Stagnation Nation

Enough has been said about the midterm election that swept the Republicans back into power. The Republicans retook the Senate and increased their majority in the House, to a level not seen since 1928 or so, and they now control more state governments than ever before, so the Democrats are hurting – but more than a few red states voted for a mandated higher minimum wage, some states decided to go with the flow and voted for legal pot and for actual abortion access, of all things – and also voted in Republican senators and congressmen and governors, who have consistently vowed to fight all those things. That was odd. People seem to like those “progressive” ideas that Democrats have, and they voted for the Republican on the ticket. The Republicans won, and they lost, but much of this can be explained by a general sense that the nation is stuck.

Things aren’t getting better for most people – just keeping your job is a worry, and forget getting a raise – and this time around there was Ebola and ISIS and Putin to consider too, and the usual mass shooting every few weeks, and now it’s clear that climate change will end the world as we know it – and all we can do about that is take drastic steps to limit the damage, at least a little, steps no one seems to want to take. The world is a mess. The Democrats have held the White House and the Senate for six years. Maybe someone else should be given a chance to get us out of our troubles. That might have been the thinking, if that’s thinking.

That wasn’t thinking. There’s no evidence the Republicans could fix any of this. They’ve spent the last six years pointing out how stupid everything Obama and the Democrats did, or tried to do, really was. That finally got them the votes they needed to surge back – but they never said what they would do instead. They said they didn’t have to – they were not the ones in charge. Six years after Obamacare was first proposed, and four years after it became law, they still haven’t revealed their awesome alternative to Obamacare. They used to say that would be along any day now, but they stopped saying even that years ago. There was no reason to go out on a limb and risk someone thinking their alternative was stupid, or unworkable, or if workable, pretty much the same thing as Obamacare, with a different name. It was enough to say that they hated Obamacare.

That worked. Everyone hates Obamacare, even if survey after survey shows they like all its provisions. Democrats running for this and that tried not to mention Obamacare, or mention Obama – they told him to stay back in Washington. Send Michelle. And then they lost, but they didn’t want to talk about Obamacare.

Maybe it was its name – few called it the Affordable Care Act of 2010 – because everyone is sick and tired of the cautious and careful and cerebral Obama now. Perpetually calm and reasonable people become a pain in the ass rather quickly, but maybe it was because the wrong sorts of people were getting health insurance, the ones who needed help buying it. People should, after all, pay their own way. Those were not hard-working Real Americans. Mitt Romney called them the hopelessly useless forty-seven percent, whining losers, because of their own moral failings, demanding that good people, who work hard, give lots of free stuff to them.

Romney should not have said that. That comment lost him the presidential election, but comments like that don’t lose midterm elections. The forty-seven percent doesn’t show up for those. They don’t have time. They’re working three crappy jobs, trying to make ends meet, because Republicans are always blocking any attempt to raise the minimum wage. They vote every four years, when it matters.

As for this election, there was what the Associated Press reported from the exit polls:

Most of the Americans voting Tuesday say they are dissatisfied or angry with the Obama administration. But they’re not so fond of the opposition, either.

Exit polls find just 1 in 5 voters say they trust the government to do what is right most or all of the time.

About a quarter say they are dissatisfied or angry with both Obama and the GOP leadership in Congress. Another six in ten are unhappy with one or the other of them.

No one was happy with anyone, and this is curious:

The surveys show voters taking positions that align more with Democrats on many issues. Majorities favor a way for those in the country illegally to stay, for example.

At the same time, most think the government is trying to do too many things – an opinion more aligned with Republicans.

The American people are confused – the government should do things, damn it, but it shouldn’t do things – but they are very angry. They simply don’t like things as they are. Maybe the government is trying to do too many things, but whatever it’s doing, it’s not working. The rich folks are doing fine, but they can’t pay the bills. That must be Obama’s fault. He isn’t running? Okay, vote for the nearest Republican. That’ll show him.

Sometimes that backfires, as Luke Brinker reports:

Less than one week after Kansas voters narrowly reelected Gov. Sam Brownback despite the disastrous budgetary consequences of his massive tax cuts for the wealthy, state analysts announced Monday that the state’s fiscal outlook is even more dire than initially realized.

We’ve known for some time that Brownback’s supply-side experiment has been a big budget-buster. Thanks to the governor’s tax cuts, Kansas collected $330 million less revenue than expected for fiscal year 2014 – $700 million below revenue for fiscal 2013. Despite the Brownback administration’s assurances that the state’s fiscal picture would improve – any day now – the state’s revenue from July to September came up an astonishing 10 percent short of expectations.

