44 and 40

44 AND 40…. There’s been a fair amount of talk in recent months about the similarities in President Reagan’s first-term trajectory and President Obama’s. Given the ways in which their poll numbers are almost identical over their first 19 months in office — congressional Republicans weren’t even especially keen about campaigning with Reagan in the ’82 midterms — the comparison seems salient.

Indeed, the larger parallels should be obvious. Obama, like Reagan, succeeded an unpopular president from the other party in the midst of tough economic times. Obama, like Reagan, presented an agenda that was a significant break with the recent past. Obama, like Reagan, saw the unemployment rate climb towards 10% before his first midterm cycle. Obama, like Reagan, found his approval rating slip into the mid-40s after a year and a half in office.

For Obama backers, the model offers hope. The economy started to rebound in Reagan’s third year, and by the time he sought re-election in 1984, the economy was humming. His weaker standing in 1982 was quickly forgotten when he won in a 49-state landslide. If a similar pattern holds for Obama, the future need not be bleak.

At least, that’s what we see looking at the parallels in the broadest sense. Ezra Klein notes today that the differences may matter more.

Whether Obama’s polling follows Reagan’s has less to do with whether Obama “is” Reagan and more to do with whether Ben Bernanke is Paul Volcker. The recession afflicting Ronald Reagan was, in large part, Volcker’s creation. It was an attempt to break inflation, and it worked. The strategy was simple: Raise interest rates. And thus, the recovery was simple, too: Lower interest rates. GDP growth went from negative in 1982 to 7 percent in 1984. If that happens to Obama then, as Matthew Yglesias says, he’ll indeed cruise to reelection.

The problem for the Obama-Reagan comparison is that this isn’t a Fed-created recession. It’s a financial crisis. And they take longer to recover from.

Good point. Paul Krugman had a helpful item on this last week, highlighting the differences between the recession that began in 1981 and the one that began in 2007. The former was created deliberately by the Fed to curb inflation — Volcker raised interest rates a lot, which did the trick. Eventually, Volcker lowered rates again, the housing industry boomed, and the economy turned around. Reagan cut taxes in ’81, but it didn’t do much to change the economy’s trajectory. Reagan raised taxes a year later, but this didn’t affect the economy, either.

The Great Recession that began nearly three years ago is a different kind of animal entirely. As Krugman noted, “The 2007-9 recession was driven by the collapse of a huge housing bubble, and the resulting financial fallout. The Fed couldn’t cut rates sharply, because they weren’t all that high to begin with; there couldn’t be a housing boom, because housing was already overbuilt.”

Given the differences, we’re talking about different recoveries growing at different speeds, after recessions that occurred for very different reasons. Still, the Fed has options. Will Bernanke do for Obama what Volcker did for Reagan? As Ezra concluded, we’re “unlikely to see a recovery that robust if the Federal Reserve doesn’t see encouraging that sort of recovery as part of its mandate.”