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Brendan Nyhan

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Who Would Be Blamed For a Debt Default?

Posted: 07/15/11 05:42 PM ET

Who would get blamed for an economic downturn resulting from the debt ceiling standoff? John Sides, a political scientist at George Washington University, has argued that incumbents tend to get blamed by voters for bad economic conditions even under divided government. New York Times blogger Nate Silver responds that a debt-induced crisis "would not be a normal case":

Whatever else the 2012 election would be if the debt limit is not raised in a timely fashion, it would not be a normal case. There's no especially appropriate precedent for the economy tanking by such an immediate and direct result of action (or inaction) in Washington. One reason the public tends to score strong economic performance in favor of the president, and poor economic performance against him, is because the United States economy is incredibly complicated -- it's hard for the public to discern cause and effect...

This would be different, however. The stock market could drop by thousands of points. Some major corporations, particularly in the financial services sector, might go under. Although the consequences might take some time to filter through the broader economy, there would nevertheless be a number of immediate and extremely visible effects. Many voters would feel as though they had perfectly reasonable grounds to connect the dots.

You'd have to weigh two things against each other: the additional damage to the economy, which is bad for the president all else being equal, and the additional ownership of the economy that Republicans would take for it, which is bad for them all else being equal. I don't know which effect would win out, but it's not a risk that either side should feel happy about taking.

It's certainly true that the current standoff seems relatively unprecedented, but as Jonathan Bernstein (another political scientist) notes, "There's always going to be some slightly new twist to almost any political phenomenon, and in most cases the new twists are a lot less important than the similarities." Over the years, people have come up with lots of stories about why the president won't get credit for a good economy or why the opposition will be blamed for a bad economy, but things rarely work out that way.

In this case, it's worth thinking through the mechanics of how Republicans would be blamed instead of Obama. As Silver notes, the economy is incredibly complex. Even if there were a debt default, the process by which it would affect the economy would be difficult for people to understand. Both sides would no doubt blame each other for the outcome and create elaborate stories about why the other side is to blame, which would then be reinforced and amplified in the press. Then more than a year would elapse before November 2012, and both sides would continue to blame each other for failing to adequately address the consequences of the default. In the meantime, many people will forget the details of what happened, but will know that Obama is the president and the economy is in bad shape. Under those conditions, how likely is it that people who would normally blame Obama for the poor economy will instead blame the GOP when they show up at the polls? Presidential forecasting and approval models aren't perfect, but I think the burden of proof is on their critics to explain why we should expect a deviation from the normal pattern of economic voting.

[Cross-posted to brendan-nyhan.com]

 

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Who would get blamed for an economic downturn resulting from the debt ceiling standoff? John Sides, a political scientist at George Washington University, has argued that incumbents tend to get blamed...
Who would get blamed for an economic downturn resulting from the debt ceiling standoff? John Sides, a political scientist at George Washington University, has argued that incumbents tend to get blamed...
 