And things just got worse:

Kansas’ revenue forecasts have once again proven far too rosy, with revenue estimates for the current fiscal year now $205 million lower than they were in April. State officials now say that lawmakers will need to slash $278 million in spending no later than June to balance the budget. Moreover, the state’s reserve fund – which contained $379 million just four months ago – will be completely depleted, forecasters say. To avert a deficit in the next fiscal year, lawmakers will also have to cut an additional $435 million from a $5.9 billion budget, the Topeka Capital-Journal reports.

“Sam Brownback spent the last six months lying to the people of Kansas. He knew all along that his fiscal experiment had bankrupted our state,” state Sen. Anthony Hensley, the Democratic minority leader, said in response to the new numbers. “Now he and his followers will get exactly what they wanted – to starve public schools, to raid the highway fund and to cut the social service safety net that so many Kansans depend on. All of this for the sake of his own reelection and political aspirations,” he added.

That’s happening now. Brinker provides all the details and adds this:

What makes Brownback’s experiment so repugnant is that the governor and his supporters knew full well that a reckoning was coming. In the final analysis, Brownback & Co. share Grover Norquist’s goal of shrinking the government to the size that it can be drowned in the bathtub. Last Tuesday, 50 percent of Kansas voters gave them the opportunity to do just that.

It was a close election, but just enough people decided the government was always doing too much, and should stop that stuff. Low taxes, especially on businesses big and small and on the rich, would have every corporation in America moving to Kansas soon, and folks would be starting up all sorts of new small businesses too, so things would be small-government wonderful. With the roads falling apart and the bridges falling down, and school after school closing, and the poor dying in the streets, they might rethink that. The citizens of Kansas won’t be living in an Ayn Rand paradise. They’ll be living in Somalia soon. Koch Industries may even have to move its Wichita headquarters to some place with paved roads and running water.

That Kansas election, however, wasn’t an outlier. These midterm elections, and all elections in the future, may be about the rich versus everyone else. They will be about the economy, and Andrew Sullivan has argued, that on the economy, voters should be willing to cut Obama some slack:

No other developed country has achieved the growth that the US has after the stimulus – including austerity-bound Germany. No other administration has presided over a steeper fall in the deficit. The brutal facts of the twenty-first century global economy has meant this has not been felt very much among the beleaguered middle class. But who is offering on either side a real solution to that by-product of globalization, trade and technology? Again, on the actual substance, Obama has a strong record – dented by the avalanche of hostility from the right and disgruntlement from everyone but the very rich. …

He [Obama] never promised us perfection – merely endurance and persistence in substantively changing the nation and the world for the better. He has easily demonstrated that persistence against truly vitriolic demonization. The easy cynicism and cheap piling on are not, in my view, what he deserves.

Maybe not, but something is wrong, and Josh Marshall thinks the Democrats need to wake up:

I tend to agree that Democrats should have run more clearly on their economic record, though I do not think it would have been a game changing move. …

First, more of this than we are inclined to admit at the moment was beyond the Democrats’ control or was so baked into the cake by election time that there was little political strategists could do about them. It’s the sixth year of a president’s term (bad); the president is not popular (bad); most key races were in red or purple states (bad); the current Democratic coalition consistently drops off from voting in non-presidential elections (bad). Putting all these things together, frankly, you almost wonder how they didn’t do worse. What this doesn’t account for, however, is the loss of key governors’ races where Democrats should have or seem to have had a good shot at winning – Illinois, Massachusetts, Maryland, more marginally Florida and Kansas and Wisconsin.

It also seems clear – though just how to measure it is difficult – that the rise of ISIL and the Ebola scare created a general feeling that the country was adrift and threatened. That further depressed the President’s popularity and that spilled over to his party.

All of these things fit into the mix and others too.

Sure, but forget all that:

Democrats have toyed (and I use that term advisedly) with the issue of rising inequality for the last two elections. But let me suggest that as a political matter inequality is a loser. What is driving the politics of the country to a mammoth degree is that the vast majority of people in the country no longer have a rising standard of living. And Democrats don’t have a policy prescription to make that change.

Marshall reviews a lot of data, but it comes down to this:

The gist is that while productivity growth has been relatively consistent through the post-war period, productivity became unchained from wages in the early 1970s. Despite a modest bump up in the 90s and another small one in the aughts it’s really never come back.

He points out that wage growth “has basically flat-lined” since the economy collapsed at the end of the Bush years and the job numbers again and again show no signs of that changing:

If you follow macroeconomics you know all this stuff like the back of your hand. And when I say that this is the issue rather than ‘economic inequality’, this is obviously one side of the equation which is driving rising inequality. You might even say this is the same thing, only expressed in a different way. But it’s a critical difference.

