What History and Economics Suggest About Biden-Trump, Round 2

Politics and economics have always been intertwined, often in ways that were mystifying in real time.

We’re living in another of those perplexing moments.

With the Super Tuesday primary results and a couple of important Supreme Court rulings behind us, it looks as if voters will face an election rematch between President Biden and his immediate predecessor, Donald J. Trump.

The polls show that many Americans perceive this contest with the distress reserved for root canals or colonoscopies. Democrats tend to view Mr. Trump as a villain who has committed serial misdeeds that include plotting to overturn the results of the last presidential election. At the same time, many Trump supporters see Mr. Biden as a doddering tax-and-spend political hack.

The prospect of this dreaded rematch sent me back to the history books, and to economic and markets data, looking for precedents and parallels. I found that repeat performances, in which previous major-party nominees for president ran again, sometimes against incumbents who had defeated them — have happened many times before, though not since 1956.

The current campaign presents a puzzle. Right now, economic data suggest that slowing inflation, robust economic growth and a bull market could give Mr. Biden a strong tailwind by November. The president devoted much of his State of the Union address on Thursday to what he described as a remarkably strong economy.

Yet polls show that the electorate isn’t giving him much credit for these salutary developments so far.

While this election is unique, as elections always are, there are plenty of previous presidential rematches, and instances when economics and the markets really mattered, even if it wasn’t always obvious at the time.

So here’s a whirlwind, extremely selective spin through U.S. history.

There were three rematches since the Civil War.

The most recent was 68 years ago, when President Dwight D. Eisenhower, a Republican, trounced Adlai E. Stevenson II, the Democratic former governor of Illinois, for a second time.

Only about half of American households had TVs then, which may be why it was the last presidential campaign between two bald men. They ran on their accomplishments, character and, in the case of Mr. Stevenson, wit.

But, in retrospect, it doesn’t look like a fair contest. Part of it was straightforward politics. Mr. Eisenhower, who had commanded the victorious Allied forces in World War II, was so popular that he could have run as a Democrat, if he had so chosen. In fact, Harry S. Truman, Eisenhower’s immediate predecessor as president, offered in 1947 to run as vice president in 1948 if Eisenhower would lead the Democratic ticket, but Eisenhower declined. A secret Truman diary published in 2003 revealed the exchange, which was unknown back then.

By the time Eisenhower decided to run as a Republican in 1952, he was practically anointed president. “I like Ike” was his campaign slogan, and the war hero never had to say much about policies.

By contrast, Stevenson was urbane and eloquent, a true liberal “egghead” (a term widely used to describe him). He spoke in idealistic terms about the complexities of policymaking. “Let’s talk sense to the American people,” he said. “Let’s tell them the truth, that there are no gains without pains.”

It’s not just that this approach was ineffective against a universally beloved figure. It’s also that economics worked on behalf of the Eisenhower administration in ways that weren’t entirely appreciated at the time.

A new paper by three economists — Gillian Brunet of Smith, Eric Hilt of Wellesley and Matthew S. Jaremski of Utah State — found that nearly 80 percent of American households owned war bonds by the late 1940s. But high inflation eroded their value sharply. The Eisenhower administration brought inflation down, and war bond holders noticed. In counties with the most ownership, votes for Eisenhower were greater.

The stock market was strong, too. The Dow Jones industrial average returned an average 10.4 percent annually during the Eisenhower administration, the sixth best for a presidency since 1900, according to Bespoke Investment Group, an independent market research firm.

Note that during the Trump administration, stock returns were even higher, 12 percent, annualized, ranking fourth, behind only Presidents Calvin Coolidge, Bill Clinton and Barack Obama. So far in the Biden administration, the annualized return is only 7.1 percent, according to FactSet. At that rate, Mr. Biden would rank 11th among presidents since 1900 — just above Warren G. Harding and below Truman.

