Is President Obama's Second Term in the Bag?

President Obama
President Obama

You might think Yale economics professor William C. Fair is a bit crazy. After all, he's predicting that President Obama will cruise to reelection in 2012. However, Fair has a good track record of predicting presidential outcomes based on his economic model, which puts numbers on the slogan that "It's the economy, stupid," which Bill Clinton adviser James Carville famously coined.

Fair's model is simple enough. According to the The New York Times, he has two econometric models -- one that predicts the overall state of the economy and one that forecasts the popular vote. Fair predicts that U.S. gross domestic product will grow 3.7% in the first three quarters of 2012 -- compared with the 3.2% forecast from Blue Chip Economic Indicators and 3.4% from the Congressional Budget Office.

Fair's latest calculation from earlier this month predicts that based on his forecast, Obama will get a bigger share of the electoral votes in 2012 than he did in 2008. Specifically, his model predicts that Obama will get 55.9% of the two-party vote share -- over two percentage points more than 2008's 53.7%. Moreover, Fair predicts that the 2012 Democratic share of the two-party House vote will rise from 45.9% in 2010 to 49.9% in 2012.

No Wonder the GOP Hates QE2

Of course, if Fair's GDP growth prediction is way too high, all bets are off. President Obama's reelection would be doomed if the economy stayed at its current 2% growth rate by 2012. Unfortunately, for Obama's political enemies, the Fed's $600 billion quantitative easing (QE2) plan puts in place a key part of the economic stimulus needed to add enough growth above the 3% rate needed to cinch Obama a second term.

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The only way for Republicans to stop the economic growth needed to help Obama win a second term is to vote against their dearest issue -- extending the Bush tax cuts. And that doesn't appear to be in the cards. As far as Fair is concerned, QE2 plus an extension of the Bush tax cuts are enough stimulus to add $1 trillion to the deficit while assuring that the economy grows faster than the 3% needed for Obama's reelection to be in the bag.

Hoping Fair will be wrong? His most recent prediction was prescient. In November 2006, way before the 2008 candidates had been chosen or the campaign issues had been clearly formed, Fair used his model to predict the state of the economy in 2008. It correctly forecast a weak economy then and a Democratic landslide in the election.