“It’s the economy stupid.” The famous line uttered by President Bill Clinton perfectly encapsulated the issue on which the majority of American elections have been decided upon in the 20th and 21st centuries. Short of the 1936, 1940, 1944 (WWII), 1980 and 2004 every other election has hinged on economic results. Eisenhower’s election in 1952 owed as much to public unrest with a centralized economy as his five-star military background. JFK rode the Democratic political machine to victory in 1960 and Richard Nixon exploited a Democratic rift over the Vietnam War and Civil Rights to win landslide victories in 68 and 72.
More recently, Carter’s victory in 76 owed much to Watergate and Ford’s weakness as a candidate. By 1984 the US economy was recovering from the 70’s malaise and GDP and income were rising sharply. H.W coasted on Reagan’s coattails to victory in 1988. But since the 1988 election much has changed. The economy has shifted with massive advancements in technology and the fall of the USSR made the world a unipolar arena. With foreign policy largely out of the equation (virtually every candidate in every election pre-1990 talked tough on Communism), the economy was the name of the game. HW lost reelection in 1992 due to a nagging recession. Bush’s narrow victory in 2000 partly came due to the Dotcom bubble beginning to burst thanks to Clinton. In 2004, even with the Iraq War in full swing, the election largely hinged on a recovering economy. Fast forward to 2008 and the economic collapse of Wall-Street all but assured Obama would be elected. Even in 2012, where a hobbling economy was thought by some to doom Obama it did not.
Against this historical backdrop stands the 2016 election. The rise of ISIS, Saudi Arabia’s increasingly secretarian concerns, and Israel’s waning tolerance of American foreign policy all hint the election could be fought on foreign policy. But it takes two to tango and that means both parties have to want to engage in such a debate. The Republican base seems to want to increasingly engage on foreign policy. The hearts of the Democratic faithful are far more concerned about economic inequality and want to divest themselves of foreign concerns. Hence, 2016 will likely be an election fought on the performance of the economy.
This should concern Democrats mightily. The Labor Department’s report two weeks earlier showing the economy shrunk 0.7% in the 1st quarter of 2015 showcases why. Since 2009 the economy has hobbled along. In no quarter since the start of 2009 has GDP grown by more than 5%. More alarming, the average growth for every 1st quarter in the same time period has been negative.
Such weak growth has had profound economic and political consequences. Policy-wise, continuous low-interest rates have made financing more affordable than ever. But low rates also mean low returns on investment hurting young workers looking to start saving for retirement. Stagnant wages have locked workers in place (leading to increased competition for few open positions) and more and more children are returning home even after acquiring a college degree to live with their parents. A new class of worker has also been created, predominately older and whiter, the long-term unemployed.
Politically, such economic performance has splintered the public’s views. Not surprisingly, such results have inspired the Democratic base to call for a far more activist government in the economy. Consider Bernie Sander’s call for a $1 trillion infrastructure package and debt free college. Clinton has called for a CEO tax (to fight inequality) and a mandate for businesses to provide paid maternity leave (guys you don’t get such leave). Congressional Democrats have hammered over and over the (lie) that women earn 73 cents on the dollar of what men earn and at the local level (Seattle, LA and San Francisco) the minimum wage has been hiked to $15,
Republicans and Independents are far less trusting of the government’s ability to deal with the issue. Policy prescriptions for the US’s new economic malaise include some government action such as increasing the Earned Income Tax Credit (EITC) to stimulate people with children to find work and be rewarded for it. But, in other ways, the solutions are deceptively simple. Leading such solutions are deregulation and generally getting the government out of the way of the economy; for Republicans this has meant doing everything they can to kill Obamacare.
Generationally, growing up in a weak economy has had profound impact. Some Millennials have done quite well and are the “new rich.” Others, such as myself, have scrapped by and in surveys describe themselves as incredibly cost conscious. Generation Y and Baby Boomers who have been able to survive the recession with much of their wealth intact have by most accounts not seen their economic behavior change.
Again, all this sets the stage for 2016 which will likely be fought on economic performance. In this, Clinton, the likely Democratic nominee, will be fighting an uphill battle. She does not have the cultural or generational appeal Obama does and her current positions on issues (most she came to recently) are likely to be undermined by more liberal primary challengers such as Sanders and O’Malley. And for all the feminists pining for her candidacy the perception remains she has a significant authenticity problem.
An election fought on the economy should benefit Republicans. Despite Americans becoming more socially liberal they have not become more fiscally liberal (a 3% change is not statistically significant). Pragmatism on the economy and spending appeal to the public as does deregulation. Demographic change is widely assumed to benefit Democrats but could just as much benefit the GOP. While Millennials identify as being socially liberal they identify as fiscally conservative and a campaign tailored to such a message appeals. There is evidence to support such a hypothesis including the 2013 and 2014 elections.
Of course sticking solely to an economic message in any campaign is impossible. Cultural/social issues such as gay marriage, abortion, LBGT rights (Caitlyn Jenner anybody) are sure to pop up, especially considering the Democratic Party knows this is the key to winning elections of late. Republicans would be smart not to play such a game.
In short, the weak economy has had profound impacts on policy, politics and generations. Ironically, it might be the youngest and most Democratic generation to date who would find a fiscally conservative message appealing. A weak economy puts the Democratic nominee in a deep bind considering Obama has not fixed it in eight years. Cries of “It takes time to fix” are unlikely to appeal to an electorate having lived through stagnant wages, a recession, struggles finding a job and a financial collapse. As for Republicans there is always the chance they could blow it. Let’s hope they don’t.