What Happens Politically If The Economy Improves?

If the U.S. economy improves, it seems safe to assume that will be good for President Obama’s job approval ratings. It will probably help congressional ratings as well. If the wars in Iraq and Afghanistan are winding down as job creation starts revving up, it could be a very good time to be an incumbent politician.

But the bigger question is what impact the improving economy might have on the president’s policies. Here, the results are much harder to forecast.

One key to the equation is how fast the economy improves. If the recovery comes early enough to keep the administration’s deficit projections in the ballpark, that bodes well for the president's team. That’s especially true if the economy and Congress both behave well enough to make declining deficits a reality during the back half of Obama’s first term in office.

On the other hand, if recovery is a bit slower and the deficit soars up to two trillion dollars annually with no decline in sight, it will be much more difficult to implement new policy initiatives. Or will it be?

Pundits on both sides of the aisle, in fact, argue that the magnitude of the nation’s economic problems give the president a crisis to build new policy upon. If that sense of crisis fades, will comfort with expanded government spending fade as well?

Americans continue to look at the massive bailout programs initiated during the Bush years as bad for the nation. Most continue to see deficit reduction as the most important of the budgetary priorities outlined by Obama. Americans consistently view tax cuts as good for the economy and government spending increases as bad.

On top of all that, there’s the view shared by most Americans that no matter how bad things are, Congress can make them worse. Without a sense of economic urgency, that skepticism will slow even the most noble and popular of new programs.

One other unknown to throw in the mix is the Republican response. A recent analysis suggests that the Beltway Republicans may be irrelevant, but it is not clear whether some other voices will begin to articulate a credible alternative to Obama’s policies.

The president, like all Americans is hoping for an economic turnaround, and the sooner, the better. But what's good for him politically is no guarantee that his policies will prevail.