Clearly, economics isn’t all that matters. There were three recessions during the Eisenhower administration, and the market declined in 1956. But his enduring political stature as the Cold War heated up and the impact of lower inflation on voter attitudes provided insulation against economic problems.

Going further back in history, many presidents tried unsuccessfully to regain the White House. For example, President Herbert Hoover, who was unceremoniously defeated in 1932 by Franklin Delano Roosevelt — and by the Great Depression, which destroyed him politically — sought the Republican nomination in 1940, but it went instead to Wendell Willkie, a prominent utility executive.

Including only those who made it as far as the actual presidential balloting, there were two other sets of repeat presidential candidates since the Civil War:

  • William Jennings Bryan ran unsuccessfully as a Democrat in 1900 against President William McKinley, the Republican who had defeated him four years earlier. Bryan ran for president a third time, against President William Howard Taft, but never won. He is perhaps most famous for his speech at the 1896 Democratic convention, arguing that the gold standard and its deflationary effects were hurting workers and farmers and enriching bankers and investors. “You shall not crucify mankind upon a cross of gold,” he said.

  • Grover Cleveland was the only president to lose a re-election bid and then, in the next election, beat the man who had defeated him. Cleveland was a former mayor of Buffalo (no, not of Cleveland!) and in 1885 became the first Democratic president after the Civil War. In 1888, he lost to Benjamin Harrison, a Republican. Four years later, Cleveland ran again and defeated Harrison. This is the precedent that Trump supporters will want to emphasize.

Note that Cleveland was interested in a third term, but had the misfortune of presiding over a major banking panic and two severe recessions (known then as depressions). His party in 1896 turned to Bryan, who repudiated many of Cleveland’s policies.

In addition to those rematches, there was an instance in which a former president ran against his successor.

President Theodore Roosevelt, who left office near the height of his popularity, decided to run again four years later, in 1912, against Taft, his Republican successor.

Economics was a major factor behind Roosevelt’s decision to run, as well as his failure to win re-election. He was perhaps the greatest leader of the progressive movement, which called for breaking up monopolies and protecting consumers. Taft only halfheartedly embraced these causes. Roosevelt failed to capture the Republican nomination and ran on the Progressive ticket. Eugene Debs also ran, as a Socialist.

But the Democrat, Woodrow Wilson, defeated them all by grasping the progressive economic mantle for himself. He went on to support antitrust legislation and the creation of the Federal Trade Commission. Wilson, however, appointed a cabinet that included overt racists and promulgated segregationist policies, actions that have tarnished his progressive luster.

There were at least three rematches before the Civil War, starting near the dawn of the republic:

  • Martin Van Buren, a Democrat who had been President Andrew Jackson’s vice president, defeated William Henry Harrison (grandfather of Benjamin) and two other candidates in 1836. But the financial panic of 1837 and a severe depression ruined his re-election prospects. Harrison ran again and beat him, but died on his 32nd day as president.

  • John Quincy Adams defeated Jackson and two other candidates in 1824 in a deadlocked election that went to the House of Representatives. Jackson claimed that Adams had struck a “corrupt bargain” with the House speaker, Henry Clay, who was another candidate, and immediately began campaigning to unseat the president. Adams and Clay agreed on the need for expansive development of roads, canals and scientific research. In the 1828 rematch, Jackson won and became president.

  • John Adams, John Quincy’s father and George Washington’s vice president, ran for the presidency twice against Thomas Jefferson, in bitter contests. The first time, in 1796, Adams won. The second, in 1800, Jefferson prevailed. In his second term, Jefferson acquired the Louisiana Territory from France, vastly increasing U.S. territory.

All of these contests had economic components, and all had ugly moments.

Biden-Trump, Round 2, isn’t the first presidential rematch, or the first time that economic factors have been difficult to discern, or even the first period of extreme political polarization.

In fact, the most important lesson we can cull from this history as the election rematch proceeds in earnest may be the simplest. The country has survived excruciatingly contentious times before.


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