Vicious Cycle: Presidential Decision Making in the American Political Economy

American presidents enter office ready to enact a policy-making agenda that will satisfy partisan interests and facilitate re-election to a second term. Economic circumstances, however, may catch presidents in a vicious cycle of economic growth and inflation versus recession and unemployment. Faced with responsibility for the nation’s economic health, presidents are often forced to make trade-offs between pursuing political objectives and stabilizing the economy. This volume offers a theoretical framework for explaining how presidents pursue partisan and electoral objectives in office while simultaneously managing the nation’s economy. With an approach that bridges several literatures in presidential studies and political economy, the author develops an econometric model of post-war presidential decision-making in the American political economy and examines its relationship to economic decision-making in four presidencies. These case studies - of presidents Eisenhower, Johnson, Carter, and Reagan - offer variation across several analytic dimensions: temporal, partisan, electoral, and institutional. The book concludes that trade-offs between political objectives and institutional responsibility are driven by a transformation in the nature of the American presidency, from an office in which decision-making is anchored in partisan accountability to one constrained by the chief executive’s institutional mission. It aims to contribute to a fuller understanding of the residency and political economy and the methodologies that elucidate them.