Fundamentally, most people don’t care particularly how astronomically wealthy people are living their lives. It is a distant reality on many levels. They care a great deal about their own economic circumstances. And if you are not doing any better than you were 5 years ago or a decade ago or – at least in the sense of the hypothetical median wage earner – 40 years ago, that’s going to really have your attention and shape a great deal of your worldview and political outlook.

So, let me sign up with those who are saying that it was a mistake not to run more clearly on the President’s (and the Democrats’) economic record. Unemployment is back down to something like normal levels (under 6%); the deficit has fallen consistently and is now back to pre-crash levels judged as a percentage of GDP (which is the only meaningful way to judge it); the stock market has done incredibly well. Yes, totally.

But here’s the thing: As long as most voters are still just treading water in their own economic lives, Republicans can say, “Oh yeah, they say the economy’s doing great with all their fancy numbers. But that’s not what I see!” To an extent that will be just another Republican paean to innumeracy. But it will resonate because rising employment is not leading to rising wages. And that’s the core economic experience of wage earners who make up the overwhelming number of people in the country.

That is true to them, and that’s the problem:

The great political reality of our time is that Democrats don’t know (and nobody else does either) how to get wage growth and productivity growth or economic growth lines back into sync.

We know a fair amount about why they got out of sync. Decreased bargaining power resulting from the steep decline in the labor movement, a whole series of vast structural changes in the economy we put under the heading of ‘globalization’, rapid changes in technology which play a big role… and a bunch of other things. What complicates the question is that at a certain point economic trends that concentrate wealth at the top magnify themselves as the winners use the political power derived from that wealth to lock down and expand their gains. …

But what are the policies that would change this corrosive trend? And how do you run on them as a party if you don’t know what they are? Minimum wage increases help those at the very bottom of the income scale and they have a lifting effect up the wage scale as the floor gets pushed up. But it is at best a small part of the puzzle. Clamping down on tax dodges by the extremely wealthy claws back some resources for the treasury and sends an important message, as might some restrictions on ridiculously high CEO pay. But again, these are important changes at the margins that do not fundamentally change the equation. Economic populism or another comparable politics with a different tonality won’t get you very far if you can get beyond beating up on the winners to providing concrete improvements to those losing out in today’s economy.

Again, a stark reality: Democrats don’t have a set of policies to turn around this trend. Republicans don’t either, of course. But they don’t need to. Not in the same way. As a party they are basically indifferent to middle class wages. And their policies stand to make the situation even worse.

We’re stuck:

Tax cuts as an elixir for every problem in the American body politic may be running out of steam. But it wasn’t so potent because of its policy merits, which haven’t made much sense for decades. It was potent because a generation of activists and politically minded people were reared on the idea and a vast political coalition was built around them. So find the policies, if there are any, build a political coalition around them. And then, don’t forget: the spiraling rates of wealth concentration have created a political economy in which organized wealth is extremely well positioned to beat back any challenges to its gains.

Yes, they will, and the New York Times’ David Leonhardt sees the same stagnation:

A quiz: How does the Democratic Party plan to lift stagnant middle-class incomes?

I realize that liberal-leaning economists can give a long, substantive answer to this question, touching on health care costs, education and infrastructure. But most Americans would not be able to give a clear answer — which helps explain why the party took such a drubbing last week.

The Democratic Party’s short-term plan to help the middle class just isn’t very clear. Some of the policies that Democrats favor, such as broader access to good education, take years to pay off. Others, like reducing medical costs or building new roads, have an indirect, unnoticed effect on middle-class incomes.

The fact remains that incomes for most Americans aren’t growing very fast and haven’t been for years. Median inflation-adjusted income last year was still $2,100 lower than when President Obama took office in 2009 – and $3,600 lower than when President George W. Bush took office in 2001. That’s not just because of the financial crisis, either: Last month was another solid one for job growth and another weak one for average wage growth, the latest jobs report showed.

We’re living through the great wage slowdown of the 21st century, and nothing presents a larger threat to the Democrats’ electoral fortunes than that slowdown.

That’s what the next election will be about:

As the 2016 presidential campaign begins to stir, the central question will be how both parties respond to the great wage slowdown. Neither has offered a persuasive answer so far – let alone a solution – which is why the public mood is so sour and American politics has been so tumultuous lately. The partisan makeup of the Senate has seesawed more over the past decade than in any time since just after World War II. The Republicans won big victories in 2004, 2010 and 2014, the Democrats in 2006, 2008 and 2012.

