Despite Some Good Economic News, The Status Quo Is Not Enough

Should Democrats present themselves as fighters for a transformative economic vision, or as skilled managers whose job is to restore and maintain the status quo of the last several decades? The question came up again last week, when new economic data for 2015 was released.

President Obama told a Philadelphia crowd:

“… last year, across every age, every race in America, incomes rose and the poverty rate fell …the typical household income of Americans rose by $2,800, which is the single biggest one-year increase on record … We lifted 3.5 million people out of poverty. That’s the largest one-year drop in poverty since 1968. The uninsured rate is the lowest it has been since they kept record. The pay gap between men and women shrank to the lowest level ever.”

It’s all true, and it’s a welcome burst of unexpected good news. These are major advances by any standard.

The View From Main Street

But there are lingering problems. Median household income is still lower than it was in 2007. In fact, it’s lower than it was 20 years ago. Moreover, as the Economic Policy Institute’s Elise Gould points out, most of the income growth occurred at the top. Wage inequality continued to rise last year.

As The New York Times reported, “Americans in the bottom half were still well below where they stood at the turn of the century even as those at the top chalked up significant gains.”

Many parts of the country are still wrestling with extreme poverty and lagging incomes. Americans pay more today for needs like health care and higher education than they did in the 1990s.

At 14.5 percent, our poverty rate is still higher than the latest reported figures for most Western European countries. (Only austerity-battered Greece and Spain fare worse.) States like Mississippi (with a 22 percent poverty rate) and Arkansas (at 19.1 percent) are much worse off than any developed nation. And, as Shawn Fremstad points out, the federal poverty measurement undercounts America’s poor.

Obama’s comments will probably play well in states like Connecticut, New Jersey, Maryland, Massachusetts and California – all in the top 10 for key economic indicators. But they won’t resonate in the struggling states that are more inclined to vote for Donald Trump.

The Long Decline

The 2015 census figures suggest that, after seven years of a painfully slow recovery, we’re returning to pre-2008 conditions at a faster rate than expected. But shouldn’t we aspire to more than that? As this chart shows, hourly wages have been lagging behind productivity since the late 1970s:

Source: Economic Policy Institute

“(H)ad all workers’ wages risen in line with productivity, as they did in the three decades following World War II,” Gould writes, “an American earning around $50,000 today would instead be making close to $75,000.”

Economist Dale Jorgenson told The New Yorker that “we’re almost out” of the Great Recession. Perhaps that’s true, at long last. But that will not give Americans back their years of lost income. It won't make college or health care affordable, or give them the childcare benefits and paid leave enjoyed by citizens of other Western nations. It will not heal our struggling rural areas or rebuild our devastated inner cities.

Failure to Thrive

Leading Democrats sometimes appear exasperated when confronted with economic dissatisfaction. Sometimes they lash out against the left, as President Obama did in 2010 when he called progressives “sanctimonious” for opposing his budget deal with House Republicans. Sometimes it takes the form of scornful dismissal of the electorate. "When Americans are asked how the economy is doing," Paul Krugman wrote last week, “many of them just repeat what they think they heard on Fox News.”

Krugman’s argument for the electorate’s self-delusion is based on Gallup figures that show what he describes as “a sharp increase in the percentage of Americans who see themselves as thriving.” But “thriving” is Gallup’s word, based on its interpretation of the data, not one that voters used themselves. And an increase of less than 4 percent, measured against the height of the worst economic crisis in modern times, is arguably less than “sharp.”

There are positive indicators in Gallup’s data, but there are also warning signs. 30 percent of Americans see the economy as “poor.” Americans’ satisfaction with the way the healthcare system works for them has fallen slightly since 2014. While some of that discontent is clearly political – in this case, Fox News probably is a factor – some is presumably the result of skyrocketing out-of-pocket costs for the millions of Americans who receive coverage through their employers. And there has been a steep drop in the number of people under 45 who say they are in excellent health.

These voters have reason to be unhappy, and they appear increasingly inclined to act on their unhappiness. Economist David Autor and his co-authors found that voters whose communities had lost jobs to China tended to replace moderate Republicans with hard-right extremists. Districts represented by centrist Democrats either replaced them with more liberal Democrats or switched to conservative Republicans. It would appear that politicians from the pro-trade-deal “center” were largely rejected.

In itself, that's not an irrational response. Unfortunately, the right-wing alternative is worse – much worse.

Something to Vote For

But how can Democrats convince struggling voters that they understand their needs while at the same time celebrating an economy that has left these voters behind? That job got even harder last week when the president teamed up with Ohio Gov. John Kasich and other Republicans to push another job-killing trade deal, the Trans-Pacific Partnership or TPP.

Last week Hillary Clinton said, “I want to give Americans something to vote for, not just against.” That’s smart politics. But there is a fundamental disconnect between that message and the president’s “Thanks, Obama” remarks, which essentially told Americans their lives have already gotten better.

Granted, there's a delicate balance between celebrating your party's accomplishments and channeling voters' pain. But if Clinton and her party want to offer a positive vision for the future, they’ll need to do more than promise to restore a pre-recession economy in which lower-income and middle-class Americans had been losing ground for decades.

The Arena

President Obama clearly had his progressive critics – and Hillary Clinton's – partly in mind when he quoted Teddy Roosevelt’s “Man in the Arena” remarks at the Democratic National Convention. Calling Clinton “the woman in the arena,” he said “she has been caricatured by the right and by some on the left,” adding:

“She’s made mistakes – just like I have … That’s what happens when you’re the kind of citizen Teddy Roosevelt once described – not the timid souls who criticize from the sidelines, but someone ‘who is actually in the arena…who strives valiantly; who errs…but who at the best knows in the end the triumph of high achievement.’”

But the president omitted Roosevelt’s characterization of the leader in the arena as someone “who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly…"

Democrats needn't be defensive toward those who are urging them further toward the left. As the Economic Policy Institute (EPI) notes, a great deal of the credit for 2015’s strong report goes to government programs like Social Security, housing subsidies, and unemployment insurance, which together kept millions of people out of poverty. Minimum wage hikes helped boost incomes nationwide.

Krugman correctly points out that “progressive policies have worked, and the critics of those policies have been proved wrong.” Democrats need to make that case more forcefully, while calling for new, bold social programs that build on these achievements.

In the end it comes down to this: What kind of people do we hope to become? Will we be satisfied with an elegiac future of ever-diminishing aspirations for our children and grandchildren, or will we reach for new goals that rival past achievements like Social Security and Medicare?

Democrats need a vision that is compelling enough to rout congressional Republicans, if not this year than in elections to come. They must meet Teddy Roosevelt's test of leadership by "daring greatly." Otherwise they're likely to face a Sisyphean fate, eternally seeking the same compromises over and over again from implacable Republican extremists.

They must also resist the temptation to dismiss expressions of concern about the economy as doing Donald Trump’s work for him. That's ceding the "change" mantle to the Republicans. Democrats can win on a platform of change, because Republicans have nothing to offer but empty rhetoric. It would be a tragic mistake if Democrats presented themselves instead as the stewards and engineers of the status quo, when the status quo has failed so many for so long.