Steep Price

No matter the political question these days, the answer invariably seems to be another question: "How will the economy be doing?" Can Democrats hang on to their current levels in the House and Senate? Depends on the economy. Can Democrats hold the governorships of New Jersey and Virginia this November? Again, depends on the economy. How long will President Obama's honeymoon last? Yes, it depends on the economy.

Historically, the party of a first-term president loses seats on Capitol Hill in the midterm election. In the House, postwar losses average about 16 seats, but outcomes have ranged from an eight-seat gain to a 52-seat loss. In the Senate, they have ranged from a gain of four to a loss of eight, with the average being pretty much a wash. In both chambers, the best year for the party holding the White House was 2002. That was President Bush's first midterm election and the first congressional election after 9/11. In contrast, the worst losses were both in 1994, President Clinton's first midterm election.

However, even though history argues for Democrats' losing a bit more than a dozen House seats and breaking even or losing a Senate seat, several factors point to continued Democratic gains. Party identification numbers, the relative popularity of the two major parties, and generic congressional ballot tests suggest that the GOP is not much healthier today than it was going into the last two elections. Still, the 2010 elections are a long way off. And a significant downturn in Obama's approval ratings combined with continued fear about the economy could reverse the outlook come election time.

In New Jersey, Democratic Gov. Jon Corzine has weak poll numbers, but the state has become a political graveyard for Republicans seeking statewide office. Given Corzine's great wealth and the tremendous cost of advertising in the New York City and Philadelphia media markets, it would probably take a plummet in Obama's numbers for Democrats to lose that governorship.

In Virginia, the past eight gubernatorial contests were lost by whichever party was holding the White House. That trend dates back to 1977. Is the Democratic Party gaining and the GOP hurting in Virginia? No question. The Democratic presidential nominee carried the state last year for the first time since 1964. Virginia is no longer a true Southern state but a mid-Atlantic one. Regardless, an unpopular Democratic president and a lousy economy could still cost Democrats the governorship this year.

At this point, Obama's job-approval ratings are holding at around 62 percent in the Gallup Poll, about average for presidents still in honeymoon mode. Americans seem to understand that the country didn't get into this economic mess overnight and won't get out of it quickly.

But how soon will Obama have to take ownership of the economy? In my opinion, voters will expect the economy to have bottomed out by sometime in the first half of 2010. At that point, they will be looking for some improvement and holding Obama and his party accountable if things are still in poor shape. If this were an average recession, lasting 10 or 11 months, the crisis would have been over around September or October of 2008. Obviously, we're suffering through something much worse than an average slump. The two longest recessions since the Depression each lasted 16 months. This month we are reaching that point.

In the midsummer of 2010, the Obama administration will have been in office 18 months, and the recession, if it's still around, will be more than 30 months old.

The econometric models of the ISI Group, one of the most respected economic consulting firms on Wall Street, project that the real gross domestic product will decline 5 percent in the current quarter, 3 percent in the second quarter, and 1 percent in each of the last two quarters of the year, before growing 3.5 percent in 2010.

These projections, of course, come with the caveat, "if we don't start seeing major financial institutions fail." If that happens, all bets are off and it's Depression time.

Therefore, at this point, handicapping individual races is a fun sport, but the big drivers will be Obama's job-approval ratings and how the economy is faring. The moment of truth will come a little more than a year from now.