How important is the state of the U.S. economy in determining the outcome of presidential elections? You might ask George H.W. Bush, who lost to Bill Clinton 10 years ago despite an impressive military victory in the Persian Gulf. Almost a decade later — on the heels of an impressive military victory in Iraq — the future of another Bush presidency could hinge on the state of the economy. The bottom line is that most Americans vote their wallets in presidential elections, and that could spell trouble for the current occupant of the White House.

“If we have an economic recovery, the president will be unbeatable. If we have a double digit recession, then the president is beatable by anybody,” political analyst Stuart Rothenberg told hundreds of business leaders at Delta Council's 68th annual meeting May 9 in Cleveland, Miss.

“If we continue to stagger along with minimal economic growth, that's the gray area. Then the outcome of the next presidential election depends on how the president is performing in other areas and what sort of opponent the president draws. Does he draw Howard Dean and win, or does he draw Sen. John Edwards of North Carolina?”

A political handicapper, Rothenberg says his job is to provide voters with a scorecard of sorts, telling who has the advantage, who's winning and who's losing the game of politics. “Anybody who, at this point, is predicting that Bush is certainly going to win, or certainly going to lose, should be ignored. Either they have a partisan axe to grind or they are delusional,” he says.

That's not to say there aren't a few guideposts to follow as we inch closer to election time. Rothenberg recommends keeping a close watch on Bush's job approval numbers, both overall and with regards to the economy, as well as the economic growth numbers, the Dow and the NASDAQ numbers. “These numbers will give you a good sense of how the president is doing.”

Currently, President Bush's job approval rating nationally is between 65 and 72 percent, which Rothenberg calls “extraordinary.” While not quite the 90 percent approval Bush enjoyed immediately following the attacks of 9-11, his current job approval rating is considered remarkable by many political analysts.

However, Rothenberg says, underneath that 65 percent number there's reason for Bush to worry. When Americans are asked if they approve or disapprove of the way George W. Bush is handling the economy, the president's approval rating drops to between 48 percent and 52 percent. “Even those numbers are slightly higher than they were when the war began. Even so, if you are George W. Bush, you are looking at that economic performance number because you remember back when your father ran for re-election,” Rothenberg says.

When asked in another recent poll to rate the economy, Americans responded even more negatively, with 1 percent describing it as excellent, 34 percent as good, 46 percent as not so good, and 19 percent as poor. “One out of every five Americans says the economy is doing very poorly. If you add the numbers rating the economy as either ‘not so good’ or ‘poor,’ you've got 65 percent. That's about the same number that is approving how George W. is doing as president.”

That means, Rothenberg says, that one of two things is happening. Either people have a sense that the economy is starting to do better, or they are waiting until closer to November to measure and evaluate the president's performance primarily by the state of the economy, or their perception of the economy.

Also playing a role in the president's bid for re-election, are his tax cut plan and his prescription drug proposal for Medicare, both currently being debated in Congress. Rothenberg is critical of both the president's initiatives.

“It's not because I don't think there should be a tax cut, and not because I do or do not want prescription drug benefits, but I think the president hasn't played the politics of it as well as he could have,” he says. “People, particularly seniors, don't want to be told they have to go to an HMO doctor in order to get a prescription drug benefit. As far as the tax cut goes, I don't think the White House did a good enough job selling the package to show that it was going to boost the economy in the short term.”

What's more, debate on the Bush tax cut proposal has resulted in a showdown in Congress with a difference in outlook and opinion between the Republican-controlled House, the Republican-controlled Senate, and the White House. “This is the worst thing for any political party. The Republicans have been divided, and it has caused some anger, but now it appears the sides are moving closer,” he says.

“The president needs this tax cut, and I understand that he'd like to see his $726 billion package passed. At the end of the day, though, if he can get a tax cut of $400 billion or $450 billion, he can at least go to the American public and say, ‘we have done something,’” Rothenberg says. “This is very different from his father, who said, ‘We're coming out of this recession. The light is at the end of the tunnel. I can see it.’ Well, he could see it, but apparently the voters couldn't see it.”

In comparison, he says, George W. Bush can tell the voters that he's doing something, that he feels their pain, and that he's trying to do something about it. “And then, Bush is going to say, ‘but it's not enough.’ Now, for a politician, isn't that a great thing to be able to say. A couple of weeks ago Bush was looking to be in difficult shape, but the way it has worked out is actually better for him.”

The bigger problem for George W. Bush, Rothenberg says, is that the election does not depend on the passage of his tax cut package, it depends on the economy. “If he's right, and the tax cut creates more value in the stock market, more optimism, more consumer confidence, more spending, more business investments, and more jobs, then the economy will improve. But ultimately for George W. Bush, it's the bottom line that matters. It is how the economy performs.”

Rothenberg says the prescription drug coverage issue will be handled in “classic Bush” style. “Make a proposal. Back off when it takes significant criticism, and then say, ‘Okay, you guys know generally what I want you do to. Work it out.’ If the Republicans can do this on prescription drug coverage, they will go into the 2004 elections in pretty strong shape,” he says.


e-mail: dmuzzi@primediabusiness.com.