By Kevin Bogardus and Jessica Malmgren - 04/16/08 07:43 PM EDT
Panelists on an influential committee that determines whether the U.S. is in a recession have contributed to and are advising presidential campaigns.
The Business Cycle Dating Committee (BCDC), part of the National Bureau for Economic Research (NBER), has top economic advisers to both Sens. John McCainJohn McCainOvernight Defense: Congress overrides Obama 9/11 veto | Pentagon breathes easy after funding deal | More troops heading to Iraq McCain comments won't derail Bergdahl case Senators already eyeing changes to 9/11 bill after veto override MORE (R-Ariz.) and Barack ObamaBarack ObamaFirst lady slams Trump's 'birther' comments Obama's contradictory stance toward black asylum seekers Webb: After the debate MORE (D-Ill.).
David and Christina Romer, who are married, have been BCDC members since 2003. The University of California-Berkeley economics professors informally advise Obama on fiscal policy and have contributed to the Illinois Democrat — $3,250 each this cycle, according to Federal Election Commission (FEC) records. The Romers have only donated to Democrats, including contributions to past presidential candidates Sen. John KerryJohn KerryOvernight Defense: Congress overrides Obama 9/11 veto | Pentagon breathes easy after funding deal | More troops heading to Iraq McCain, Graham mock Kerry's threat to end talks with Russia The Hill's 12:30 Report MORE (Mass.) and former Sen. Bill Bradley (N.J.).
Martin Feldstein, NBER’s president and a BCDC member since its inception 30 years ago, advises McCain. He has worked with a number of Republican presidential candidates on economics, including President George H.W. Bush and former Sen. Bob Dole (Kan.). He also chaired President Reagan’s Council of Economic Advisors.
Feldstein, a Harvard economics professor, endorsed McCain in January of this year and contributed $2,000 to him that month. Feldstein has given solely to Republican candidates since 2004 — totaling $8,500 — such as President Bush’s 2004 reelection campaign and Sens. Richard BurrRichard BurrDem groups invest big in Bayh in Ind. Senate race The Trail 2016: Fight night Poll finds races for president, Senate tight in North Carolina MORE (N.C.) and Lisa MurkowskiLisa MurkowskiOvernight Energy: Obama integrates climate change into national security planning GOP pressures Kerry on Russia's use of Iranian airbase Overnight Energy: Lawmakers kick off energy bill talks MORE (Alaska), according to FEC records.
And like McCain, Feldstein believes the nation has entered into a recession, though it’s still too early for the BCDC to reach a final determination.
“My personal opinion is that we are now in recession but it will be months before the NBER can be in a position to set a date for its start — if it has actually started — and until the relevant data have been revised,” Feldstein stated in an e-mail to The Hill.
McCain said Monday that he believes the country is in a recession, adding that “these are very, very tough times in America.”
Over the last several months, the economy has become a political football. The word “recession” has been mentioned 141 times in The Congressional Record this year.
Member of the BCDC maintain that political considerations do not enter their calculations. Instead, the panelists say they produce a nonpartisan analysis of straight economic data to determine when a recession begins and finishes, typically many months after the downturn was initiated.
For example, the BCDC decided in November 2001 the last recession started in March 2001. By July 2003, the panel determined the downturn only lasted eight months.
“We are incredibly scholarly and fanatically nonpartisan,” said David Romer about the committee. “You could go through the e-mail traffic and not find any trace of a political inkling of where one person or the other was.”
Feldstein echoed Romer: “The members of the BCDC have to convince each other based on the detailed statistical evidnce.”
Another panel member, Robert Gordon of Northwestern University, wrote in an e-mail that he was an Obama supporter. Gordon has not contributed to nor is he advising Obama’s campaign.
The committee’s members are regularly in touch with each other through e-mails and phone calls. They trade data of economic indicators, like gross domestic product (GDP) and employment figures. The panel members meet and discuss the factors and decide when a recession has begun, to the month.
Most recessions identified by the BCDC consist of two or more consecutive quarters of declining GDP, but not all of them.
The BCDC was formed in 1978, but the NBER’s ability to date a recession was recognized much earlier, in 1961, by the Commerce Department. The NBER was founded in 1920.
The staff of the BCDC’s parent organization — the NBER — is not that politically active, however, according to a review of FEC records. Excluding Feldstein, there is only one staff member out of the remaining 33 who gave a political donation this election cycle, which was to former Sen. John Edwards (D-N.C.).
Yet, only BCDC committee members are involved in determining whether the country is, or has been, in a recession. NBER staff is not involved in the decision, said Donna Zerwitz, NBER’s public information director.
There is also no stipulation that employees of the NBER, including members of the BCDC, cannot donate to political campaigns, according to Zerwitz.
Economic downtimes could be a burden for McCain. The president in power and his party typically take much of the blame when the economy sours, according to campaign observers.
“It is very clear that it is bad news for Republicans,” said David Epstein, professor of political science at Columbia University. “No presidential party has retained office when the country is in [a] recession this century.”
“On balance, it provides a political advantage to Democrats. But it also does add a lot of teeth to McCain’s argument against repealing the tax cuts,” said Dan Schnur, the former communications director for McCain’s 2000 presidential campaign.