 
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02:42 PM on 07/29/2011
I really do not know how much stupid the GOP thinks an average American is. But most of us know now that they love votes more than the Country. But guess what? They will fail in the next election more than they have ever failed in history. They are mistaking people's lack of interest in recent elections as their doing well.
Good enough, they have awaken our interest to deal with them in the coming elections. Enough of their playing on American people's intelligence, making us look foolish in the eyes of the World.
The longer they drag all this issues the more we know how good President Obama has intended
for this great Country. GOP in the quest of destroying Obama may have destroyed Republican party. Extreme hatred is all they have for the president who has a better plan for this country than most previous presidents, Republican or Democrat. Raising debt ceiling which was done about 7 times during the President Bush's time was never heard. Why has it become a taboo under a president that inherited one of the worst economy that any American president ever inherited. Who is fooling who? An economy that was messed up for good 8 yrs cannot be fixed in less than 3 yrs, as a matter of fact it cannot be fixed even in 8 yrs but Obama was heading well until the GOP decided to be the clog on his wheels and I can see them crushed by his wheels.
07:05 PM on 07/18/2011
Projections for federal revenue for August are $172-200 billion (close enough for government work). Service of the debt takes $20 billion. SS is funded by ious (special treasury securities) and the monthly tab is $49 billion. These payments are mandated. The treasury has to pay them.
There is no magic 14th Amendment fix.
If the debt ceiling is not raised, then Obama and Geithner have to decide what part of the monthly $320 billion dollar federal nut to cut. Obama can blame the GOP all he wants but it will be his administration making the cuts. His name will be on them. All it will take is about 5% of the electorate that is 'undecided' to blame Obama. C'ya Barack.
12:05 AM on 07/18/2011
Obama gets all the blame.
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brabc1
10:06 AM on 07/18/2011
No, voters fear a total repub take over more. Haven't you noticed what is going on in Michigan, Wisconsin, Minnesota and Florida? This is a preview of what they want to do at the federal level.
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carolo
retired Democrat
02:38 PM on 07/26/2011
Every one of those new Republican Governors have ratings that are now low. Total buyers remorse in every state you mentioned.
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cancerg01
10:27 AM on 07/17/2011
Maybe I am misinformed but the bills that we are about to default on have already been approved by Congress (both houses.) So Congress (whether this one or previous ones) gave approval to spend the money but are now saying that we're not going to pay for the bills that we told you to make. I would hate to see the credit rating for some of these republicans if they treat their household debts the way they treat the national ones. You don't just stop paying bills you've already incurred. You find ways to pay what you have committed to while simultaneously find ways to not add any more to it. The default and the deficit reduction should be two separate conversations.
09:46 PM on 07/21/2011
To amend your home analogy, it is actually a bit more like this: 1 income for a 2 person household. The democrat loves to go out and spend frivolous amounts of money to make himself look good. The republican wants to pay down the bills so that all of the money can go to making everyone prosper. The bills are surpassing the income, so the republican is making a stand against the democrat, and forcing him to control his spending, so that the debt can be eliminated, and all of us can prosper. Only one of these two has a plan that benefits everyone. And here's a hint: Its not the democrat.
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cancerg01
05:01 AM on 07/22/2011
how does that change the fact that these are bills that have already been approved by congress and committed to?

further i was wondering in your overzealous republican pride if you've ever heard of ronald reagan, george h w bush or george w bush. all republicans (two apparently republican gods) who all raised the debt ceiling multiple times. bush I and reagan raised taxes multiple times and bush II spent money like a drunken rich boy with a blank check which he was. so you may want to check your sanctimonious arrogance at the door.

And any plan that includes social security which is and always has been a separate pool of money and is not in trouble is nothing short of theft.
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JJenius
Being lucky is often forgotten!
12:17 AM on 07/17/2011
American who remember their Civics classes will blame Congress! Congress, not the President, has the purse strings! (ref.: U.S. Constitution) So let's remind Congress that they are responsible for the debt that THEY already created with THEIR votes. This requires borrowing 40 cents on the dollar for every check the Treasury sends out each month, all 80 million checks! (Reference: Meet the Press today 7/10/11, U.S. Treasury Secretary Tim Geithner.)
10:49 PM on 07/16/2011
The American people!
10:14 PM on 07/16/2011
At the end of the day, the buck stops with the President . . .

It's not like Americans are all for the massive increase in spending we've seen through Bush and now Obama.
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cancerg01
09:59 AM on 07/17/2011
how can it stop with the president if he needs the House and Senate to approve the bill before he can sign it. I believe in the balance of power but with that balance comes responsibility for all of them.
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08:46 PM on 07/16/2011
The Republicans are getting the blame because despite how they keep trying to change the message, people don't want what they're selling. Sure, you'll still have your ~30% or so who will blame Obama no matter what, but these are the same people saying let it default. Most of the rest of us can see Obama caving and giving in to almost all of their demands, which will not do much of anything, and them refusing to even budge an inch. That inch is what people overwhelmingly want. Taxes increased on the top, who are not creating jobs or sharing in the sacrifice, and an end to loopholes that let those same people and companies make billions in profits (while we produce in record numbers will little benefit, lucky to even be working), but pay little to no taxes.

Then complain the bottom half doesn't pay. We have no money! Pay us decent wages, if we're paid at all, and we will contribute. Make cuts and layoffs so more money can go to the top or you can hoard, of course we aren't contributing, we can't! Add in kids, the disabled, and the retired, there's your half. Your half has all the money, you wonder why you pay so much and we want you to pay more. The GOP wants to cut from people already suffering, and they wonder why it's suddenly unpopular.