All the while, incomes keep stagnating, and nothing influences the national zeitgeist quite so much as income trends, for understandable reasons.

And there may be nothing anyone can do about this:

Washington could definitely do more to help growth: better infrastructure, a less burdensome tax code, a less wasteful health care system, more bargaining power for workers and, above all, stronger schools and colleges, to lift the skills of the nation’s work force. Countries that have made more educational progress over the last generation have experienced bigger income gains than the United States, and even here the pay gap between college graduates and everyone else has reached a record high.

Yet no mix of these policies is likely to end the great wage slowdown anytime soon. “This is not a silver-bullet issue,” says Gene Sperling, a longtime adviser to Bill and Hillary Clinton and Mr. Obama, “and that’s part of what’s frustrating to people.”

At Mother Jones, Kevin Drum adds this:

Growing income inequality per se isn’t our big problem. Stagnant wages for the middle class are. Obviously these things are tightly related in an economic sense, but in a political sense they aren’t. Voters care far less about rich people buying gold-plated fixtures for their yachts than they do about not getting a raise for the past five years. The latter is the problem they want solved.

Needless to say, I agree, but here are the two key takeaways from Marshall and Leonhardt and pretty much everyone else who tackles this subject: (1) nobody has any real answers, and (2) this hurts Democrats more than Republicans since Democrats are supposed to be the party of the middle class.

Anyone can see what happens next:

Sure, Republicans are the party of business interests and the rich, but voters blame their problems on whoever’s in power. Right now, Democrats have gotten the lion’s share of the blame for the slow economy, but Republicans rather plainly have no serious ideas about how to grow middle-class wages either. They won’t escape voter wrath on this front forever.

That wrath seems to be what the midterm elections were about, and what future elections will be about, until we no longer live in a stagnation nation, which seems unlikely. There’s no reason to raise anyone’s wages. There’s globalization – someone, somewhere, will do the job for less, and probably better. There’s automation – almost any job can be done by a tireless gizmo of some sort. Both have been going on for decades, and that will accelerate. If you have a job, you’re lucky to have a job – so don’t press your luck. The world really doesn’t need a whole lot of workers. It probably doesn’t need you. Wage stagnation was inevitable. It’s a feature, not a bug. The Democrats incurred the wrath of the voters for that this time.

They’ve been tossed out. It’s the Republicans’ turn now. Things aren’t getting better for most people, and neither party knows what to do about that. People hate stagnation, but they’d better get used to it.


About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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2 Responses to Stagnation Nation

  1. Rick says:

    Kevin Drum is just one of many to say this sort of thing:

    “Sure, Republicans are the party of business interests and the rich, but voters blame their problems on whoever’s in power.”

    No, they don’t. They blame losers. Voters tend to vote for those who seem to be winning the argument, regardless of whether they’re right or wrong, and there was never much doubt this year which side was making which side play the fool. Did you happen to see Chuck Todd, asking Howard Dean on Meet the Press over the weekend what went wrong?:

    Dean: “The Republican message was, ‘We’re not Obama.’ No substance whatsoever. ‘We’re not Obama.’ What was the Democrats’ message? [flapping his hands meekly, in a weeny voice:] ‘Oh, well, we’re really not either.’ You cannot win if you are afraid.”


    And yet, Josh Marshall’s answer to this has almost risen to the level of conventional wisdom:

    “I tend to agree that Democrats should have run more clearly on their economic record, though I do not think it would have been a game changing move. … First, more of this than we are inclined to admit at the moment was beyond the Democrats’ control or was so baked into the cake by election time that there was little political strategists could do about them.”

    Okay, that’s true, but the point is not that the Democrats should have sat down at the beginning of the election season to decide their strategy and conclude that they need to come up with a plan to talk up their record or that they should now start getting behind their president, it’s that they should have been doing this all year round, every year, for years in advance!

    We never should have allowed the Republican narrative — such as that Obamacare is a “failed program”, and that Obama is a “failed president” — to be “taken for granted”, as “common knowledge”. By election day, it was virtually impossible for any Democratic candidate to argue, especially on a local level, against an assumption that everybody in the country — not just Republicans but also Independents and Democrats and even those not even paying attention — seemed to believe was the undisputed truth.

    Maybe this should be the new political maxim:

    The longer you allow those horse’s asses to spread their horseshit with impunity, the harder it will be to shovel it out of the barn.


  2. Pablo says:

    Please note that a Republican (actually in the rest of America Charlie Baker would be a moderately liberal Democrat) governor in MA won’t make a damn bit of difference to most people.

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