How Much Does the President Really Matter?

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Jan. 20, 2009

Pete Souza, President-elect Obama, backstage at the U.S. Capitol on Jan. 20, 2009, just before taking the oath of office.

How Much Does the President of the U.S. Really Matter?: The U.S. president is often called the “leader of the free world.” But if you ask an economist or a Constitutional scholar how much the occupant of the Oval Office matters, they won’t say much.

After a throw-out-the-Dems mid-term election on Tuesday, with Republican promises to unwind Democratic legislation like healthcare reform and an economy that refuses to break into anything more than a cautious jog, we use the Freakonomics Radio podcast to pose a tough question: How much does the President of the United States really matter?

We asked this question on the blog a while back and figured, with the political landscape so fractious and the stakes so high (or are they?), that it was a good time to update and expand, with a broad cast of characters doing the talking. (You can download/subscribe at iTunes, get the RSS feed, read the transcript, or listen live via the link in box at right.) You’ll hear from some economists, a Constitutional scholar, a politician, and even a baseball manager.

Justin Wolfers

We open with Wharton economist (and Freakonomics blog contributor) Justin Wolfers, who talks about his love for gambling on political outcomes and does his best to outline the President’s influence. This is gleaned from, inter alia, Wolfers’s research on prediction markets. He describes the 2004 Presidential election (Bush/Kerry) as a “social scientist’s dream,” with a helpful shock to the system:

“If you remember the 2004 race – around about three o’clock election day the polls got leaked. … what you have is four hours in which we basically had a Kerry presidency… So what we can is we can look at how the financial markets perform during those four hours of the Kerry presidency and compare that to, either the four hours prior when it was clearly a Bush presidency, or the four hours after when it was clear that it was a George W. Bush presidency. So, when we do that we see in fact that stocks fell a little bit during the four hours of the Kerry presidency and that they rose a little bit when it became the Bush presidency. So that tells us that the stock market preferred George Bush over John Kerry.”

Although it doesn’t appear in the podcast, an interview with Caltech economist and political scientist Erik Snowberg yielded this insight:

“It seems that the public thinks that the president matters a lot more than our academic research would suggest. There is, actually, some academic research that shows that in counties that are very heavily Democrat, if a Republican wins the presidential election, in the fourth quarter of that year, consumption declines quite a bit. It can decline somewhere between 4 to 8 percent. So that seems to indicate that people think that it matters quite a bit more than it does. The argument in the political-science literature is that it’s like rooting for a team: when your team does really badly, you get upset. People end up spending a lot less money and that doesn’t seem to be borne out by the effects we note in the broader economy.”

Because the President’s job is so vast, and therefore hard to measure in terms of hard influence, we sought to measure the influence of some other types of top-of-the-pyramid leaders. Baseball managers, for one. We spoke to Joe Maddon of the Tampa Bay Rays – he was a great interview; smart, informative, upbeat – as well as “baseball economist” J.C. Bradbury. He argues that managers have little ultimate effect on a team’s performance. But, as with the Presidency, the role is still vital because “you need the final arbiter to say ‘This is the decision we’ve made and we’re going with it.'” That said, Bradbury argues that there’s a significant gap between the public’s perception of the President’s influence and his actual influence:

“I think people think that the President is a benevolent despot determining our fortunes when in reality I think the President is just sitting in the co-pilot seat of a plane that’s already on auto-pilot.”

We also looked into the true influence of corporate CEO’s and, while this segment didn’t make it into the podcast, Harvard Business School professor Rakesh Khurana talked us through the parallels between a CEO and President:

When we ask people, “What’s the most important things that affect firm performance?,” often the CEO is ranked, you know, 6 or 7 or 8 [on a scale of 10] … but if you go back to the research, it’s not that the CEO doesn’t matter, but that they matter in much more subtle and nuanced ways than we typically attribute. So my guess is that CEO’s matter closer to 2’s or 3’s rather than 7’s or 8’s.

About 15 years ago, when people asked why the American economy was doing so well, the simple response was, “Alan Greenspan – the maestro,”?as if you could reduce very complex causes to single individuals.? I think that what we need to do, is really step back as a society and say, “What is it that we expect from our leaders?? What is it that we expect from our institutions?” Because if we don’t do that, I think what we’re likely to do is to continue in this cycle of very high expectations followed by disappointments. Meanwhile what doesn’t get done goes back to the structuring and the health of the institutions that create the conditions for good performance, either in a firm or in our society.

John AshcroftDoug Mills/The New York Times John Ashcroft

We interviewed former U.S. Attorney General John Ashcroft, who shared his view that the President’s major power has historically not been the power of governance:

“When we think of our earliest presidents and the great heroes that we have as presidents, most of them are remembered not so much for their governances as they are for their leadership. If you think about George Washington, few people can mention any of the laws that were passed under his time as President, but they know what he stood for, and the kind of moral tone that he brought to America.”

