Do Elections Matter for Economic Policy?

Kevin Grier says, reluctantly, that the blogospheric acclaim for Tyler Cowen's argument that elections are unimportant for economic policy may not have been warranted:

Blowin' in the wind, by Angus: Tyler Cowen has been very very good to me. We've been friends for 18 years. He convinced me to try traveling outside the USA, he was the matchmaker for my marriage to Mrs. Angus... So I pretty much try to stay on his good side.

But, in Tyler's most recent NY Times column, he announced, to blogospheric acclaim, that the upcoming US elections probably won't amount to a hill of beans:

This election is certainly important. But based on the historical record, it isn’t likely to result in a major swing in economic policy.

I beg to differ.

Our current status quo is a fairly liberal / populist-ish Democratic Majority in both houses, being held somewhat in check by a witless, right-ish, hawk-ish President whose main weapon is the veto and a large enough minority to block overrides. ... I am no George Tsebelis (but then again, who is?) but given that McCain would probably be kind of a more sentient and honorable Bush, a President Obama, given the current Congress (which isn't going to move to the right in the election) would make for a big change in where the veto players are located.

I would predict potentially large changes in our trade policies, in tax rates for business and higher earning individuals (isn't Obama in favor of letting Bush cuts expire and also lifting the income cap on FICA taxes?), a large increase in government "green" initiatives with our lovely ethanol policy as a guidepost. I'd also predict a potentially large change in our security policy and our methods of diplomacy, which to be fair Tyler also acknowledges.

Now you may like all or most of that. Cool. Vote for Barack. You may not. Cool. Vote for McCain. But I think saying that there isn't that much at stake here is incorrect. ...

I see real differences. I don't see McCain lifting the cap on FICA earnings. I don't see McCain going for publicly created "green jobs". I do see both of them "fixing" the AMT. I don't see McCain as so anti-trade as Obama.

I see parallels to 1992 when a much less liberal than Obama Bill Clinton came into office, hiked taxes, turned Hillary loose on health care and promptly got slapped with a Republican congress in the midterm elections.

My hopes are higher than that. One reason is the hope that, if Obama wins, he will have a stronger coalition than Clinton. As Brad DeLong says in reference to Bill Clinton's "working majority":

Working majority? What happened to gays in the military? The stimulus package? The BTU tax? The 2:1 split between tax increases and spending reductions? The inclusion in the 1993 budget of the Reich-Sperling-Blinder-Munnell public infrastructure boosts? To go 0-5 in the spring and early summer and then, in August, to have the president reduced to personally begging Bob Kerrey not to destroy his presidency by voting against the budget and to have Kerrey say that he would think about it--that there were too many tax increases and not enough spending cuts--that's a working majority? To personally beg Marjorie Margolies-Mezvinsky to be vote number 218 for the budget in the House when she was one of seven--one of seven!--members of congress who had more people in her district in the upper brackets who were going to be charged the higher tax rates than would benefit from the expanded earned income tax credit? That's a working majority?

Sam Nunn had a working majority in the summer of 1993. The American Petroleum Institute had a working majority. Bob Kerrey had a working majority. Bill Clinton did not have a working majority.

If he wins, will Obama have a stronger hand than Bill Clinton had? I think so. Will he know how to play it? I think he will, but that's the question at this point.