Not to mention who ran up most of the debt in the first place.
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wbearl
Retired Manager Mechanical Operations
08:26 PM on 07/16/2011
The reason we blame the President is because he is suppose to be the Leader, you know the guy who has convinced us he can lead us to prosperity and happiness. Now when this leader fails, we tend to get a bit up set and start looking for someone else to try the job. Right or wrong, Obama convinced enough people he had the answers to correct our major problems. The fact that he hasn't tend to make people cranky. Now the average person has no idea how complicated economics and foreign policy is, they trust the person who has convinced them he does understand it to take care of it. However they don't have to understand economics and foreign policy to know when the President isn't getting the job done. Their first hint that they have been taken is when the person they have selected to do this job starts blaming everyone else for his in ability to get the job done. One of my first lectures as a new manager was "I can get anyone to make excuses, I want some one who just gets the job done".
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cancerg01
10:15 AM on 07/17/2011
How can he get the job done with the House blocking EVERYTHING? My goodness, let's use some common sense here. Your leaders understand what you apparently don't. All they have to do is destroy the country and they can make Obama look bad for the next election because he is supposed to be the leader. That is, after all, what is most important. Get Obama outta there. Never mind about the rest of the country. How scared they must be to him to force them into all of these underhanded actions. I guess if they went up against him honestly they feel there is no way they can win.
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Skunkman
old & decrepit
08:13 PM on 07/16/2011
The GOP Congressional Team of Experts

Budget Expert: Paul D Ryan
Scientific Expert: James W DeMint
Marriage Expert: David B Vitter
Potatoe Expert: Benjamin E Quayle
So with this small list in mind I blame the Democrats. LOL

Mike
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Mark Cormier Arizona
2012 has put us on the path to Europe
05:56 PM on 07/18/2011
Dem Team of Experts:

Treasury Expert: Tim the tax cheat
Banking Experts: Dodd & Frank (The ones who set up the housing collapse)
Communications Expert: VP Biden (What a joke)
Health Care Expert: House Minority Leader Pelosi (Sign the bill now and read it later)
Justice Expert: Eric, look the other way on racial crimes against whites, Holder
Homeland Security Expert: My man Jan (Nepalitano) who says the border is secure.
and the list goes on and on and on and on.................
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Skunkman
old & decrepit
08:03 PM on 07/18/2011
Hi Mark. You don't want a list war, do you? LOL

Mike
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DocJoseph
A bleeding heart will heal; a cold heart will not
07:32 PM on 07/16/2011
Republicans have admitted on many occasions to using the debt ceiling limit as "leverage" to get what they want.

And, if they don't get what they want, we default.

Who gets the blame? The Republicans deserve blame (if there is a default) whether they get it or not.

(and it's clear that many of them don't "get it")
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kamact
Market Observer
06:14 PM on 07/16/2011
When "weak" meets "no", both should be blamed
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Margaret Rhode
05:22 PM on 07/16/2011
While the news is filled with the budget deficit and the in-fighting between Obama and Republicans, the voters look at the bottom line. Are we better off under Obama's presidency? If the economy doesn't improve, if unemployment remains at over nine percent, if people are still losing their homes, if gas prices remain high, if companies continue to flee overseas, if we continue to get involved in the Middle East, then it's "Carter-time," all over again and Obama will not be re-elected. The voters will elect who they think will do a better job, and with all that's going on, it sure isn't Obama and the Democrats. They continue to blame Bush, but three years is enough time to at least show they can do a better job, and they haven't done it. It's time for them to take responsibilty for their lack of action and stop the blame game. Most presidents only have four years to get the job done, few are given a full eight years, and there's a reason for that. Presidents' establish their leadership abilities and ability to get things done in that first four years, if they haven't done it by then, it's not going to happen.
09:42 PM on 07/16/2011
When in our most recent history - not counting the depression - has a president inherited a disaster of an economy? Clinton left Bush with a balanced budget and look what was passed on to Obama. Considering the magnitude of the problem coupled with a Repub congress who insist on obstructing him every step of the way, how could one expect much progress in four years?
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Margaret Rhode
01:50 AM on 07/17/2011
Carter left a mess for Reagan-not only with the economy, unemployment, the housing market and high gas prices, but the Iran hostage situation. He cleaned it up and plus ended the Cold War and brought down the Berlin Wall by staring down Gorbachev. Reagan understood how to get things done and developed a working relationship with Tip O'Neil for one. If you think the Republicans are hard-a****, you obviously never knew Tip O'Neil-the Democratic Speaker of the House. Do you really believe that the dems, as a whole, worked with Reagan? They still speak of him with disdain, but millions of people grieved his death, just as they did Kennedys.