And the episode concludes with Bernadette Meyler, a constitutional law professor at Cornell University, to whom I could have listened all day. She ably broke down the areas in which the President does and doesn’t exercise real power, pointed out some interesting historical trends, and identified – as did Ashcroft, Bradbury, and others – the disconnect between the President’s job and our view of the President’s job:

Bernadette Meyler Bernadette Meyler

“Well, I really believe that the President isn’t as significant as we imagine him or her to be. We think of the President as having great power to fix the economy for example, or fix international conflicts, and to some extent the President has persuasive authority to do things like that. But the President really can’t just turn around and fix the economy within two years for example.”

This episode was great fun to put together, and I hope you enjoy it. Along the way, you’ll hear some long-forgotten musical performances by Presidents, including Harry Truman, Lyndon Johnson and Bill Clinton. You already know, surely, about Johnson’s legendary powers of persuasion. But did you know they extended to getting his dog to sing?

President Lyndon B. Johnson sings with his dog Yuki as Ambassador David Bruce looks onLBJ Library photo by Yoichi Okamoto President Johnson leading his dog Yuki in song

Illegal immigrant.

This President?

Not much.

The Nun's Priest's Dogsbody

Things Black People Can Have Now That White People Are No Longer Interested:

Rhyming poetry
Sharp clothes
Good grooming
Hats (other than baseball caps)
Postal delivery
The Presidency

P.S.: if we decide we're interested again, we'll be sure to reclaim any or all of these things without warning, compensation or a by-your-leave (c.f. inner cities).

Drill-Baby-Drill Drill Team

Someone has to press the Launch Button.

I am glad it is not someone with depression, a personal history of alcoholism, a major alcohol-sales beneficiary, and Post Traumatic Stress Disorder like another Presidential Candidate.


President Obama played a major role in this election. The Republicans lost their majorities in Congress in 2006, without Obama playing a major role. They never would have gained back a majority in the House this year (and a larger majority at that) without Obama attempting to govern from the left when most voters are either conservative or moderate. So yes, Presidents to matter, but not always in the ways that they, and us, may expect.

John D

You forgot to ask about economists and the press. How much do they influence what happens?
My answer NOT AT ALL.

Kristine A

I like to think of the President as the captain of our ship out to sea. Right now we're caught in a squall . . . there's not much the captain can do about the squall but hunker down and ride us out of it. He can get his men to turn this way a certain degree or that way . . . but really? The squall is gonna do what the squall is going to do. If the ship sinks, Captain's to blame. If we come in safely to port, he's our hero.


You are really asking the question of "how much does the president really matter" (BTW, a grammatically incorrect question), from the perspective solely of economics, and a limited economics perspective at that. I.e., you are asking whether the president affects markets, "consumption", etc. However, the president is empowered to attempt to pass legislation, e.g. the health care reform bill and the financial reform bill. I.e., the president affects public policy, including economic policy in a far broader sense than you have considered: the health care reform bill obviously will affect insurance companies, employers, and individuals and families' bottom line, and is also a social policy change. There is also the issue of changes to the tax laws, another enormous area that you have failed to consider, and which may affect all businesses and individuals.

Many who work in the finance industry (i.e., Wall Street) would like to believe that government, including the Pres., has no real effect on their lives or businesses. It sounds as though you share in that perspective. However, the financial reform bill has certainly had an effect on the finance industry, for example (and a different president, or congress, could have a more significant impact on that industry).

It is, IMO, a useless exercise to post a piece implying that the president has little influence without truly considering the "big picture." BTW, to the extent that the quote from Prof. Meyler is an attempt to remedy this omission, it is wholly lacking in context.

Yours truly,
Dee, Esq.



OK, from the summary, this topic was just too silly to even consider listening to the broadcast, because the question is so vague. Even the narrower question of the President's influence on the actual economy is dependent on the make-up of the legislative and judicial branches.

But in terms of general influence, you don't even mention the President's ability to nominate and appoint judges and supreme court justices, administrative agency heads, negotiate with foreign countries, engage or disengage the military in wars or "police actions," and veto legislation, all of which have huge impacts, although regularly downplayed or neglected in the media. And none of these actions are similar to the jobs of CEOs and baseball managers.


Some presidents bring a stature, dignity, class, and statesman-like quality to the office. Some don't.
I think both have repercussions.


Can't let the right wing lie machine belch away here unchallenged.

Quoth Publius3:

"... Obama attempting to govern from the left when most voters are either conservative or moderate."

Obama has been governing from the moderate right - witness his health care plan adopted from Mitt Romney, and far to the right of the plan once proposed by Richard Nixon; witness his Republican approach dealing with the financial system - minimal new regulation, leave the bankers and traders and their ill gotten gains in place.

The right has no conscience, no honesty and no decency.

Have a nice day Publius3.


Is the question: how much does the president matter to the economy? If so, that might be a question for Freakonomics to tackle. But to conclude from a four hour stock market window or quarter of consumption in a few communities that a president doesn't matter in a more general way is absurd. He or she can launch an undeclared war, veto meaningful legislation, influence tax policy or spending , issue executive orders and use an army of appointees to materially impact whole industries or millions of individual lives. Also, why would lobbyists and other groups spend millions to impact a presidential election if it had no impact?


This anecdotal stuff is pretty useless. Where's the data? There is some evidence, for example, that having a Democratic President in office leads to a more balanced budget and higher growth... Presidents do matter, and you can present data to show it!


