Part of the discussion surrounding the elimination of Osama bin Laden has taken a somewhat ghoulish turn: what does it mean for Obama's re-election chances? While I'm more of a zombies-eat-brains! type of guy, I'm certainly willing to be ghoulish, especially when it gives me the chance to discuss some interesting political science.
A couple of years ago, political scientist Douglas Hibbs published a model that describes the percentage of the vote an incumbent party will receive in a presidential election based on only two factors: disposable income and U.S. military causalities. By his own admission, it's not perfect, although the R2 is 0.87 (where 1.0 is a perfect fit). But in a qualitative sense, the model has never predicted the wrong popular vote winner.
Without going through the details of the model (which I plan to do in another post), basically every ~6,000 U.S. military causalities during a four year term results in a drop of one percent of the vote. Fortunately for our servicemen, Obama is 'only' on pace for around 1,500 deaths, so this shouldn't affect the outcome of the election much, one way or the other.
The election will revolve around disposable income growth (technically, it's the weighted-average growth rate of per capita real disposable personal income calculated by quarter--quarters closer to the election are slightly more important than early quarters). Here, every one percent increase in disposable income growth increases the incumbent's vote by 3.55%. Basically, Obama will need about a 1.1 - 1.2% increase in disposable income.
So how is he doing? Well, not as bad as you think: ballparking these numbers, Obama would probably win by a little over a point--if the economy doesn't worsen. And that brings us back to the death of Bin Laden.
By itself, Bin Laden's elimination will be a 'bounce.' But if Obama uses that bounce to limit the damage conservative policies of 'austerity' will do, he should win, barring pictures of him having sex with farm animals or the like. Basically, there are several things he could do at this late date (this is why failing to get a more spending-based and larger stimulus package early was so stupid):
1) A one-year Social Security payroll tax holiday, on the employee side. This would put about $450 billion into employees' pockets--and disproportionately help middle-class and lower-income workers.
2) Reduce the trade deficit by imposing taxes on holdings of Chinese currency. More details are here, but it would go a long way in curbing the trade deficit. If we lower the trade deficit, we will increase private savings.
3) Extending the stimulus to states and localities. This is a good short term way to keep people employed (which obviously prevents disposable income from declining).
4) Hold the line against Republican cuts. Again, public deficits increase private savings (including disposable income).
Now, I don't know if Obama and the Democrats will push for this. But right now, he's on the fence. The question is will he pursue his own self-interest? That, of course, could help many people too....