It seems we're getting closer to August 2nd without getting closer to a deal. Each day brings new developments on the negotiations which, invariably, go nowhere. The President has addressed the nation, Harry Reid and John Boehner have held press conferences, the gang of six blitzed the TV and radio talk-shows, and an endless number of Congressional members make appearances on the news. Adding to the excitement is the fact that we are in an election season. There is no question that this debacle over the debt ceiling will affect the Presidential race come 2012. The question is how?
It's widely understood that the economy has a tremendous impact on Presidential elections. That might seem worrisome for the Democrats as President Obama launches his re-election campaign with unemployment teetering around 10%. However, anticipating what effects the economy has on an incumbent are more dynamic than simply associating the state of the economy with the party in power. Voters also want to know if the opposition can do a better job. If the voters are just as apprehensive, if not more, about handing power over the Republicans, then Obama enjoys another four years in office. However, if voters are more confident in the Republican's abilities to turn the economy around, then they take over.
This was the case in the 2010 elections. That election cycle, popularly characterized as an anti-incumbent year, was largely won by the Republican Party who seized control of the House of Representatives. The "shellacking" sustained by the Democrats was largely seen as a referendum against President Obama's economic policies, in particular government spending. the newly appointed Speaker of the House, John Boehner, kicked off his acceptance speech highlighting the economic discontent that put his party in power:
I'll be brief, because we have real work to do - and this is not a time for celebration, not when on in 10 of our fellow citizens are out of work, not when we have buried our children under a mountain of debt, not when our Congress is held in such low esteem.
