Who takes credit for economic recovery?

We've heard it so often lately that it has almost become cliché: The 2012 presidential election will be "historic." Pundits have been saying this for every election I've seen, from George W. Bush to John Kerry to Barack Obama. This time, however, they couldn't be more right. The repercussions of this election will be larger any other in our generation, but not for the reasons most people think.

By 2013, the housing market should begin to bounce back, cites a study commissioned by Reuters, and by 2015, the Congressional Budgetary Office estimates that our economy will be back into full recovery. What do these events all have in common? They will all take place after the 2012 election during the next president's term. For this reason, many are dubbing this next election the "recovery presidency."

Perhaps the biggest fallacy of the American presidency is how little power the leader has over the economy. The president cannot affect interest rates or monetary policy – that's the Federal Reserve's job. The president cannot pass laws and fiscal policy – Congress does that. In fact, the president has very little power over how the laws will even be executed as much of the money goes back to the states to use. To put it simply, the president has very little power over the economy.

Yet the American people herald presidents during boom times and punish them during the bust. In the 1930s, a worldwide depression consumed the economy of every country in the world. As Ezra Klein of the Washington Post points out, the parties that were in power when the Great Depression hit took large political losses. The Republicans here in America were voted out for Democrats; in England, the voters replaced the Labor Party with the Conservative Party; in Germany, the voters rejected all the established parties and voted in the Nazi Party.

The parties voted out of government all had very little in common in terms of policy. Some were conservative, some were more progressive. The only thing they had in common was one thing: They were in the wrong place at the wrong time.

Opposite of that, the party that was then voted in to office was in the perfect place to take advantage of it. Franklin D. Roosevelt claimed the aftermath recovery was thanks to his policies, as did Winston Churchill in England and Adolf Hitler in Germany, and they all reaped massive political benefits from it. As a result, Keynesian and progressive presidents ruled the political arena for decades after.

That was until the slowdown in the late 1970s under Jimmy Carter. The slowdown was not of Carter's doing, but of Paul Volcker, the Federal Reserve chairman, who tightened up monetary policy to ensure that inflation didn't envelop the economy for years to come. The American people, however, not being economists themselves, blamed Carter and voted in Ronald Reagan as a result. When the economy inevitably bounced back in the aftermath, Reagan claimed all the credit, and Republicans dominated the political agenda for the next 30 years.

So fast forward to the recovery of 2012-2016, where either Obama or the Republican nominee takes office. If Obama wins and the economy bounces back in his second term, his economic policies will be vindicated, and Democrats will look superior.

Now imagine if Mitt Romney wins, cuts taxes, repeals all of Obama's policies, cuts government and the economy bounces back. He will almost assuredly claim credit, and the small government ethos of the Republican Party will look superior.

You see, this next election will not just decide who gets to be president for the next four years, but what ideology will dominate the political sphere for the next few decades.