On many Mondays I indulge in taking Robert J. Samuelson to task after his regular Washington Post column of the day. Today he was almost right, or if you prefer, even mostly right. This one was titled “It’s Not the Economy, Stupid” about the outcome of the midterm election, as well as a delayed comment on the 2016 presidential election (although, of course, HRC did win the popular vote by three million popular votes, if not the electoral college). His main argument is that in both of these elections, but especially last week’s midterms, the state of the economy was relatively unimportant. The argument is that here is Trump with GDP growth exceeding 3%, the unemployment rate under 4%, inflation largely under control, but this supposedly good performance did not help him out much with his party taking a pretty serious hit (the size of which still being counted). He also sees something similar in 2016, although arguably the economy was not as strongly favorable, but still quite respectable while not obviously helping the incumbent party. Indeed, in 2016 many saw the economy as hurting the Dems, especially in the Rust Belt.
There is a lot of truth to this, with a lot more attention on ethnic and cultural issues, although it should be kept in mind that the top issue for Dems, health care, is at least partly an economic issue. Certainly one sign of the weakness of the economic issue is the matter of the big GOP tax cut. They were quite convinced when they passed it last December that this was their ticket to a strong showing in the midterm election. And indeed it is almost certain that at least some of the acceleration of GDp growth can be attributed to it even if it may be setting up the economy for slower growth down the road. So according the usual views, it should have helped the GOP. But in the end it seems to have been an electoral flop. It has consistently done poorly in the polls, and most GOPs running for reelection in the end barely mentioned it.
But then the major source of reported public unhappiness with the tax cut is revealing. It is the massive inequality obviously inherent in it: the vast majority of the gains went to the top ends of the income and wealth distributions, and everybody knows it. As it is, supposedly the vast majority of taxpayers did get a cut, but for vast majority of that vast majority, it was such a small cut that they barely noticed it. In fact, Obama gave a bigger tax cut back in 2009, but the same thing happened then. When the GOP claimed he had raised taxes, a majority of voters believed them. They barely noticed the actual cut they got. No, it does not seem voters are all that upset about the increased deficit, but they resent that so much of it went to the rich.
So in both 2016 and in 2018, a major problem was that while there were all these good looking aggregate statistics, a majority of people really did not notice much improvement. Yes, job security has steadily improved, but this still has not shown up in wage increases, although reportedly there has begun to be some increase of those recently. But as with the tax cut, not too much, or maybe too little too late. The bottom line here is that most people simply are not seeing all that much economic improvement, so while it is not a negative, the economy is not remotely the positive many think it might have been or should have been. Most of those gains have gone to the top, and that was going on while Obama was president as well.
There is another matter in the midterm election where economics may have shown its old important tole, curiously reported on in WaPo two days earlier. This is that it looks like Trump’s trade war may have impacted several congressional races, mostly not to the GOP’s favor. There seems not to have been much impact, if any, on Senate races, with Dem candidates in Indiana, North Dakota, and Missouri losing even while trying to score against Trump’s trade war. But supposedly the issue played for the Dems in in several races where growing soybeans is a big deal, notably two races in Iowa, one in western Illinois, one in southwestern Wisconsin, and one in southeastern Minnesota, with Dems flipping all these seats while pushing hard on the trade issue. OTOH, one of the two seats that flipped from GOP to Dem was the northeastern seat in Minnesota. This is where the Mesabi range is and still probably the largest source of iron ore of any House district in the nation. Anyway, its economy is booming thanks to the tariff on steel and aluminum imports. So, we know that so far basically the one industry that has really done well from the Trump trade war has been steel, and so it is not surprising that a district heavily dependent on producing iron ore would boom and favor the GOP, while districts with industries, like soybeans, hurt by the war would go the other way.
So, Samuelson’s claim that “It’s not the economy, stupid,” seems to be a bit overdone, if not completely false.
Barkley Rosser
The role of the media is not really mentioned here. You say, for instance, that “When the GOP claimed he had raised taxes…” but don’t explore how the media reported it. If one side says one thing, an opponent the opposite, and then the media repeats one dozens of times while reporting the other not at all, it’s pretty obvious that what “the public believes” is not going to bear any real relation to the truth.
The media reported good news on employment data in one line, and then trumpeted inequality for six paragraphs, so of course most people took a dim view of the economy. They wrote about the tax cut being for the rich but, unlike your mention above, almost universally failed to mention that middle class workers also got a cut, all of it under a headline reading “Tax Cut For The Rich.”
No, I’m not a Trump supporter, and am glad Democrats won control of the House, but the role played by the media in how the voting public thinks cannot be ignored.
It’s the pathological (as in non-union) American labor market “stupid.”
You know how side rail issues, from Gary Hart having a girlfriend to Hillary’s emails to the caravan, seem to push every serious, national path changing issue aside (assuming the Democratic party had any path changing issue to be bumped off course from). Donald Trump says he could go out on Fifth Avenue and shoot somebody and not lose his fan base.
Apparently he has found such an undistractable issue. Democrats could hook up with the exact same unquenchable issue by advocating regularly scheduled union certification elections (I would suggest one, three or five year cycles — local plurality rules).
Donald’s supporters have to be told that even if the president were good hearted and intelligent (even if the president were another Abe Lincoln) he could not do anything for them without the heavy assistance of (and leadership from) labor unions.
