Looking at the challenges George W. Bush faces in the run-up to November 2, it's hard not to see the parallels with the last Republican incumbent to win reelection. As with Ronald Reagan in 1984, the United States has a president whose foreign policy is considered by many to be reckless and ill-conceived. (Reagan's statement that the Soviet Union was "the focus of evil in the modern world" was thought to be a breach of diplomatic etiquette at the time.) Just like Reagan, Bush's hawkish predilections have helped alienate most of our NATO allies, with the possible exception of Great Britain. And, for all of the flowery talk about the United States promoting democracy and human rights, the White House has ignored state-sponsored repression perpetrated by strategically important allies, also à la Reagan.

Economically, Bush faces a puzzle similar to the one that confounded Reagan in his first term. While economic growth has rebounded, job creation remains sluggish. The twin deficits--the federal budget and the balance of trade--have worsened dramatically, threatening to choke off long-term growth. Meanwhile, Americans are increasingly fearful of Asian countries with undervalued currencies--countries that are growing and innovating more rapidly than we are, while stealing U.S. jobs and hollowing out our economic base.

But in politics, as in sports, nothing succeeds like success. Though Reagan had more than his fair share of foreign and economic policy failures, most of them were overshadowed by two important historical developments: the collapse of communism and the collapse of the Japanese economic model, which at one point in the 1980s looked like it might eclipse our own. It's not inconceivable that, for all his Reagan-esque failings, Bush could be similarly redeemed by history.

Certainly Bush supporters would argue that the historical parallels between 2004 and 1984 are strong. Their logic is as follows:

The underlying security threat to the United States comes from the ability of Islamic radicals to either inspire or promote violence against the West, and the inability of Arab states to offer a credible alternative. Osama Bin Laden's dictum that "when people see a strong horse and a weak horse, by nature they will like the strong horse" clearly applies to successful and unsuccessful modes of governance. Give Arab populations a voice in the management of their own societies, and anger towards the West will subside.

If the experiment of turning Iraq into something resembling a market democracy works out, it obviously gives lie to arguments that democratic forms of governance cannot thrive in the Arab world. The occupation of Iraq has not run as smoothly as some would have liked. But in less than a year there are positive signs that democracy has found fertile soil. As former White House adviser Mary Matalin put it yesterday, "Getting a whole region to bring in the hallmarks of a modern state, private property, human rights, rights for women, a judicial system, market principles, it takes more than a campaign cycle." Wait a few years--if Iraq looks more secure, more democratic, and more affluent, then the WMD contretemps will fade from view in the same way that Reagan's claims about "windows of vulnerability" vis-à-vis the Soviet nuclear arsenal suddenly vanished.

A similar phenomenon is taking place on the economic front. The current lack of job growth is frustrating, particularly with media reports focusing on the outsourcing of service sector jobs to faraway lands. Yet in both the 1960's and the 1990's, bursts in productivity growth were a harbinger of employment gains down the road. And sustained increases in employment and economic growth will partially alleviate the problems created by the looming budget deficit.

Bush's critics, of course, offer a counter-narrative:

Iraq is not the cornerstone of remaking the Middle East, but a distraction from the more important goal of defeating Al Qaeda; the absence of WMD stockpiles merely reinforces the concept of Iraq as a sideshow. Worse, the administration now seems less concerned with turning Iraq into a model Arab state than with getting large numbers of U.S. troops out of the country as quickly as possible--hardly a recipe for successful state-building. If Iraq disintegrates into either civil war or general lawlessness, then the administration will have squandered a great deal of diplomatic capital for a failed state. Iraq could well be to Bush what Lebanon was to Reagan.

As for the economy, what's unusual about the Bush years is that productivity surged even during a downturn. As Morgan Stanley's macroeconomic analysts bluntly state: "There's never been anything like it. The U.S. economy is currently in the midst of the most profound hiring shortfall of any modern-day business cycle." Even more alarming, this is happening despite expansionary fiscal and monetary policies and a moderate dollar depreciation (the latter of which should be helping to create jobs in the short run by stimulating exports).

Over the long term, the explosive growth of the federal budget deficit has the potential to choke off private investment. Reagan reluctantly raised taxes in 1982 when it became clear that the budget deficit would otherwise reach astronomical levels. Bush, by contrast, wants to make his tax cuts permanent.

Which side is right? This is normally the part of the essay where I'd confidently wager a prediction. But the hard truth is that no one will know for years. Even if I were able to accurately forecast specific developments, that wouldn't necessarily help my cause. Narratives are easy to retrofit onto events, but very difficult to construct without knowing the ending. Yet, as Reagan proved, it's the broader narrative that's going to determine whether or not Bush is a success.

Links to relevant documentation and further information can be found here.