
As Malcolm Mackerras might paraphrase Howard deVoto, in respect of two-party preferred voting elections, “Nothing is for certain, that’s for sure”.
Still, Christopher Shiel is engaging in the time-honoured left-wing past-time of wishful thinking about John Howard. The deserts of Australian political punditry gleam white with the bleached bones of pundits who underestimated John Howard.
I think that Howard still has the aces in hand, strong on the Un-Holy Trinity of economic prosperity, military security, civic identity. I am sticking with my June prediction that Howard will win in 2004, by a whisker.
I agree with Pr Q that Bush will win the US election in 2004. He has neutralised Iraq as a security problem, thanks in the main to the professional competence of the US Army. And he largely owns the war on terrorism. The US economy is probably going to boom for a couple of more years, thanks to fiscal, monetary and currency expansion. That is, until interest rates and debt financing catch up with US corporations, both public and private.
The odd thing about Bush Republicans is that they are behaving exactly like the big spending, deficit mongering left wing parties of the seventies, the ones that New Right economist used to win Nobel Prizes criticising. Except that these days, inflation is in asset, rather than goods, markets. Which means it is a plus rather than a minus. But financial inflation does not last forever, as the example of Japan indicates.
So I repeat my call – any one up for the trifecta of Howard, Bush and Blair?
I am offering 3:1 against. Come on Lefties, have a flutter!
Hmmm, I see Bush swinging in the wind. The US economy will go back in to recession about May or June – there’s a strong correlation between money supply and GDP with a six month lag, and money supply contracted late 2003. Also, current growth figures or loaded with bogus hedonic accounting fudges like you just wouldn’t believe, and cannot be taken seriously. Bush’s White house has gone all out to pump the economy – tax cuts, a quarter-fold increase in spending, a “voluntary” (can’t think if a better word) war, and it can’t be sustained, even with the photo-copy machine round the back of the treasury (already the USD is devaluing quickly, and other currencies want to slide with it).
JWH is a tough call. I figure he’ll go for October 30, since it’s the last Saturday before the US election and the latter will simultaneously provide a media distraction of the first order, plus remind everyone of the terror/fear/”strong man” cocktail he loves to stir. There won’t be an election before August (constitutional hassles with the Senate plus some writ issues), and then there’s the football finals. It seems to me for Latham it’s all about momentum in the first half of this year – Howard is beatable, but not easily.
-p
Howard to lose, (IF Latham doesn’t go insane); Bush to win fairly comfortably against Dean.
I’m with pwe. I think the fundamentals are shocking for the US economy, with debt at record levels in all areas. It’s been held up by a massive fiscal and monetary stimulus which has pretty well run its course. The falling dollar is helping but its not falling against China.
I really can’t see how a strong sustained recovery is possible from a position of record household and corporate debt. When consumers decide they can’t take on any more debt, the economy will stall (as the Japanese economy did in the same situation). That could happen early this year.
And if the economy tanks the incumbent loses, regardless of who is running against him. Electors don’t normally vote new leaders in, they vote old ones out.
So I’m picking George W to lose. But I can’t see John W losing. He’s just too smart a politician.
I’m not so sure Dean is a dead set loser (I’m not so confident he can win either). Reading dKos a couple days ago they mentioned Dean has a 100 000 strong activist army in the swing states alone. That gives him a huge get out the vote and canvassing ability.
I certainly agree the US is economy heading for grief – but probably not this year. A collapse of the greenback will benefit economic activity in the very short run, and Greenspan’s no Volker. Count on stagflation sometime during the next presidential term, but not before November 2004.
As for the ‘jobless recovery’, all recoveries are jobless at first – when you hear the term in common use you know that the labour market is about to catch up (like hearing “the business cycle is dead” at the very top of a boom). I reckon US employment growth will take off around the middle of the year.
On your first post, DD, I agree that it’s arithmetically possible, but I think it will prove politically untenable to promise partial repeal without ending up leaving nearly all the tax cuts untouched. It would be better to repeal the entire tax cut and then give specific tax relief on a smaller scale.
On your macro prognosis I agree, though the real power is now in the hands of Asian central bankers rather than Greenspan. On ‘jobless recovery’ you’re right, though I have the impression that the jobless phase seems to have been longer in the last couple of US cycles and in the post-1990 Australian cycle. OTOH, those cycles had long expansion phases too (still unfinished in Australia’s case).
I think the economy will assist Iron Mark.
If JQ is correct and housing corrects 20-30% then goodbye Johnnee.
If however things continue swimmingly then the RBA will lift rates to 6-7% which will then impact on housing.
Either way it bodes well for Iron Mark.
Bush is not doing all that well out of the Saddam capture. See http://www.emergingdemocraticmajority.com/newsletter.cfm?nl_id=51&nla_id=100 The Iraq thing could still swing either way and his domestic numbers continue to slide. His largest challenge is that his support is fading among independents. As a polarising leader he will probably draw a higher turnout from the Republican base but that is not, on its own, enough to re-elect him.
His lead over Dean is 10 points. At the same time in 1992 Bush I led Clinton by 25 points. I am not predicting that Bush will lose, just that his re-election is by no means assured at this stage.