Reagan's Query, Obama's Problem: Are You Better Off Than You Were? On Monday morning, President Obama told the world that he was running for reelection. The announcement brings to mind something Ronald Reagan asked back in October 1980, when he was running for president. About 100 seconds into this clip, he posed a question that seemed to resonate with voters: "Are you better off than you were four years ago?"

Ask that question of most Americans today, and the answer is likely to be "heck no!"

But a closer look at the statistics reveals that recent years have created clear winners and losers. If you're among the winners -- hedge fund managers, corporations, and owners of commodities -- the answer is an unequivocal yes. For the winners, it's almost as if George W. Bush won a third term in 2008. On the other side, there are the losers: the unemployed, the average American homeowner, the middle class American family -- and, believe it or not, the typical Wall Street banker.

If you think elections effect how America allocates wealth, think again. The fundamental reality is that thanks to a Jan. 20, 2010, Supreme Court ruling, Citizens United vs. the Federal Election Commission, companies can now spend as much as they want on political campaigns. As a result, there is no way to change the split between America's winners and losers without a fundamental change in the way we pay for political campaigns.

Does this have any effect on who will win in 2012? According to Yale economics professor Ray C. Fair, the answer is no -- what matters is how fast the economy is growing during the three quarters leading up to the election. And by that measure, Obama's reelection is virtually assured.

The Economic Winners

Let's take a closer look at the winners and how well these campaign contributors -- Wall Street, for example, gave $5 billion to Washington between 1999 and 2008 -- are doing:
  • Hedge fund managers: $883 million average annual income. Back in 2007, the top 25 hedge fund managers made a total of $22.29 billion, according to Alpha Magazine, in 2010, the top 25 made $22.07 billion, according to AR Magazine. This is down 1% from 2007, but still enough to get by,
  • Corporations: Up 12% to record highs. In 2007, companies made $1.5 trillion in profits, in 2010, they booked a record $1.68 trillion worth, according to the Commerce Department;
  • Owners of commodities: Way up. Gold is up 113% from $670 an ounce four years ago to $1,430; corn spiked 87% from $4.00 to $7.48 a bushel, oil is up 63% from $64 to $108 a barrel, and cotton is up 80% from $0.58 to $1.91 per pound. This is great news for those who own commodities and bad news for people who have to pay for them.
Bad News for the Rest of Us

Too bad we can't all be hedge fund managers. Most Americans are struggling with lower incomes -- if they have jobs -- and the values of their houses and stock portfolios are down. Here are some statistics:
  • Median family income: Down 8.1% in the last decade. The median family income has been falling steadily since 2000 from $60,746 in 2000 to $55,821 in 2009. More recent data are unavailable, but the latest productivity report suggests that the figure has declined since unit labor costs fell 1.5% in 2010. And with 13.5 million people out of work, the pressure to push wages lower remains strong.
  • Stock market investors: Down 8%. Since the first week of April 2007, the S&P 500 is down 8%. But since Obama took office, stocks have skyrocketed an average of 26.5% a year. As I've posted, for families that have suffered a loss of net worth, making up the difference depends on shifting cash from money market funds to stocks,
  • Homeowners: Values are down 30%. The S&P/Case Shiller 20 City Home Price index has fallen from 200 in April 2007 to 141 in January 2011. This 30% bath is terrible news -- particularly for families that borrowed too much money to buy those houses.
  • Wall Street: Average cash bonus is down 37% to $128,530. It may shock you to learn that Wall Street has lost ground in the last four years. But by one measure, it has. Wall Street's cash bonuses in 2007 were $33.2 billion, according to the New York State controller, while in 2010, they totaled $20.8 billion. But those finance industry players shouldn't feel too bad, since they got a bigger portion of their bonuses in stock in 2010. This should be good for Wall Street's long-term survival, because it links banker pay to shareholder performance.
Why Obama Will Win a Second Term

There are plenty of people in this country who would like to see a new president take office in January 2013. However, according to Fair, who has an uncanny ability to predict presidential elections, Obama is likely to be the one taking that oath of office.

As the professor explains, there's a strong correlation between GDP growth in the nine months preceding a presidential election and the incumbent's share of the popular vote. If GDP growth exceeds a certain level during that time, the incumbent gets re-elected; if not, Americans elect a new president. As I've written previously on DailyFinance, Fair predicts 3.69% GDP growth in the nine months preceding the election and 55.9% of the popular vote for Obama.

Will Obama's reelection make you better off? If you're an American winner, the answer is yes. If not, you'll continue to fall further behind.

If I could wave a magic wand, I would vote for a candidate who could lift up America's middle class more skillfully. Until a Republican candidate actually enters the race, I will reserve judgment on who that might be.

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chrls

I have tried to get an assement of how Obama supporting people are doing today, and when the question is asked are things better or worse for you, they will not give a clear yes or no answer, but start bashing Bush.
From what I can see, the wealthy are still doing fine, and the poor are getting poorer. So if you are wealthy things seem to be great, if you are poor, not so great. I doubt if Mr. Obama stayed in the White House for the next ten years things would be any better. Blaming an ex-president is not going to pay your rent, or put food on your table, so forget Bush, and figure out how you are going to get by. Things are going to be rough in 2012, so hang on.

