What history and economics suggest about Biden-Trump, round 2

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

We are living in one of those mind-boggling moments again.

Now that the Super Tuesday primaries and a number of key Supreme Court rulings are behind us, it appears voters will face an election rematch between President Biden and his immediate predecessor, Donald J. Trump.

The polls show that many Americans are experiencing this struggle with the suffering reserved for root canals or colonoscopies. Democrats tend to view Mr. Trump as a villain who has committed serial misdeeds, including plans to overturn the results of the last presidential election. At the same time, many Trump supporters see Mr. Biden as an evasive political hack on taxes and spending.

The prospect of this dreaded rematch sent me back to the history books and to economic and market data in search of precedents and parallels. I discovered that repeat appearances, in which previous major party presidential nominees re-entered the fray, sometimes against incumbents who had defeated them, had happened many times before, but not since 1956.

The current campaign presents a puzzle. Right now, economic data suggests 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 Thursday to what he described as a remarkably strong economy.

Yet polls show that the electorate does not give him much appreciation for these beneficial developments so far.

While this election is unique, as elections always are, there have been plenty of previous presidential rematches, and instances where the economy and markets really mattered, even if it wasn’t always clear at the time.

So here’s a whirlwind, highly selective spin through American history.

When two bald men ran twice

There have been three rematches since the Civil War.

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

Only about half of American households did TVs and that’s why it may have been the last presidential campaign between two bald men. They based it on their performance, character and, in Mr. Stevenson’s case, their humor.

But in retrospect, it doesn’t seem like a fair competition. Some of it was pure politics. Mr. Eisenhower, who commanded the victorious Allied forces in World War II, was so popular that he could have run for office as a Democrat if he had chosen to do so. In fact, Harry S. Truman, Eisenhower’s immediate predecessor as president, offered in 1947 to become vice president in 1948 if Eisenhower led the Democratic ticket, but Eisenhower declined. A secret Truman diary, published in 2003, revealed the exchange, which was unknown at the time.

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 policy.

Stevenson, on the other hand, was courteous and eloquent, a true liberal.egg head‘(a term commonly used to describe him). He spoke in idealistic terms about the complexity of policymaking. “Let’s talk sense to the American people,” he said. “Let’s tell them the truth: there is no gain without pain.”

It’s not just that this approach was ineffective against a universally beloved figure. It is also the case that the economy worked for the benefit of the Eisenhower administration in ways that were not fully appreciated at the time.

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

The stock market was also strong. The Dow Jones industrial average returned an average of 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, year-over-year, ranking fourth behind only Presidents Calvin Coolidge, Bill Clinton and Barack Obama. According to FactSet, the annualized return in the Biden administration is just 7.1 percent so far. At that rate, Biden would rank 11th among presidents since 1900 — just above Warren G. Harding and below Truman.

Clearly, economics is not the only thing that matters. There were three recessions during the Eisenhower administration, and the market fell in 1956. But its enduring political status as the Cold War heated up and the impact of lower inflation on voter attitudes provided insulation against economic troubles.

Previous matchups

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

Including only those who made it to the actual presidential election, there have been 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 best known for his speech at the 1896 Democratic Convention, in which he argued that the gold standard and its deflationary effects hurt workers and farmers and enriched bankers and investors. “You shall not crucify humanity on a golden cross,” he said.

• Grover Cleveland was the only president to lose a re-election bid and then defeat the man who defeated him in the next election. Cleveland was a former mayor of Buffalo (no, not 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 to preside over a major banking panic and two serious recessions (then known as depressions). His party turned to Bryan in 1896, who rejected many of Cleveland’s policies.

In addition to these rematches, there was an instance in which a former president faced off against his successor.

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

Economics was a major factor behind Roosevelt’s decision to run for office, as well as his inability to win re-election. He was perhaps the greatest leader of the progressive movement, calling for breaking monopolies and protecting consumers. Taft embraced these causes only half-heartedly. Roosevelt failed to win the Republican nomination and went for the progressive ticket. Eugene Debs was also a candidate as a socialist.

But the Democrat, Woodrow Wilson, defeated them all to seize power progressive economic mantle for itself. He subsequently supported antitrust legislation and the creation of the Federal Trade Commission. However, Wilson appointed a Cabinet with open racists and segregationist policies, actions that have tarnished his progressive luster.

Back to the beginning

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

• Martin Van Buren, a Democrat who had been vice president to President Andrew Jackson, was defeated William Henry Harrison (Benjamin’s grandfather) 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 alleged that Adams entered into a “corrupt deal” with the Speaker of the House of Representatives. Hendrik Klei, who was also a candidate, and immediately began campaigning to oust the president. Adams and Clay agreed on the need for extensive development of roads, canals, and scientific research. In the 1828 rematch, Jackson won and became president.

• John Adamsthe father of John Quincy and vice president of George Washington, ran for president twice Thomas Jefferson, in bitter matches. The first time, in 1796, Adams won. The second, in 1800, Jefferson prevailed. In his second term, Jefferson acquired the Louisiana Territory from France, greatly expanding American territory.

All of these matches had economic components and all had ugly moments.

Biden-Trump Round 2 is not the first presidential rematch, or the first time that economic factors are difficult to discern, or even the first period of extreme political polarization.

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