Clinton's '96 Hopes May Just Ride On Regulation

Economists have teamed up with political scientists in the past to correlate an incumbent President's reelection prospects to the rate of growth in the economy. Not surprisingly, voters tend to reelect Presidents or their party's successors when times are good in the 12 months before the election and dismiss them when times are bad. Remember Gerald Ford's untimely recession, Jimmy Carter's runaway inflation, and George Bush's tortoiselike recovery?

Now, two Brookings Institution economists, Clifford M. Winston and Robert W. Crandall, link Presidential elections to federal regulatory policies, whose cost to business now exceeds $500 billion a year. Over the last half-century, voters have rewarded the incumbent party for expanding social regulation but punished it for increasing economic regulation. The most common social regulations are health and safety codes. Economic regulation includes the control of rates companies can charge and various barriers to competition.

The economists used the number of federal employees performing regulatory tasks as the best index for judging regulatory activity. The researchers found that a 1% increase in social regulatory employment increased the incumbent party's share of the vote by 0.93%, while a 1% increase in economic regulatory employment lowered it by 0.78%. The implications for the current Administration appear positive. Under Clinton, the government is curtailing economic regulatory activities while expanding environmental and health regulations.

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