Presidential Rhetoric and Economic Leadership

The two most important areas of leadership for any president are the economy and foreign policy. Presidential leadership in these two areas is mutually dependent, because foreign policy actions can affect U.S. macroeconomic performance (Wood and Durham 2004). However, this study focuses on direct efforts by the president to provide economic leadership through the use of rhetoric. Of course, the president has various tools of economic leadership. He can propose legislation that alters taxing or spending, thereby stimulating economic growth. The president can attempt to affect the cost of producer-consumer exchanges by changing regulatory policy. The president can also potentially affect interest rates and the money in consumers' pockets through nominations to the Federal Reserve Board. Yet, all of these tools are constrained by the need for cooperation from other political institutions. Additionally, there can be substantial lags in implementing these tools due to the fragmented nature of the American political system. In contrast, rhetorical leadership is a tool that the president can apply unilaterally without substantial impediment and delay. The president needs no permission from Congress or the bureaucracy to be a cheerleader for the economy or to tout ongoing programs. The president is an authoritative source of information about the current and future state of the economy with near continuous access to the media and public. As such, presidential rhetoric is a cue for businesses and consumers making decisions on investment and spending. While the president may be tangential to these decisions, the president's economic rhetoric affects the tone under which consumers and businesses make decisions (Wood, Owens, and Durham 2004). Presidents have strong incentives to use economic rhetoric in their public appearances. Since the Great Depression there has been an expectation that the national government is responsible for the economy. The Employment Act of 1946 institutionalized an activist role for the president, formally charging the chief executive with promoting "maximum employment, production, and purchasing power" (Public Law 79-304). From this point forward, presidents were required to make an annual economic report to Congress detailing the current and future state of the economy, as well as the administration's plans and recommendations for promoting these goals. The mandate for the president to promote a sound economy was reinforced in 1978 through the Humphrey-Hawkins Act, which required the president to establish targets for inflation and unemployment. (1) Presidents usually find it valuable to publicize their efforts on the economy to give a perception of fulfilling these legal mandates. Additionally, presidents attend to the economy in their public remarks to appear in charge of an issue critical to presidential power and success. Americans hold the president accountable for U.S. economic performance. There are numerous studies showing that macroeconomic performance is a strong determinant of the president's job approval rating (e.g., see Mueller 1970; Monroe 1978; MacKuen 1983; MacKuen, Erikson, and Stimson 1992; Ostrom and Smith 1993; Clark and Stewart 1994; Edwards, Mitchell, and Welch 1995; Wood 2000). Most political actors believe strongly that presidential approval is important to presidential success in Congress and credibility in other areas such as foreign policy (e.g., see Edwards 2003, chapter 1). Therefore, presidents wanting to maintain public approval need to appear to be leading the economy. U.S. economic performance also affects the electoral success of the president and the president's party. There are numerous studies showing that the electoral success of the president and president's party depends on U.S. economic performance through time (e.g., see Fair 1978; Fiorina 1981; Rosenstone 1983; Kiewiet and Rivers 1985; Markus 1988; Erikson 1989; Erikson, Bafumi, and Wilson 2001). …