The Economy: What They Won't Tell You

Washington Matters

The Economy: What They Won't Tell You

The economy is the number one issue for voters today and in all likelihood, it will remain so in November. That's why Barack Obama and John McCain are working so hard to convince you that he'd be a better manager of the economy. They both have serious talking points and long policy papers. But there's something they are not telling you and dare not: Even if elected, they can't do much about the economy in the short term. 

The powers of the president to alter the economy and alter the business cycle are really pretty limited, but admitting that on the campaign trail is a sure loser of an idea. Saying you would have little ability to steer the economy a get someone a job is not a vote getter.

It's true, though. If the president could make some snap decisions to create jobs, lower the price of gas and food and pump up the stock market, President Bush would have done it. Or Carter or Reagan or George H.W. Bush, to name a few from recent history.

Bill Clinton often takes credit for the rocket-fueled economy of the 1990s when 23 million jobs were created. But it wasn't because of him. It was a technology boom, the seeds of which started growing before he was president.


Except for a president's tax and spending agenda, which can take years to have a real effect and require congressional cooperation, the president has few tools handy to totally turn a free-market economy around. He can't call the Fed and tell them to lower interest rates. He can't push a button and stop a stock market plunge. He can't go to a sea port and turn around the trade deficit. He can't set the price of gas. Can't pick up the phone and strengthen the dollar. Maybe some subsidies he can give here and there perhaps. Or a small tax rebate as we have just seen.

Remember the disaster of Richard Nixon's wage and price controls forced on the economy in 1971 in an effort to stem inflation? Didn't work. President Ford's campaign motto was "Whip Inflation Now," but he couldn't. Remember then-candidate George W. Bush in 2000 saying he would "jawbone" the Saudis into lowering the price of oil. Hmmm. 

FDR's New Deal is credited with lifting the country out of the Great Depression. True enough. It did, but only after several years, and not long before WW II injected so much more into the economy. 

I'm not being dismissive of presidential economic platforms. Whether Obama or McCain is elected, their economic agenda is critically important as a mission statement for the country. But for either to say they will "manage" the economy is a stretch. There's nothing in the Constitution about a president "managing" the economy. The most a president can do is wish to inherit a good economy and keep it going and maybe even try to take credit for it in a memoir.