As far as Bush, you seem to forget 9/11 and the repercussions on the economy. Airlines alone, lost 350,000 jobs and the fight against terrorism wasn't cheap. Even if the Iraq War hadn't taken place, we would have used those same resources in Afghanistan. And the Community Reinvestment Act, started by Carter and enforced under Clinton was the beginning of the end for the housing market. It merely exploded at the end of Bush's term.
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cancerg01
10:20 AM on 07/17/2011
If Obama doesn't win, after what we have seen from the republicans, then I guess their plan worked...they truly did rig yet another election:

http://alecexposed.org/wiki/ALEC_Exposed
http://alecexposed.org/wiki/Democracy,_Voter_Rights,_and_Federal_Power

"This page shows how ALEC bills or resolutions would disenfranchise Americans and give corporations great powers to influence elections in our democracy. These "model bills" include the infamous "Voter ID" bills pushed through this year by new governors, many of whom have ties to ALEC. Through ALEC, corporations have both a VOICE and a VOTE on specific state laws affecting your voting rights and elections through these model bills. Do you? "
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Margaret Rhode
03:10 PM on 07/17/2011
"Rig yet another election???" You mean like Kennedy's father did for him? Unfortunately, "C," we're at the mercy of politicians and those whose fund their campaigns-and don't believe for a moment that Obama's millions are mainly the result of small donations.

As far as another Obama administration, look for higher taxes and not just on the rich, but on the middle class. There aren't enough "rich," to tax for all their programs, and those same "rich," and corporations give heavily to their campaigns, and they expect something in return or they'll take their ball and go home. Who are some of the richest members of congress-Pelosi, Feinstein, Kerry, to name just three-all Democrats. Obama is getting us further involved in Middle Eastern countries-can ground troops be far behind? The healthcare bill is over 2000 pages and not one congressman admits to having read it page by page until they signed it-wait until we learn that the bill is just another, "road to hell paved with good intentions." As much as I want us to leave Iraq and Afghanistan, look for those countries to crumble back into despair once we're gone.
05:01 PM on 07/16/2011
No need for a debt default. Stop the invasion of 6+ countries. Pull the foreign aid. Sell the NY Fed gold.
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Margaret Rhode
05:48 PM on 07/16/2011
The first place we can start pulling aid is Pakistan who is arresting those people who helped us in the search for bin Laden-with friends like that, we don't need enemies. And while we are still fighting in Iraq and Afghanistan, how insane is it to become further involved in Middle East affairs. The NATO mission in Libya is costing us billions and who knows how much covert operations in other countries is costing the American taxpayer. Bush was responsible for our involvement in Iraq, 9/11 was responsible for our involvement in Afghanistan, but what caused our assumption of responsibility in Libya, Egypt, Yemen, and Somalia? That lies directly with Obama-and why aren't liberals upset that he is pulling us further into war-like situations at a time we can least afford it.
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alex61
03:38 PM on 07/16/2011
People on the left are, by nature, reluctant to shoulder any blame. They don't like responsibility, accountability, consequences, etc., because they see these things as "judgemental." They also like instant gratification, so they prefer "solutions" that are qick, simple, and easy. Long-term thinking is not a hallmark of the left.
Because of these traits, the Democrat party, which is made up of "people on the left" (who have the above described mentality) always seeks to blame the GOP for whatever problems we may be having at any given time. No matter how much power the Dems have, they are somehow never responsible for troubles. Never. Obviously this is absurd, but that is how they operate.
For these reasons, the Dems are living in denial about our financial realities, and/or they just want to paint the GOP as being "evil and mean-spirited" people who "want to cut programs." Pure politics, and very dangerous.
The Dems: let's kick the can down the road.
Republicans: Let's face this and deal with it while we can.
05:21 PM on 07/16/2011
Precisely and exactly backwards.

Just like your party.
09:49 PM on 07/16/2011
Who created these financial realities in the first place? Do you think it's right to cut programs to people who desperately need them while giving tax breaks to those who don't?