How Romney Lost The Economy As A Winning Issue
The biggest surprise of the Presidential race to date is the fact that Mitt Romney has lost the edge he once had on economic issues.
For the better part of a year now, the conventional wisdom was that the Presidential election would be, almost exclusively, a referendum on the state of the economy and President Obama’s response to it over the past several years. To many observers, it seemed clear that this was something that would work to Mitt Romney’s advantage both because of his business background and because of the fact that, especially this summer, the economic statistics seemed to be suggesting an economy that was slowing down and possibly even heading into recession. Indeed, up until very recently, polling consistently showed that Romney was leading the President on the question of who would best be able to handle the economic troubles the nation faces. Then, something interesting happened. In what Forbes is calling the real October Surprise, the economy slipped away from Romney:
In the gaffe-termath of Romney’s “47 percent” video, we spent the past week wondering exactly what bombshell would drop next.
Well, there were no bombshells last week. At least not by the standards set by this most gaffe-happy campaign season. In fact, the GOP nominee enjoyed a relatively calm week, allowing him time to focus on his core message regarding the economy, and to prep for the first presidential debate on Wednesday. And the respite in fact may have helped him. According to Traackr – an online influence monitoring tool — “the economy” topped the list of phrases most often used last week (119 mentions) by 50 online influencers in the 2012 election. But a closer look at the numbers — and the context — for last week’s conversations suggest that “the economy” as a campaign theme may have slipped away from Romney.
First problem for Romney is that there is now a broader discussion of the economy, in part the result of “the 47 percent” fiasco. After “the economy,” the phrase most often used by top influencers last week were “the 47 percent” (69 mentions), “the Middle East” (54 mentions), and “early voting” (39 mentions). The fact that “the 47 percent” is still driving so much conversation is of course meaningful. It’s not just the volume of the conversation. It’s also the way “the 47 percent” is helping to reframe the discussion around the economy. The Romney-Ryan storyline (rebooted, again, this week) of a better economy with less government intervention has been supplanted in part with a Democratic storyline of a better economy for all. Granted, Romney and Ryan have been working diligently to retell their economic story in a way that is more inclusive. But with “the 47 percent” story still looming large, it’s a hard sell.
Of course, Romney started losing ground on the economy even before the “47 percent” video became public. If anything, the video simply made worse something that was already happening. The question is why it was happening to begin with, especially since it has happened at the same time that we’ve been treated to some particularly gloomy economic statistics. Some have suggested that Romney and Ryan’s unwillingness to give any concrete details of the plans for the economy and the budget are part of the problem, and I certainly think that’s part of the problem. Some have argued that the relatively flat Republican National Convention, followed as it was by the Democratic Convention that was highlighted by a particularly effective speech by Bill Clinton are what’s responsible for the bend in public opinion. That speech was very good, and the President has gotten quite a good bounce in the polls from the convention, but I’m not sure we can give it all the credit for what’s happened here.
Over at Buzzfeed, Ben Smith and Zeke Miller argue that part of what’s going on here is the fact that Republicans and Democrats now have very different perceptions of what’s going on in the economy:
A closer look at some of that same polling data helps explain it. The most dramatic figures come from the Pew Research Center for the People & the Press, which routinely asks voters about the news they are hearing about the economy. In August of 2011, Americans of all parties said the news was mostly bad, with only minor differences showing between members of different political parties.
A year later, a survey taken in early September found a “record partisan gap.” A full 60% of Republicans said they were hearing “mostly bad” news. Only 15% of Democrats reported the same. And independent voters split on the question, with 36% saying they were hearing mostly bad news.
It’s not just a matter of what voters are hearing. Gallup’s tracking of Americans’ reported confidence in the economy has also seen a dramatic divergence: Democrats’ confidence reached a new high in a survey released September 25; Republicans’ reached a record low.
An online survey by the firm CivicScience, among those that has sought to develop reliable online metrics, found that among the Romney supporters it surveyed over the last three months, 96% labeled the economy “weak.” The corresponding figure for Obama supporters is 55%, according to the company’s data director, Ross McGowan.
The pattern is a familiar one to pollsters and political scientists alike, though some say it has intensified with the changing and increasingly partisan media.
“Cues and signaling from the political leaders definitely influence how people experience their own lives,” said Democratic pollster Harrison Hickman, who said he’d seen the trend “aggravated in recent years.”
This isn’t necessarily a new phenomenon, Michael Barone noted the same thing in a column he wrote when Barack Obama’s Presidency was just a few days old:
Americans’ views of the economy are increasingly a function of voting behavior or party loyalty, rather than the other way around. The most succinct evidence of this comes from a January 2006 report by the Pew Research Center for the People and the Press entitled “Economy Now Seen Through Partisan Prism.” As the Pew report notes, during the1992 campaign year and up through 1994 there was a partisan divide on the economy, with about 20 percent of Republicans and less than 10 percent of Democrats rating it as excellent or good. From 1995 to 1998, with a Democratic president and a visibly aggressive Republican Congress, Democrats and Republicans gave similar ratings to the economy. From 1998 to 2000, Democrats were somewhat more positive about the economy than Republicans, at a time when economic growth was vibrant and inflation low.