Everybody has to be told that normal union organizing is long over — dead — in America — that even if we finally made union busting a felony and hired (tens of?) thousands of investigators, employers could just laugh. What are we going to do, lock up millions of owners and managers — the heart of our entrepreneurial machine?
Penalty free, if “technically” illegal union busting has become part of our industrial DNA (our economic retrovirus). Nothing like this in any other modern economy. Has systematically and intentionally reduced non-gov union membership to 6% (just so we can remember what unions look like).
Only practicable remedy: skip (run-the-gauntlet) organizing and go to regularly scheduled certification elections.
https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule
In 2012 Obama took battleground states Wisconsin, Michigan and Ohio from Romney by a wide margin — in 2008 Obama took the same by the same margin from McCain. In 1988 Jesse Jackson took Michigan in the Democratic primary with 54% over Mssrs Gephart and Dukakis. They will listen to anybody who can really help
Regular union elections will mark a conscious, non-subliminal path to exactly what disaffected Democrats are looking for — and — actually solve the problems they intend to solve.
PS. If McDonald’s can pay $15/hr with 33% labor costs, then, Walgreen’s and Target should be able to pay $20/hr with 10-15% labor costs and (blessedly efficient) Walmart could pay $25/hr with 7% labor costs.
Jason Furman, chairman of Obama’s Council of Economic Advisers said Walmart saves consumers $260 billion a year. Chop 10% off that and Walmart can give every employee a $20,000/yr raise. 😉
PPS. If McDonald’s is forced to pay $15/hr, won’t it be in the interests of Big Mac owners for Target and Walmart to be unionized — so their employees can purchase more of Ronald’s wares? :-O
Bill H.,
I think you overstate the power of the media on the economics issue. The average voter does not read the WSJ or the business seciont of major or even local newspapers. They make their decisions about the economy based on their own personal experience, including that of those close to them, especially family members. The gains from tax cuts and wages have simply been too small for them to notice. If they had gotten big tax cuts they would have noticed the stories about the rich doing well would not have mattered, but they did not. That is the bottom line.
DD,
The decline of unions in the Rust Belt has been a long running affair, and the Dems paid for it in 2016. However, aside from those in the steel industry, Trump has not helped out the rest all that much, hence the turning back at least somewhat to the Dems this time.
In agreement with Bill H.
The media and propaganda machines are at an all out assault. When I talk to people about where they get their news, they will say they don’t watch the news. When I ask if they have Facebook, overwhelmingly they do, and are very active. When pressed about if they get their news from Facebook, they say no, they only really are there for the posts from their acquaintances. In researching this, we find that a) people share the propaganda openly, and because it is being supported by a known person of friendship or family there is more buy-in and b) the software algorithms are tailoring content based on what folks are sharing, thereby creating this feedback loop. This is then reinforced by media companies on both sides who have now found their target audience. Sensationalism leads to public outcry that leads to sensationalism that leads to..well you catch my drift.
Mike:
Welcome to Angry Bear. First comments always go to moderation to weed out spammers and advertising.
So, Mike S., does this mean that you agree with Bill H. that the reason the public has not been enthusiastic about the tax cuts is that they are hypnotized victims of media exaggerations about how little the middle class got compared to the wealthy?
On this matter I would note that it is a fact that the vast majority of the tax cut went to the wealthy. Possibly the media overstated this, but it is not a wild distortion or outright lie as we have seen spread on many other issues by many parties.
Slightly off present discussion, but: I keep seeing this 75/25 disapproval of Nancy Pelosi. Why do I think that if I asked the first ten persons walking by in the street outside — I don’t think one of them would even know who Nancy Pelosi is?
@Denis,
I’ll bet you’re right. But thanks to the GOP demonization of Pelosi, I’ll bet most of those who don’t know who she is disapprove of her.
Barkely,
I don’t think the electorate are complete sheep. I think some get stuck in the infinite feedback loop. I think mostly people form opinions and then move on. I think the media made a big hype, and then people said great! and then nothing really changed. There are so many different inputs into people’s brains that not much attention is held unless it has a dramatic impact on their lives directly and is a constant nagging blister. I was mostly generalizing that the new media that has been building for the past 20 years might be the cause of a lot of the social division, and politicians have picked up on it, much in the same way Fox News and CNN have.
Michael:
Please keep one name or I have to keep approving your comments.
Help me here!
“top issue for Dems, health care, is at least partly an economic issue.”
I thought it was calling Trump unfit and his supports racists.
Only person I see who could claim health care is a top issue is outside Sanders.
Or is there more than Krugman always bashing Trump, racism the NRA and deplorables?
@Barkley Rosser
Don’t read the local paper? Don’t watch the evening news? Don’t watch the local evening news? All they do is read Facebook, I guess, which certainly never talks about inequality, right? Sarcasm is ugly, and I apologize, but, please.
AS we talk about people living in their chosen media bubble, we see a clear example with Ilsm dismissing the idea that healthcare was a huge part of the 2018 election.
I wonder he was while it was going on in states throughout the country. Geez, I mean AZ has a Dem Senator for the first time in 30 years and clearly her opponents actions against the ACA were the main reason Sinema won.