Most presidents don't inherit a gold-mine, and are thus compelled to dig dirt. So it was with Obama.

I didn't vote for Barry... but I wished him well upon his election to the presidency... and hoped that he'd throw everyone a curve-ball and step up to the bat and hit a home-run.

I like seeing an underdog surprising hell out of everyone... and I hoped that somehow he'd be the catalyist that compelled the implementation of changes that would be good for the country.

But many not only didn't want him to be successful... they outright wanted him to utterly fail. Partisan/party politics. More concerned with their own job security than the state of national affairs and the common good.

No president can be domestically effective when the deck is stacked against him. The puppet-masters on the planet have the "pull" to cause our president and other politicians to dance to their tune. A sad reality.


steve pesce

I think you have asked the 64 trillion dollar question -- and yes, that is the number we ACTUALLY owe when you include all the future obligations we've already acquired. Anyone who gives you a lower number is running for office.

The two party duopoly is meaningless and thus the president is meaningless. People say the difference between Obama and Bush is FULL SENTENCES.

It's really much worse. We are now government by powerful multinational interests who have systematically dismantled the safety net (ongoing), are destroying the middle class (ongoing), and are taking away all the rights of working and poor people, not to mention all our civil rights.

We're headed from a phase of KLEPTOCRACY into what's been aptly called Inverted Totalitarianism. But the real engine of this tranformation to neo-feudalism is GLOBALIZATION. I like to call it GALLOPING GLOBALISM. We've already lost 40% of our manufacturing jobs -- and they ain't coming back. We keep being told that we have to be more competitive. This is code for our workers have to have a standard of living comparable to Chinese and Indian workers. Yet no one in the corporate owned media talks about PROTECTIONISM as a serious option. The fact is that Protectionism IS the short term solution to preserving ourselves. It's not a long term solution. Nothing is. Things are changing fast. Money now sloshes all over the planet. Multinationals have no loyalty to any government. We the people are getting squeezed by the powerful corporations who run the world.

The president is worse than irrelevent. They're a shill for the actual power brokers. Obama said Wall Street reform turning into an uphill fight because of INTENSE LOBBYING. What does that mean? Bribery, extortion? How can legal be a name for Wall Street lobbyists preventing regulations being applied to them by throwing money at congress?



Perhaps in general what a President does, so long as it is within the realm of the normal, matters relatively little to the ups and downs of an economy.

But, if one accepts some basic principles of Keynesian economics -- including his diagnosis of, and cure for, an economy plagued with insufficient demand due to the onset of the Paradox of Thrift -- then the policies a President advocates may have a profound effect on the economy.

In particular, Keynesian economics stipulates that a major stimulus is required under such circumstances -- especially when standard monetary policy is ineffective due to a zero inflation or deflation trap.

Those circumstances, of course, are exactly those of today.

Obama might have advocated for an adequate stimulus; he did not. He bears, then, the brunt of the responsibility for the continuation of our economic slump.

And, of course, if a Republican replaces him as President, he or she likewise will never argue for an adequate stimulus -- so our misery is very likely to continue.

Which would bring us to 2016 as our earliest window to get us out -- and only on the possibility that some enterprising Democrat rises to the fore who will pull the sword out of the stone and advocate for a stimulus adequate to the job.

It may seem inconceivable now that such a possibility might be politically viable at that advanced date. Yet I think that 6 more years of economic suffering will motivate many voters to listen to new, bold ideas for pulling us out of the pit: the Republicans will have failed, and the timid Democrats of Obama's term will have failed.


Walter James

Presidents don't matter? What about George W. Bush's decision to invade Iraq, probably the worse foreign policy decision in the history of this country, which has played a large role in our current massive debt problem, not to mention causing the deaths and injuries of untold thousands. Can we blame that on someone else? The Congress? John Ashcroft? Donald Rumsfeld? I think not. Ultimately, the President has the potential for life and death decisions for us all (see also: Cuban missle crisis).


"So my guess is that CEO's matter closer to 2's or 3's rather than 7's or 8's."

Then why do they get paid so much?


Our expectations are too high for the Presidency - at least when it comes to our wallets. The current economic problems were many years in the making, yes pre-Bush, and was a matter of time for the house to crumble. Republicans did NOT take the house because more American are leaning Right. Republicans took the house cause we are desperate, and have shot term memory.

Is a fore-gone conclusion that Republicans will not be able to get much done. Republicans will be creditied for turning the economy around. It will not be because of their effort, but a function of time. Similarly, in 2012, the President, will claim economic recovery as a personal accomplishment.


Hari Seldon approves this message.

marc ostiguy

If there is one thing American's take seriously, it's the games they play.
The money game is the biggest game of them all.
Why do people go to the casino? 'cause they go visit their money.
I understand the President has two powers, the power of suggestion and... the power of veto.
Oh, yes, he is also head of the American armies.
I am of the opinion I would trust no one in the world with the power of the American armies other than the British or to the American intelligentsia and I hope their President.
I hope, trust and believe in the American intelligentsia.
A Canadian neighbor.