Then, after the election of George W. Bush, the divergence between the two parties expanded into a chasm. It began to widen during the recession of March-November 2001, and it widened much more as the economy recovered and resumed low-inflation growth. By early 2006, a time of vibrant economic growth, 56 percent of Republicans said the economy was excellent or good, while only 28 percent of independents and 23 percent of Democrats agreed. We have seen similar responses in the years since, although the percentage of Republicans rating the economy positively has dropped somewhat since the subprime mortgage crisis and the decline in housing prices during the second half of 2007. As the Pew Research Center points out, Democrats and Republicans of similar income levels gave sharply different ratings of the economy.
There is a divergence here between Democrats’ and independents’ assessments of their personal economic condition, which have generally been positive, and their assessments of the economy as a whole. It’s hard to resist the conclusion that when Democrats—and, in 2004-2006, independents—were responding to questions about the condition of the economy, they were actually responding, “I am a Democrat,” or, more emphatically, “I hate George W. Bush.”
In other words, people’s perception of the economy in general, and their own economic situation in particular, is now influenced being heavily by their partisan biases. In that respect, this is yet another reflection of the polarization that has become such a pervasive part of our politics and our culture. We’re approaching the point where hardcore partisans on each side don’t just have different opinions, they have different facts, and that never ends well.
I would suggest that this gap in perceptions about the economy also explain, in part, why people on the right are so insistent in denying that the polls showing the President leading and Romney slipping behind, especially in swing states, must clearly be wrong. The Pew Poll taken in September showing that 60% of Republicans surveyed said that the news they were hearing about the economy was mostly bad. By contrast, 36% of Independents said that, and only 15% of Democrats agreed that most of the news they were hearing about the economy was wrong. Among Democrats, I tend to agree with Andrew Sullivan that the low number is largely a refection of their reaction to the Democratic National Convention, including Clinton’s speech. Their enthusiasm about the race and about the President was enormously positively impacted by those events, and they seem to have bought into the idea that Clinton pushed in his speech that the President did the best he could under the circumstances that existed when he entered office. Arguably, the Democrats have a bit of a rose-colored glasses thing going on here, because all one needs to do is look at the latest jobs report or the fact that the economy only grew at a 1.3% pace in the second quarter to see that things aren’t very good at all. At the same time, Republicans seem to have an overly pessimistic view of the economy that doesn’t acknowledge that the U.S. is still doing far better than Europe and we’ve been growing our economy since early 2009. I bet if the President were a Republican, their attitude would be very different.
The problem for Romney, though, isn’t the perceptions of Republicans and Democrats about the economy, it’s the perception of Independents. A year ago, Independents were about as pessimistic about the economy as Republicans, but their perceptions have changed markedly over the past year to the point where only 36% say that most of the news they are hearing about the economy is bad. That’s still a fairly sizable number, but it’s better than it was in the past and it’s likely one of the main reasons for why Romney has lost the edge on the economy.
This is why you see the Romney/Ryan campaign moving into areas like foreign policy and trying to tie the argument about the economy into the deficit. As Dave Schuler noted this morning, though, Romney’s arguments about foreign policy have lacked any real substance, and there’s very little evidence that the deficit is an issue that strongly motivates voters. So, this leaves the Romney campaign with a conundrum. Their strongest issue is slipping away, and they don’t seem to be able to make inroads in other areas. It will be interesting to see how Romney tries to play this during Wednesday’s debate.
Everything R-money touches turns to salt …. Nothing grows.
…It is because he is such a dick.
This is very simple, Doug…and I could explain…but it would take too much time…
36% is still quite high, so I wonder if there are other factors at work.
Do you suppose Obama’s basic likability is playing into things? In other words, independents generally want him to succeed more than fail, so fair to middling economic news would be viewed as more of a half-full situation rather than half-empty, because few people outside of Republicans want to see him fail.
Number of people polled who think Romney “…would be fun to meet in person…”
21%
It’s going to take more than a weak recovery to overcome that kind of negativity.
Perhaps it may just be a matter of same old story, same old song and dance.
Mike Konczal of the Roosevelt Institute did a piece around the beginning of September in which he compared the proposals of W Bush 2004, his 2006 SOTU, McCain 2008, and Romney’s five-point plan. They were nearly identical, meaning much of the GOP message that wasn’t simply “anti-the other guy” hasn’t changed very much, if at all.
The Romney campaign team aren’t dumb – the reason why there has been so few details offered (even when there’s time . . .) is that the message is damaged, rather than improved, by firmer figures (probably the same for Mitt’s tax returns).
And face it, Fox’s thousand straight days of unrelenting criticism of Obama has probably produced glazed eyes on independents everywhere – so even credible criticism is just more white noise.
Mitt Romney’s problem is not that the economy doesn’t suck. His problem is that the public has the heard his prescription for turning around the economy and the public doesn’t buy it. Let’s review his plan:
1. Big tax cuts for the rich
2.Big cuts in entitlement programs (” entitlement reform” in Republicanspeak)
3.Subsidies for oil companies (“energy independence”)
4. Deregulating business (“restoring economic freedom”)
5. Abolishing health care reform (“Repealing Obamacare”)
How does any of this help with lowering unemployment? It doesn’t, and the public sees that. That snake oil might have worked prior to the 2008 crisis, but it doesn’t work now.
