Conclusion: President Obama’s approval bounce from killing Osama bin Laden will be short term in nature, but due to the incumbency advantage he continues to be well positioned to win a second term.
Despite the somewhat muddled public relations by the White House related to the killing of Osama bin Laden, President Obama has received a noteworthy bounce in his approval ratings. In the most recent Real Clear Politics poll aggregate, President Obama’s approval rating is now +9.3. The last time his approval rating was this high was late 2009, which was the beginning of Obama’s long decline in overall approval.
Although the killing of bin Laden is certainly a meaningful event and appears to show Obama’s decisiveness and willing to make a tough military decision, one off events are typically illusory in nature as it relates to shifting the perception of a President. The best examples of this are political conventions, where a President or Presidential candidate sees a short term bounce in approval, which typically then reverts to the mean within a week or so. The exception to this is, often, a negative performance, which can change the overall perception of the politician and reset approval ratings lower.
The best proxy for the sustainability of President Obama’s approval rating is probably the real time gauge on Intrade, which has a futures contract on whether President Obama is going to get re-elected. Shortly after the announcement of the killing of bin Laden, the contract soared to 70.0. The contract has since declined to the levels of before the event and is now trading at 59.9, which is consistent with the 58.0 to 60.0 range for the month of April. We’ve attached a chart of this below.
Despite the fact that it seems unlikely that the killing of Osama bin Laden leads to a new perception and a resetting of his approval rating, we still believe he is going to be difficult to beat in 2012. We introduced this view on March 14th with a note titled, “2012 . . . Can Obama Be Beat?” At the point, we raised the issue that there were not many Republican candidates officially in the race and certainly one clear front runner. The implication of this is that the Republicans will severely lag President Obama in fundraising.
The race for the Republican nomination is poised to more fully get shaped on Thursday in Indiana as Governor Mitch Daniels is speaking at the Indiana Republican Party’s spring dinner. He is expected to announce his Presidential intentions at this dinner.
Currently, Governor Daniels’ poll numbers place him in the top ten of potential candidates, but very distant from the top 5 with only a 3.3% rating. The top five, according to a Real Clear Politics aggregate are: Romney with 16.3%, Huckabee with 16.0%, Trump 13.7%, Palin 10.3%, and Paul at 7.2%. Interestingly, only two of the top five have declared their candidacy, which is indicative of how little shape the race has taken.
President Obama’s advantage versus the Republican field is primarily based on incumbency. Simply put, incumbents have a statistical advantage in elections. Professor Ray Fair, an economist from the Yale School of Management, has actually quantified the incumbency advantage in Presidential elections going back more than 100 years. According to Fair’s work, there are three key factors in determining the outcome of a Presidential election: which party is in office, how long they have been office, and the state of the economy.
According to Fair’s analysis, just the incumbency advantage alone should get President Obama 48.4% of the two-party vote. After that, it is all about the economy (stupid). The two components of the economic portion of the prediction relate to growth in the three quarters just prior to the election and whether any of the prior 15 quarters before the election have had growth rates of 3.2% or more. Currently, Obama has had two quarters of 3.2% growth or more. These were Q4 of 2009 and Q1 of 2010.
Interestingly, based on Fair’s formula, if President Obama had no more good news quarters of 3.2%+ growth and even if real GDP growth was flat lined at zero through the 2012 election, he would still have a legitimate shot at the Presidency. In fact, according to the Fair Model, in that scenario, President Obama would win 50.4% of the two party vote. (The Fair formula is here: http://fairmodel.econ.yale.edu/cgi/computv5.pl)
So, even if the approval bump that President Obama has received from killing bin Laden is as illusory as we believe it is, the Republicans still have a serious uphill battle to win back the Presidency based on the incumbency advantage.
Daryl G. Jones