Give Barack Obama and the Democrats credit. In 2008, Obama won election as the candidate of Hope and Change — while being the first major-party nominee to eschew federal campaign spending limits since Watergate. Now, in 2012, Obama wants to be the first incumbent president to avoid answering the ingenious question devised by Ronald Reagan, which devastated Jimmy Carter's attempt to win a second term in office. Call it the Reagan Metric: Are you better off than you were four years ago?
Democrats fell all over themselves this weekend when asked the most predictable question in presidential politics. David Axelrod and David Plouffe refused to give a direct answer when challenged on Sunday morning talk shows. Maryland Gov. Martin O'Malley had the misfortune of being a little too honest on CBS' Face the Nation. When Bob Schieffer asked if O'Malley could honestly claim that voters were better off after four years, the Democratic governor responded, "No, but that's not the question for this election." By Monday, O'Malley had reversed himself and claimed that the positive jobs growth over the last 38 months shows that Americans are better off. "Clearly we're moving forward, we're creating jobs, unemployment is down, job creation is up," O'Malley claimed on CNN's Starting Point. "And that job creation would not happen without the president's leadership."
Just the existence of this question frames the election as a referendum on a failed administration.
O'Malley was on more solid ground with his original answer. Even the Obama administration predicted we'd see stronger job growth over the last three years, with or without the stimulus package, than we've actually seen. This now-notorious chart from Christina Romer's stimulus proposal predicted that the stimulus would accelerate hiring and keep unemployment below 8 percent, but that even a continuation of previous economic policy would produce an unemployment rate of 6 percent by the third quarter of 2012, only slightly higher than without the stimulus:
Instead of keeping unemployment under 8 percent, of course, the $800 billion stimulus — entirely funded through debt — failed to reduce unemployment at all. The last time the official jobless rate fell below 8 percent was January 2009. The stimulus package passed in early February 2009, when the jobless rate was 8.3 percent. That's the same rate as today.
However, that doesn't mean that we've maintained the status quo, either. The jobless rate is based in part on the size of the workforce. As the workforce grows smaller, the jobless rate will decline even when the number of jobs remains static. In two separate measures from the Bureau of Labor Statistics, the workforce has shrunk to generational lows since the start of the Obama recovery. The employment-to-population ratio, which measures the proportion of working age adults who are employed, was 60.6 percent when Obama took office, and 59.4 percent when the recovery began in June 2009. It's now 58.4 percent.
The civilian labor force participation rate measures the labor force against the population as a whole. When Obama took office, that rate was 65.7 percent, and it remained at 65.7 percent when the recovery started five months later. Today, that rate is 63.7 percent, near the 30-year low set in April of this year. If the workforce had the same participation rates as when Obama took office or even when the economy recovered 38 months ago, the jobless rate would be over 10 percent, not 8.3 percent, and no one would be able to pretend that we've moved "forward" in the intervening period.
The debacle from the responses Sunday and Monday seems to have pushed President Obama and his campaign into a new argument to avoid the Reagan Metric. In an interview Monday evening with a television station in Colorado Springs, the reporter asked Obama to grade himself on the economy. "You know," Obama answered, "I would say 'incomplete.'" The next day, deputy campaign manager Stephanie Cutter enthusiastically endorsed this when a skeptical Jake Tapper asked whether that answer would "cut it." "Yeah, it does," Cutter responded, pointing to the massive job losses before Obama took office, and claiming that Obama turned the losses into job growth. "But when he's saying incomplete," Cutter continued, "it means a number of different things. One: We're on a path forward. You know, we're on our way up."
The chart above shows the actual direction taken on jobs. Further data on incomes only underscores the decline that characterizes the Obama recovery. Median household incomes dropped faster during the recovery than they did during the recession, according to a study published last week by Sentier Research based on Census Bureau data. Small wonder that consumer confidence as measured by Gallup on the day that the Democratic convention opens has dropped back to a year-long low, roughly at the same level as the beginning of the recovery in mid-2009.
Obama's new strategy has its pitfalls. To convince voters to accept an "incomplete" as a first-term grade, Democrats need to put forward a detailed agenda for a second term that addresses the shortcomings of the first Obama term. So far, though, Obama has said little about his second-term agenda, focusing almost entirely on pointing out Mitt Romney's flaws as a potential president instead. Neither the president nor his party has offered much more than "Forward," the campaign slogan, and National Journal's Major Garrett reported this week that Democrats in Charlotte are as bemused by the question of a second-term agenda as anyone else. Democratic strategist Joe Trippi couldn't define "Forward" for Garrett either, admitting that "nobody really knows what that means."
This is why Democrats want to avoid the Reagan Metric. Just the existence of this question frames the election as a referendum on a failed administration. Obama needs to convince people that Mitt Romney is such a bad alternative that the only answer is another four years of economic policies that Democrats won't defend now. If Obama succeeds in winning a second term on that basis, with no agenda for new policies, while less than a third of likely voters believe that he has won the Reagan Metric, it will indeed make history — and set a record for cynicism and despair in American politics.