Sunday, August 14, 2011

President always gets blame for economy

The caller to NPR's "Talk of the Nation" last Thursday was dripping with sarcasm about the man in the White House he referred to as "Barry" or "this administration." The caller said he had decided to cancel a planned expansion of his business because of the economic ineptness of "this administration," which, he said, had never had to meet a payroll or look at a monthly P&L statement. "This administration" had never had a real job, never managed anything, he said.

The president, no matter who he is, gets the blame for a lousy economy or plaudits for a good economy, despite the fact that the president has little control over the economy. Congress controls spending. The Federal Reserve controls the money supply. The president, most often, is left to a role as a cheerleader when the economy needs a boost.

The critical caller got me to thinking, though, about presidents with business experience vs. those without it. In the past 50 years, only a handful of presidents have had meaningful business management experience. Jimmy Carter ran a family peanut warehouse business. George H.W. Bush was in the oil business in Texas. George W. Bush helped manage a baseball team for a while. All three of these men saw the economy turn sour on them and got the blame.

Presidents who had little or no business experience fared better in the economic sweepstakes. Bill Clinton's only occupation has been politics, except for a brief stint practicing law after losing an election; Ronald Reagan was in the acting business, but as an employee, not a decision-making manager; Richard Nixon practiced a little law but mostly practiced politics; ditto for Gerald Ford. Lyndon Johnson claimed to be a gentleman farmer and executive, but his only real interest was politics. All five of these presidents enjoyed better economic results than "this administration" is experiencing today, but their better fortunes could not have been the result of their business management experience.

Economic upswings and downturns are almost never the result of presidential action. They are usually the result of factors beyond a president's control, such as the bursting of the housing bubble and the international debt crisis that plague us today. A president can have some influence over the economy, as Franklin Roosevelt did in his first term by pushing stimulus spending and reassuring the public, or as John F. Kennedy did by proposing a dramatic cut in the maximum tax rates. Even then, however, Congress must act to approve a president's proposals.

Whenever the economy founders, from whatever causes, "this administration" will always get most of the blame.

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