Why Obama could still lose in November

Worsening jobs figures, Romney's ad blitz and low approval ratings are reasons for Obama not to be complacent.

A somewhat blithe consensus has built up around the view that Mitt Romney is destined to lose the US presidential election. Prediction markets Intrade and Iowa Electronic Markets have the incumbent on 70.3% and 72.4% respectively to win, whilst Nate Silver, a superstar election seer, has Obama a huge 76.1% favourite. But for all the President’s advantages, and they are admittedly formidable, a good deal of uncertainty remains going into the final six weeks of the campaign. Here are three reasons why the race is more unpredictable than most pundits appreciated.

1. The economy, stupid. Long before the Clinton campaign coined that famous maxim, politicos have known that the single most important factor in presidential elections is the state of the economy. Ronald Reagan’s question to the nation in 1980, "do you feel better off than you did four years ago?" was widely thought to have skewered the hapless incumbent Jimmy Carter. Romney is clearly looking for the same tactic to work in 2012. The irony of Carter’s predicament was that in fact about ten million jobs had been created during his presidency – his misfortune was that the recession began in his re-election year, creating the impression of failure at the worst possible time. Obama’s job creation numbers are far worse than Carter’s: the economy has (narrowly) lost jobs since his election and only 4m of the 9m jobs lost in the recession have been recovered. Moreover, no president since Roosevelt has been re-elected with unemployment at more than 7.2% (it is currently 8.1%). But, like Roosevelt, Obama inherited a horrendously underperforming economy and, as with Roosevelt, the economy appears to be improving as his re-election approaches.

The danger for Obama, however, lies in the precariousness of the jobs growth figures. Some point out that the unemployment rate has been flattered by discouraged workers dropping out of the labour market. And the weak jobs growth figures from September – along with the current level of the ISM - have set up a tense end-game for the Obama administration. With two more months of data to come, Obama could be hugely damaged should those figures turn negative in the run-up to polling day.

Chart 1: US unemployment

2. This is the year of the super-PAC The incumbent funding advantage in presidential elections usually works in two ways: firstly the incumbent simply raises more money in most years due to their greater familiarity with donors and the tendency of backers to prefer a proven winner over an insurgent challenger; secondly, they generally avoid the costly battle for their party’s nomination that drains the challenger of cash before the real contest has ever begun. Both these advantages hold this year too (Obama had raised $600m in total to Romney’s $335m by the end of July), but they should be greatly mitigated following 2010’s controversial Supreme Court ruling in Citizens United v. the FEC. This ruling essentially eliminates the restrictions that existed on individual and corporate donations to "political action committees"; as a result, deep-pocketed donors, of which the Republicans seem to have rather more than the Democrats, will be able to target unlimited ads at the key swing states in the final weeks of the campaign.

The impact of these super-PACs was huge during the Republican primary, with Mitt Romney’s Restore Our Future super-PAC vastly outspending his rivals and destroying big poll leads, like Newt Gingrich’s 20-point lead in Florida, with a deluge of negative ads. Of course, it won't be so easy for Romney to squash President Obama in this manner. For one, he has his own super-PAC, albeit one less well-funded. It also remains unclear whether the Republican super-PACs have raised anything like the kind of funds some were predicting (data going up to 31 July showed a relatively modest $140m between them). But their eventual impact is impossible to predict, which leaves open the possibility they could make a critical difference in the crucial swing states like Florida and Ohio come November.

3. Approval ratings still dangerously low. Obama’s approval ratings are nowhere near high enough at this stage to justify complacency. Most analysts expect the bump he enjoyed following the Democratic Convention to fade by the end of September, which should erode much of the lead that appears to have excited prediction markets. Chart 2 shows the difficulty Obama has had in maintaining his approval ratings at levels comparable to those of the last four Presidents to enjoy re-election in the US.

Chart 2: Presidential approval

My view is not that Romney is more likely to win the Presidency - I don’t think he will. Obama’s approval ratings may be relatively low but they are significantly higher than those of Presidents Carter and Bush at this point in their unsuccessful re-election campaigns. He is also leading to varying degrees in states worth 332 electoral college votes (270 are needed to win). However, once one adjusts the current polls for the convention bounces and allows for the not inconsiderable likelihood of more disappointing economic news between now and the election, Romney’s task is not quite the Herculean labour that many seem to think.

Richard Mylles is a political analyst at Absolute Strategy Research, an independent consultancy based in London.

Barack Obama meets with supporters at OMG Burgers on 20 September in Miami, Florida. Photograph: Getty Images.

Richard Mylles is a political analyst at Absolute Strategy Research, an independent consultancy based in London.

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.