By Peter Schroeder, Mike Lillis and Russell Berman - 05/08/12 12:21 AM EDT
Political upheaval across Europe holds lessons — and warnings — for both political parties as Americans head to the polls in November.
There is also the question of what that political shift might mean for the U.S. economy, as it continues to play the starring role in the presidential campaign.
In France, sitting President Nicolas Sarkozy was ousted Sunday in favor of a Socialist Party candidate who railed against austerity measures meant to bring the nation’s finances in order. At the same time, the two leading Greek parties that hammered out a cut-heavy bailout agreement with the International Monetary Fund were punished at the polls, garnering less than a third of the parliamentary vote as citizens threw their support behind parties that opposed the arrangement.
If voters were truly pushing back against the officials calling for belt-tightening, it could spell doom on the ballot for the GOP if conservative politicians continue their message of fiscal restraint.
“The message that this sends to at least the Republican Party is that Mitt [Romney] ought to get the Etch A Sketch out and start understanding that the folks that are having problems have one vote each,” said Daniel Alpert, managing partner at Westwood Capital. “This notion of growth through austerity, ultimately it doesn’t work at the ballot box.”
But others look at what just occurred in Europe and see evidence of something that could threaten both parties in November, as voters air their disapproval by ousting incumbents.
White House press secretary Jay Carney was reluctant to tie the European results to the upcoming U.S. election.
“Each country has its own circumstances,” he said at Monday’s press briefing. “Europe has its own distinct problems ... and we’re not going to dictate to any country or any collection of countries what policies they should pursue.”
The results in France and Greece represent the latest shakeups in what has been a global upheaval. Since 2009, voters have toppled the legislative majority in nearly a dozen European countries, including Iceland, Hungary, Sweden, Portugal, Denmark and Spain.
In the highest-profile cases, British voters in 2010 ended the Labour Party’s 13-year rule in Parliament and sent former Prime Minister Gordon Brown packing. More recently, Irish voters responded to the economic crisis by electing the country’s first Labour Party president and handing the outgoing party its worst defeat in history.
In another prominent episode, Silvio Berlusconi resigned as Italy’s prime minister last November after his party lost its majority to voters incensed by its handling of the economic crisis.
The upheaval hasn’t been limited to Europe. One year after Wall Street fell, Japan’s Liberal Democratic Party was ousted after roughly 54 years of continuous rule. For the victorious Democratic Party, it marked the most one-sided win in the country’s modern history.
Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics, believes the anti-incumbent fever dominates any concern about austerity. For all of French President-elect François Hollande’s anti-austerity rhetoric as he blasted Sarkozy, he still vowed to balance the budget and was not proposing a massive fiscal stimulus, which would suggest a true break from existing policies.
“I think it is wrong to say that the French election is really a complete repudiation of austerity,” he said. “I think it was a vote of no confidence in Nicolas Sarkozy.”
Kirkegaard said Europe’s recent elections can be readily compared to the 2010 midterm election, when upset voters tossed out Democrats, handing control of the House to Republicans.
“They’re in the same anti-incumbency mood,” he said.
At the same time, Michael Klein, a professor of international economic affairs at Tufts University and a nonresident scholar at the Brookings Institution, suggested that while that mood might have helped defeat European leaders, President Obama might not face the same headwinds.
“It’s not like he was pushing austerity policies in the United States. He was doing just the opposite,” Klein said.
Beyond what policies might garner voter favor in November, another new factor brought on by Europe’s election upheaval is what it might mean for that continent’s economy, which in turn could affect the U.S. economy.
With the economy at the forefront of American voters’ minds, any downturn brought on by political turmoil in Europe could hit American shores.
Desmond Lachman, an economist at the conservative American Enterprise Institute, said the biggest impact on the United States from the elections in Europe could be a further deterioration in the global economy.
“Those elections weren’t good news for Europe,” he said. “They throw into question whether the euro can survive in its current form.”
Lachman said the Greek election “was really the big surprise” and could lead to a destabilizing exit by Greece from the eurozone, which might roil financial markets.
“That’s certainly going to impact the U.S.,” he said. A deeper recession in Europe, he added, could spill over and hit the American economy before the November elections.
However, others believe that the economic fates of Europe and the United States are not quite so intertwined.
“Europe is weakening, and the U.S. seems to be getting stronger,” said Klein. “We’re not moving in lockstep.”