The conventional wisdom of American politics these days is that the Republican Party is in trouble while the Democrats are ascendant. The GOP, after all, is saddled with the despised Donald Trump, the ugliness of January 6, and a deep internal cleavage reflected in the House Republicans’ nasty expulsion of Rep. Liz Cheney from the chamber’s party leadership.

The Democrats, meanwhile, control the White House and both houses of Congress and have embraced a rare political audacity in seeking to fulfill an extensive political agenda and to seize the balance of political power through institutional overhaul initiatives, such as ending the Senate filibuster, expanding the Supreme Court, and adding new liberal states to the Union.

This conventional outlook sees Democrats as having the momentum; Republicans are stuck in the dense jungles of Trumpland. There is some truth in this, as far as it goes. But the conventional perspective fails to take into account a number of political realities that will shape and guide events over the next few years. Taken together, these realities suggest the balance of political power in America is very much up for grabs.

The first question to ask is: How secure are the Democrats as the nation’s governing party? The answer: not very. American politics today resides upon a knife’s edge of parity between the two major parties, reflected in the narrow and precarious margin of Democratic control of Congress. Also, Joe Biden won the presidency with a popular vote margin of just 4 percentage points. And a swing of just 45,000 votes in Arizona, Georgia, and Wisconsin could have given Trump those three states’ Electoral College votes—and, as a result, the presidency. Given this thin margin of governmental control for Democrats, it won’t take much to upend their congressional dominance next year or Biden’s presidency in 2024. There is not a lot of margin here for governmental missteps.

And that reality is more important to GOP prospects at the moment than the Liz Cheney imbroglio or the party’s agonies over what to do about Trump. Presidential elections are generally referendums that hinge on the performance in office of the incumbent president (or the incumbent party when the president isn’t seeking reelection). This is a difficult concept for many to grasp, so fixated are we on campaign factors that are essentially trivial—verbal gaffs, debating points, early poll numbers, endorsements, etc. But American voters, in their collective judgment, focus on what’s truly important: whether the incumbent has performed in such a way as to merit retention in office.

What kinds of things play into those voter judgments? Favorable items would include solid economic growth, job creation, a major foreign policy success, a triumphant war, a serious domestic-policy achievement. Unfavorable items would include major scandal, an economic recession or absence of solid growth, persistent bloody and destructive street violence, a self-induced crisis, a major foreign policy failure, a fight for the nomination, and the emergence of an independent general-election candidacy.

This tells us that, whatever Republicans do in coming months to pull themselves together, it won’t make much difference in comparison to Biden’s performance in office. It also tells us that, if Biden turns in a sterling performance, he will consolidate power irrespective of what Republicans do or say.

Is the president positioned for such success? Clearly, he and the Democrats hold the whip hand for the simple reason that they control the government. Further, the current V-shaped economic recovery from the COVID recession, if it holds, offers strong prospects for the kind of growth that galvanizes popular support. And Biden seems bent on enacting a big domestic agenda that could generate further support, particularly if he gets a substantial infrastructure program through Congress.

But in our presidential system, with the referendum realities of the election cycle, the future of both parties will be determined by the president’s ultimate performance. Can he maintain Democratic control of Congress after next year’s midterm elections? History would suggest otherwise. And his big domestic agenda is predicated on assumptions that could prove faulty.

Biden is betting his massive spending program will, in itself, generate significant economic growth by boosting consumer demand. But, at the same time, he is pushing restrictive tax and regulatory policies that could thwart production, and hence supply. That could spur inflation. Indeed, the magnitude of projected spending, even absent Biden’s clamp-down on business activity, could in itself spur inflation by flooding the market with too many dollars chasing too few goods. All that in turn could require the Federal Reserve to squeeze the money supply and raise interest rates, thus thwarting economic growth or even inducing a recession in the interest of currency stability. Then all bets are off.

Beyond that, some big questions hover over the administration. Will the American people come to regard the border situation created by Biden to be a full-fledged domestic crisis? Can we anticipate a reprise of last summer’s street riots and looting that generated so much civic angst? Will the Hunter Biden scandal eventually impinge upon Hunter and even perhaps his father? Will world events hinder the administration’s foreign policy aims?

