Sagging Personal Income May Doom Democrats at Polls

Tuesday, 01 Jun 2010 02:18 PM

By Dan Weil

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Americans’ disposable income has been stagnant since President Obama took office last year, and that could doom Democrats in November’s congressional elections, some analysts believe.

Adjusted for inflation, per-capita income didn’t change in 2009, according to Bloomberg. During the past decade, however, income growth averaged 1.6 percent a year.

The only years among the past 20 in which income fell were 1991, which presaged President George H.W. Bush’s defeat, and 2008, the last year of George W. Bush’s presidency.

Income growth has represented the best economic predictor of U.S. presidential elections since 1952, Douglas Hibbs, a former government professor at Harvard University, told Bloomberg.

Stan Greenberg, a Democratic strategist and former pollster for President Clinton, has witnessed the dynamic up close and personal

“Unemployment was falling when the first George Bush was running for re-election, and it did not stop us from running on ‘It’s the economy, stupid,’” he told Bloomberg.

“Same thing in 1994: The unemployment rate fell, but we got killed on the economy because incomes did not rise,” said Greenberg, referring to the Republican takeover of the both houses of Congress that year.

Democrats face big losses in November, says Ray Fair, a Yale University economist who has developed a computer model to forecast congressional elections based on the trends of economic growth and inflation.

Even using an optimistic assumption for gross domestic product (GDP), Fair’s model shows that Democrats’ share of the two-party vote for House candidates will slip to 50.43 percent from 53.4 percent in 2008.

Using the median GDP forecast in a Bloomberg survey would drop Democrats’ share to 49.22 percent.

The income numbers aren’t pretty for Democrats this year, either.

Going into the elections, real disposable per-capita income will be up only “a very anemic” 0.4 percent from a year earlier, Mark Zandi, chief economist at Moody’s, told Bloomberg.

“That suggests for many households after-tax income is still declining,” Zandi said.

Economists aren’t the only ones predicting big gains for Republicans in the congressional races. Top Republican strategists Dick Morris and Ed Gillespie told Newsmax there is a good chance the GOP will win control of both congressional chambers.

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