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Defying the Odds

Defying the Odds
New book about the 2016 election.

Sunday, September 16, 2018

Economic Inequality and the Midterm

 In Defying the Odds, we talk about the social and economic divides that enabled Trump to enter the White House.  Those divides, however, are now working against him. Despite reports of robust economic growth, Trump's approval rating is sagging and Republicans are in serious danger of losing the House.  What is happening?

First, the situation is not unique.  In 2006, just before the midterm "thumpin'" that cost Republicans control of Congress, President Bush expressed confidence that the economy would save his party.  Eduardo Porter at NYT, 10/24/2006:
President Bush, in hopes of winning credit for his party’s stewardship of the economy, is spending two days this week campaigning on the theme that the economy is purring. “No question that a strong economy is going to help our candidates,” Mr. Bush said in a CNBC interview yesterday, “primarily because they have got something to run on, they can say our economy’s good because I voted for tax relief.”
But Republican candidates do not seem to be getting any traction from the glowing economic statistics with midterm elections just two weeks away.
The economy is virtually nowhere to be found among the campaign ads of embattled Republican incumbents fighting to hold onto their House or Senate seats. Nor is it showing up as a strong weapon in the arsenal of Republican governors defending their jobs from Democrats.
“I don’t know of another election cycle in which the economy was so good, yet the election prospects for the incumbent party looked so bad,” said Frank Luntz, a Republican strategist. “If something goes wrong, Republicans are to blame. If something goes right, Republicans don’t get credit.”
Second, for millions of Americans, the economy is not so greatPatricia Cohen at NYT:
As new research illustrates, two groups in particular have stalled: whites without a college degree, and blacks and Hispanics with one. Both are being far outpaced by college-educated whites.
“America has been a story of getting ahead, of progress,” said Morris P. Fiorina, a political scientist at Stanford University. “There’s been no story of progress — for them.”
The findings, part of a study on the demographics of wealth between 1989 and 2016 from the Federal Reserve Bank of St. Louis, show significant advances in education and earnings among white, black and Hispanic Americans over that period. A Census Bureau report this week also showed continued income gains last year. But the study highlights the growing importance of relative shifts in position up or down the income ladder at a time when the economy’s riches are flowing increasingly to the wealthiest sliver.
The economic swoops and comebacks of the last three decades have chipped away at many measures of well-being. An advanced global economy has radically revalued the contributions of blue-collar labor and technological skills.
The lingering economic insecurity has fired resentments, sharpened identity politics and fueled populism on the right and left that is upending hierarchies in the Democratic and Republican Parties.
But parallels between whites who did not finish college and blacks and Hispanics who did show that “this is not clearly a race story and not clearly an education story,” said William R. Emmons, an economist at the St. Louis Fed and a co-author of its report.
David Leonhardt at NYT:
The stock market, for example, has completely recovered from the financial crisis, and then some. Stocks are now worth almost 60 percent more than when the crisis began in 2007, according to a inflation-adjusted measure from Moody’s Analytics. But wealthy households own the bulk of stocks. Most Americans are much more dependent on their houses. That’s why the net worth of the median household is still about 20 percent lower than it was in early 2007. When television commentators drone on about the Dow, they’re not talking about a good measure of most people’s wealth.
The unemployment rate has also become less meaningful than it once was. In recent decades, the number of idle working-age adults has surged. They are not working, not looking for work, not going to school and not taking care of children. Many of them would like to work, but they can’t find a decent-paying job and have given up looking. They are not countedin the official unemployment rate.