Why is Obama Winning?

PRINCETON – James Carville, Bill Clinton’s chief campaign strategist in 1992, famously expressed a bit of established insider wisdom about winning elections: “It’s the economy, stupid.” Incumbents win if the economic outlook is rosy, and are vulnerable – as George H. W. Bush was – when times are hard. Indeed, throughout Europe – in France, Greece, Ireland, Portugal, Spain, and the United Kingdom – governments have been turned out of office in the face of a crisis that they have seemed unable to address.

By this standard, President Barack Obama should now be in a hopeless situation. According to United States Census data, household income fell in 2011 for the fourth consecutive year. Unemployment remains persistently high, despite the $787 billion stimulus package in 2009, and house prices, though recovering slowly, remain far below their pre-2008 peak.

And yet Obama seems likely to be reelected in November. One reason is that there is no reliable way to render an instant judgment about economic effectiveness, and the legacy that Obama inherited – coming to office in the middle of a major economic and financial catastrophe – clearly matters. President George W. Bush and Prime Minister Gordon Brown are obviously more responsible for the financial crisis than are their successors, who have to clean up the mess.

Moreover, as Zhou Enlai memorably responded when Henry Kissinger asked him about the effects of the French Revolution, “It is too early to tell” (though Zhou apparently thought he was being asked about the consequences of the 1968 Paris student uprising). Tracing the precise consequences of policy measures or institutional reforms – and estimating when they might “pay off” – is hopelessly complex. Much else is happening. Obama could not have known that a European crisis would have a big impact on US banks, and he could not have done much more to get European leaders to solve their problems.