July 26 2011 at 9:29 PM Report abuse rate up rate down Reply
Barbara

The 8 years of the Bush Administration is what we are all feeling now!! Bush was a complete disaster for this country. It would be hard for ANY President to come into office after Bush and attempt to clean up his mess. Use your heads folks, it takes a few years after the completion of an administration to feel the full effect of the changes and decisions made. Most laws and other changes are planned to go into effect after the current leader has already left office which is why most Presidents wait until their second term to make big changes. The early years of this century were good because it was left over prosperity from the Clinton Administration. Let me remind you all that when Clinton left office, the government had a surplus of cash. Bush's BS wars spent that surplus and put us into the largest deficit ever!! Not to mention, tax cuts for the rich that Bush and his crew passed reduced the amount of revenue coming into the government further escalating the deficit!!!

April 12 2011 at 2:17 AM Report abuse rate up rate down Reply
2 replies to Barbara's comment
GDRN

Barbara, you obviously have the cleanest brain in the country, as it apparently has been well washed by the Democrat planners. You talk like you just walked out of a Democrat strategic planning session with all the old talking points in hand. Take the time to look around and take in what is really going on around you and then if you can, draw some conclusions of your own. If you are then honest with yourself, you will realize how ignorant you come across spouting forth the old Democrat propaganda message.

April 22 2011 at 3:54 PM Report abuse rate up rate down Reply
rini1946

let me think when old man bush left office the first few years of clinton were due to bush. what about he nafta act he signed. what about making it easy for people to buy house he passed with no restriciton the main reason most of the morgages defaulted. do not you remember his campain where he change his mind after he said something when the polls did not agree with him. what about the triple i'm sorrry first was i did it and not sure why they spent so much money on this to crying in the church saying i hurt my family and it was my fault. then he polls said ok and he stopped. him and his wife are nothing but sorry
polute tion that lie thru thier teeth. Her with the bill told me he had nothing to do with that woman and i believe him(only so i can run for office without this hanging over my head.you demo rats vote like they do in the tv shows dacing with the stars??? and american idol .

April 26 2011 at 11:16 AM Report abuse rate up rate down Reply
builtincal

So then the premise that republicans side with big business and that democrats are good for the poor is total crap.

April 11 2011 at 2:24 PM Report abuse -1 rate up rate down Reply
1 reply to builtincal's comment
yourcountry2

yes

April 11 2011 at 6:11 PM Report abuse rate up rate down Reply
grandmatractor1

There are way more ways of cutting spending without hurting the senior population. There are so many pork programs that are uncessary and so much waste in the government. Put the congress and senators on the same benefits we have and lets see how they like it when it hits their pocketbook. They shouldn't have the power to increase their salaries. Wouldn't we all like that benefit. Government should learn to live within their means as we are all expected to do. They also need to do something with the gas situation, it cost $80.00 to fill my tank and that is ridiculous along with medicine,insurance. doctor bills, the rise in food costs, utilities and all other expenses. Do they want us all to be on medicade and have the government take care of us. Then they really would have a huge budget deficit.

April 11 2011 at 2:03 PM Report abuse +1 rate up rate down Reply
1 reply to grandmatractor1's comment
GDRN

You have to ask yourself - "Am I better off today than I was two years ago?" The obvious and accurate answer does not bode well for Mr. Obama.

April 22 2011 at 3:57 PM Report abuse +1 rate up rate down Reply
hot58mom

no

April 11 2011 at 12:19 PM Report abuse +1 rate up rate down Reply
GARY

BETTER of under OBAMA???!!!! WHAT A JOKE. Carter was the WORST president in my life time (65 YEARS) but OBAMA is 10 times WORSE than CARTER!!!

April 06 2011 at 11:52 AM Report abuse +7 rate up rate down Reply
1 reply to GARY's comment
GDRN

Very true Gary, and Obama is doubling down, doing the same things that Carter did. The really sad thing is that Obama knows the results of Mr. Carters actions as president and is following that trail anyway.

April 22 2011 at 4:00 PM Report abuse +1 rate up rate down Reply
bhawkes328

THE RIOTS ARE COMEING FOLKS.... GET YOUR PROTECTION ... FOOD, WATER, AND GUNS

April 06 2011 at 8:56 AM Report abuse +5 rate up rate down Reply
1 reply to bhawkes328's comment
tj1108

Its amazing that there are actuallly people pushing that. I live in the south where we would fare better, but there are large cities I would not want to be living in.

April 06 2011 at 9:03 AM Report abuse +2 rate up rate down Reply
bhawkes328

THE ONLY DIFFERENCE IN THE OBAMA ADMIN. AND BUSHES IS HE SPENDS MORE MONEY THE NATION DOESNT HAVE.... THEY ARE THE SAME..... IDIOTS

April 06 2011 at 8:53 AM Report abuse +3 rate up rate down Reply
teddymoe

The government is by the crooks for the crooks and of the crooks. Hand over all your worldly posessiona and you can go.

April 06 2011 at 7:39 AM Report abuse +7 rate up rate down Reply
allisonisa39e

Are you kidding ? Are you kidding ?

April 06 2011 at 7:38 AM Report abuse +1 rate up rate down Reply