Is the President to Blame for Unemployment and Gas Prices?
Pedestrians walk past a gas station selling gas for over five dollars a gallon in Los Angeles, California. Photo by Frederic J. Brown via AFP/GettyImages
Paul Solman answers questions from the NewsHour audience on business and economic news here on his Making Sen$e page. Here is Wednesday's query:
Richard Watkins: Why does the president -- any president -- get blamed for unemployment or gas prices, neither of which they have control of? Not even indirect control, in the case of internationally controlled, speculation-driven commodity prices like oil.
Paul Solman: Who says a president doesn't have control over unemployment or gas prices? Franklin Roosevelt cut unemployment by nearly 50 percent during the Great Depression of the 1930's by creating government jobs. After he slowed those programs in an effort to balance the budget in 1937, the economy again tanked. In his Annual Message to Congress on Jan. 3, 1938, according to the FDR Library and Museum, he reversed course yet again:
"To many who have pleaded with me for an immediate balancing of the budget, by a sharp curtailment or even elimination of government functions, I have asked the question: 'What present expenditures would you reduce or eliminate?' And the invariable answer has been 'that is not my business -- I know nothing of the details, but I am sure that it could be done.' That is not what you or I would call helpful citizenship."
There are those who dispute the wisdom or even efficacy of President Roosevelt's efforts, arguing that the economy would have created even more jobs had he kept government out of the picture. Mitt Romney might well be among them. It is, however, a counterfactual impossible to assess. And up until recently, it would also have been considered far-fetched. Granted, ex hoc does not prove propter hoc -- that is, because Thing Two comes after Thing One does not mean it was caused by Thing One. But when it comes to the always-iffy issue of economic causation, the case for Presidential job creation under FDR seems about as good as it gets.
As to gas prices, we've squirreled away almost 700 million barrels of oil in the U.S. Strategic Petroleum Reserve, pretty close to capacity (727 million). Don't you suppose that if the President opened the spigot, the price of gasoline would come down? I'm not saying he should tap the SPR, mind you, but just asking: what's likely to happen to prices if he were to?
On the other hand, we ran a story on political forecasting some years ago which featured, among other experts, the noted Princeton politics professor, Larry Bartels. His take on the irrational expectations of the electorate with respect to Presidents and their powers was jaw-dropping. From the transcript:
Larry Bartels: We looked at data from the weather service over the whole 20th century and there's a pretty strong pattern of incumbents doing less well in particular election years in particular states where things have been either too wet or too dry.
Paul Solman: Too wet or too dry?
Larry Bartels: Yes. People feel bad. They're less enthusiastic about the incumbent. They don't have the ability to sort out exactly why things are going bad and attribute part of the responsibility to the President.
In fact, Bartels thinks the extreme inclemency of 2000 cost the Democrats the White House. Much as President Wilson's re-election was threatened by the once-famous New Jersey shark attacks of 1916, an early assault on the Jersey shore.
Larry Bartels: We looked to see whether people in the communities along the shore voted against Woodrow Wilson when he ran for re-election because of the shark attacks. And sure enough, there was an effect there as well.
President Wilson's Administration had moved quickly to counter-attack and keep people out of the water. But, said Bartels:
"People along the shore were unhappy about the fact that Wilson wasn't doing anything to control the shark attacks. And were more likely to vote against him as a result."
The thrust of your question, Richard, is to put a president's powers into relative perspective and in that sense, I don't disagree. But I would caution you not to overstate the case.
We at Making Sen$e are working on a story to explain where the monthly unemployment numbers come from. To do so, we are looking for interviewees who have worked on the Current Population Survey (CPS; household survey) and/or the Current Employment Statistics survey (CES; establishment survey). Are you a former surveyor? Do you know one? If so, we want to hear from you! Please email us at firstname.lastname@example.org. Be sure to include your contact information. Very much obliged.
As usual, look for a second post early this afternoon. But please don't blame us if events or technology make that impossible. Meanwhile, let it be known that this entry is cross-posted on the Rundown- NewsHour's blog of news and insight.Follow @paulsolman