Academic journal article
By Hacker, Jacob S.; Pierson, Paul
Presidential Studies Quarterly , Vol. 42, No. 1
Presidents shape the economy; the economy shapes presidencies. If anyone doubted this, the first three years of the Obama presidency offered a stark reminder. Swept into office on a tide of discontent prompted by the worst financial crisis since the Great Depression, President Obama promised to create a "new foundation" for economic growth and shared prosperity (Jacobs and Skocpol 2011). After three decades in which the richest of Americans had gained dramatically, yet middle-class Americans had seen their wages and economic security stagnate, Obama offered an ambitious domestic agenda: health care reform, financial reform, energy reform, political reform. But while he achieved notable victories, his first three years ended with the nation beset by devastating unemployment, economic inequality widening, his congressional majorities gone, and conservative activists and resourceful interest groups waging a highly successful battle against his now-crippled agenda.
President Obama's rocky experience indicates both how central and how perilous long-term economic reform is to presidential leadership. The president is widely recognized as a manager of prosperity, the elected official with the greatest incentive and capacity to focus on the economy as a whole (Weatherford 2009). And yet, the prospects for presidential leadership in the economic realm depend heavily on the president's relationship to broader partisan and interest-group forces over which presidents have only partial control. In contrast to other areas of presidential responsibility, the scope for unilateral executive action in domestic economic policy is inherently limited. Moreover, the ability of presidents to change the deeper contours of the economy hinges on sustained, coordinated action over substantial periods of time. As President Obama learned to his regret, the conditions for such ongoing influence are difficult to cultivate.
This tension--between presidential ambitions and presidential authority--is at the core of the presidents' role in the ongoing organized struggle to create durable changes in the American political economy. And yet it is curiously lacking in most social science analyses of presidents and the economy. Instead, this scholarship has focused much of its attention, and increasingly high-powered technical ammunition, on a far narrower topic: presidents' ability to shape the economy in ways that influence the prospects for their own reelection (e.g., Abrams and Iossifov 2006; Alesina and Rosenthal 1995; Erikson 1989; Hibbs 1987; Nordhaus 1975). This, in turn, usually boils down to studying presidents' effects on selected economic indicators shortly before the presidential election, the period in which the effects of the economy on voters' choices appear strongest. As James Campbell (2011, 3) puts it, in a recent addition to this literature to which we shall return, these studies do not tackle "the monumental challenge of measuring the economic impact of presidential policies beyond the immediate terms of a presidency." Rather, "they are content, as most voters seem to be, to assess the more limited and proximate records of the presidents around their time in office."
This narrow focus reflects an understandable wariness about the ability of social scientists to link enduring economic shifts to specific presidents. More fundamentally, as Campbell's quote suggests, it flows naturally from a long tradition of emphasizing voters' capacity to reward or punish presidents for the economy's performance. Yet this constricted focus has several debilitating consequences. First, it draws attention away from more fundamental questions of political economy, which revolve around how governing coalitions shape economic structures and rewards over the long-term. Second, the central theoretical orientation of existing research toward unilateral presidential action and elections provides a very shaky starting point for advancing such a broader discussion. …