Who bears blame if economic policies or the nation’s economic performance are not what one likes — Congress or the president?
In an election year like 2004, visitors from other planets who read our newspapers and watch TV might assume that the U.S. president has extraordinary economic powers and responsibilities. That would not have been the case, however, until the last 70 years or so. Before the presidency of Franklin Delano Roosevelt, Congress was generally viewed as having more power and responsibility than the president.
These differences over time highlight an important question. In 2004, who is responsible for what with regard to the economy here in the United States? Is it the president, Congress or none of the above?
First, let me assert that from the point of view of most economists, “none of the above” is the most correct answer. Most of the important things that happen in an economy — including manifestations of the business cycle like unemployment — occur for reasons largely unrelated to government actions.
Making that argument is an uphill fight, however. Most of the media and general public strongly believe that if the economy is either good or bad, it is because government made it that way.
Let’s just concede that government does play a role. If it does, who bears greater responsibility? My sense is that most people think the president has a great deal to do with many aspects of national life, including economic performance.
We still have the same Constitution, however, that we had before FDR. That document specifies a division of powers between the legislative and executive branches. As students, we learned this balance of powers was designed to further democracy and deter hasty and imprudent government action.
The Constitution allows the president to submit specific legislation. If Congress does not act, however, no law can change. The president has the power to approve or veto any bill passed by Congress. Congress can overturn a presidential veto with a supermajority. Both branches have to act for laws to change.
Many people forget how frequently one or more houses of Congress are controlled by one party while the president belongs to the other.
During nine of 28 Congresses since 1948, Democrats controlled the presidency and both houses of Congress. During only two did Republicans have control across the board, and in both cases they controlled the Senate by a thin majority. In the other 17, power was split between the two parties.
The 1980s tax cuts and budget deficits? Ronald Reagan and George H.W. Bush never enjoyed Republican majorities in both houses. Clinton prosperity? Republicans controlled both houses in Clinton’s last six years. The slow growth JFK blamed on the Eisenhower administration? Democrats controlled both houses in an unbroken run from 1955 to 1981.
The lesson here is that to the extent that federal government action influences the economy, both parties usually share either credit or blame.
© 2004 Edward Lotterman
Chanarambie Consulting, Inc.