In our system of divided government, it takes presidential leadership to solve crises, break deadlocks, set new national directions, and forge governing coalitions. Absent that kind of leadership, crises fester, deadlocks remain, stasis sets in, and the nation sputters. Then the nation inevitably turns to the opposition party to pick up the pieces and set things aright. That means a party can bounce back from even devastating political defeats rather quickly if the party in power messes up.

By way of illustration, consider the Republican Party from 1964 through 1980. The Goldwater debacle at the beginning of that period generated a conventional wisdom rather like today’s—that the GOP was steeped in troubles that would keep it down for a considerable time. The party was split between its Eastern and Midwest establishments and the emerging Goldwater South and West; it was tainted by the unpopularity of Goldwater himself; and the Democrats were in ascendancy, as reflected in Lyndon Johnson’s landslide 1964 victory.

But the conventional wisdom was wrong, and Republicans captured the presidency just four years later with the election of Richard Nixon. Why? Because Johnson’s second term (his only full term) was a disaster, with the country bogged down in an intractable war, no foreign policy success of consequence, relentless campus and racial riots, a potent nomination challenge, and a serious independent general-election candidacy.

That gave the new Republican president, Richard Nixon, a chance to forge a post-New Deal coalition by ending the Vietnam war, calming the street turbulence, uniting the party base while pulling in southern voters, and meshing free-market principles with elements of the New Deal. He nearly pulled it off, but it all came a cropper in Nixon’s second term (shared with Gerald Ford after Nixon’s resignation), with the Watergate scandal, economic dislocations, the ultimate Vietnam humiliation, an intraparty nomination fight, and domestic policy lassitude.

Thus did Democrat Jimmy Carter rise to the presidency based on the referendum rejection of a hapless Republican leadership. Once again Republican prospects appeared hopeless. But once again the party reemerged based on the poor performance of the incumbent, including a foreign policy failure in the Iran hostage crisis, a dearth of successful domestic policy initiatives, a recession mixed with nearly unprecedented inflation, a debilitating nomination fight, and a third-party challenge. The result was the emergence of Ronald Reagan, elected at a time when many analysts and commentators wondered if any president could possibly subdue the many intertwined crises of the nation.

But Reagan forged a new governing coalition by unifying his party, taming runaway inflation, generating robust economic growth, transforming the tax debate in ways favorable to Republicans, halting the expansion of the federal government, maintaining domestic tranquility, saving Social Security, and avoiding scandal. In the process, he peeled off large numbers of traditional Democratic voters and lured them into the GOP fold. In his second term he secured the presidency for his chosen successor, George H.W. Bush, by maintaining strong economic growth, transforming the U.S.-Soviet relationship, fostering an epic tax-overhaul measure, and generally presiding over good times (though the Iran-Contra scandal and Central American military adventurism cut into his popularity).

Thus do we see that the fate of the GOP in this early phase of the Biden presidency doesn’t hinge upon Republican actions so much as on Democratic performance. The opposition party is positioned in the wings, as always, ready to step in if called, as will happen if Biden falters.

But the Republicans are beset with a major liability of their own, and it goes by the name of Donald Trump. The erratic billionaire captured the GOP presidential nomination in 2016 because he perceived, nearly alone among major politicians, the rise of populist frustrations on the part of millions of ordinary Americans who felt beleaguered and marginalized. He captured the White House that year because—referendum politics again—Barack Obama’s second term was adjudged by the American people to have been a mild failure. Then Trump forfeited the presidency in 2020 because his own presidential performance didn’t merit retention in office. After that he assaulted America and undermined his own party by polluting the nation’s discourse with his claim of a stolen election.

The Republicans’ ability to set the national agenda will turn on the party’s ability to get beyond Trump while retaining and building upon much of what he introduced into the nation’s political bloodstream. In the meantime, if Biden succeeds as president, the country will move aggressively in the direction of the Democratic ethos—statism, redistributionist initiatives, globalism, the woke culture. If he fails, the Republicans, however hapless they may appear now, will have what may be a final chance to reverse the current direction and build a governing coalition.

Robert W. Merry, former Wall Street Journal Washington correspondent and Congressional Quarterly CEO, is the author of five books on American history, including Where They Stand: The American Presidency in the Eyes of Voters and Historians (Simon & Schuster).