Romney’s problem is like Alf Landon’s problem in 1936. He’s campaigning on a set of proposals that the public knows from bitter recent experience doesn’t work, against the background of a still poor but slowly recovering economy. In 1936 the unemployment rate was 13 percent- but FDR still buried Landon .
That is my position, and I think it is the only explanation that gives voters the respect they deserve. Every argument that merely rested on the “state” of the economy treated the voter as a herd animal, unable to do more than “feel” its environment.
If someone says “the economy should be better,” then of course the next question is “how are you going to fix it?” It always has been.
Again, that is the “feely” argument. That is at odds with the huge positive response to former Pres. Clinton’s speech. That went beyond feel, to how things work and what we should expect.
I suspect that some members of Romney’s team understand this, but they know that a mechanics based speech, one that would explain how things work under their plan, is politically impossible. A plan which would satisfy the base would put off the moderates. A plan that would appeal to moderates would incite the base. Catch-22.
The stock market is doing extremely well, too. My 401(k) made back all its losses plus a goodly increase to boot. For a while there it was awful; opening statements or looking at the balance online was a nightmare.
Republicans lost the economic argument by being wrong. They have no idea whatsoever how to make things any better.
Neither do the Democrats of course. Because the fact is no one knows. What we have is a bunch of politically-skewed economic theory none of which is proven. None of which has ever been applied to this unique situation. No one knows how to “fix” the economy.
I think the intellectual fraud is now increasingly revealed to the public. I think it’s slowly dawning on them that no one — conservative, liberal or libertarian — has a clue. Our overlords, our kings, our secular popes of economics don’t have the answer.
In that situation, in that frightening emperor’s-new-clothes moment, two things are clear and relevant: Mitt Romney is just a greedy plutocrat out for himself, and Barack Obama actually gives a damn.
If you go to two doctors with an untreatable disease — an illness where survival depends solely on on your own immune system or sheer luck — you’re going to pick the doctor who will at least hold your hand.
Doug wrote: “only 15% of Democrats agreed that most of the news they were hearing about the economy was wrong. . . Arguably, the Democrats have a bit of a rose-colored glasses thing going on here, because all one needs to do is look at the latest jobs report . . . ”
I’m not sure if you meant to say what you actually wrote, but there is no inconsistency between only 15% of Dems believing that the news they get is wrong and the fact that the economy is not in very good shape. You must have meant to say that only 15% of Dems believe the economy is in bad shape.
“This is why you see the Romney/Ryan campaign moving into areas like foreign policy and trying to tie the argument about the economy into the deficit.”
Foreign policy will also be a loser for Romney as evidenced by how roundly his WSJ Op-Ed is being criticized.
The problem for Romney and the entire GOP is that ALL of their policy prescriptions have proved to be disasters. As I’ve said before, the electorate rejects the myth that you can create jobs and lower the deficit simply by giving huge tax cuts to millionaires. Until the GOP comes up with something plausible, they’ll continue to lose presidential elections.
@john personna:
Well that, and the fact that their plan is fraudulent. When Paul Ryan, going on Fox News, can’t defend the plan and has to evade by saying, “Its too long to explain” , you know the jig is up. The Republicans are stuck with an economic program that is logically indefensible and to boot, is unpopular the more its explained.
Its also time to put to rest the idea that Paul Ryan is any kind of policy intellectual. Its become crystal clear he is a policy fraud, and the media knows it, which is why they challenge him on his proposals, rather than just sit in awed silence, as they did before. .
@C. Clavin:
Wow. He broke the magic 27% floor.
@stonetools:
I think we need to be very leery of throwing around phrases like the above. About half of the population, based on the polls, does buy the Republican line (although I suspect that a substantial portion of the “buy-in” is due to complete ignorance of the facts).
I am beginning to wonder if a functional, responsibe democracy can exist in a country as large as ours when 50% of the population has one set of facts and 50% of the population has another set of facts.
Does anybody know if this kind of division exists in European countries?
The critical measures are the debt and revenue growth. If the economy was humming you would see steadily rising rax revenues biting into the trilllion dollar plus year-after-year Obama deficits. Since the debt bomb continues its astonishing and unsustainable explosion under Obama what little growth there is borrows from the future to pay for the present; Obamanomics is setting up a meltdown that when it is ignited will make what happened in 2008 look like child’s play. So just keep on arguing like a lawyer and ignoring the fundamental decay and degradation of the US economy and the Federal Government’s fiscal health. Re-elect Obama and we can all be sure of the ending.
@michael reynolds:
I think there are some smart economists, but they have no “play” in either campaign. As I read them, the short run of the recession is over. Any “fix” had a window now gone. What we have not is the long term. A long term defined by certain trends in US age-demographics, global trade, and automation. A sensible policy can be created for those long term trends, but it won’t come from pretending that we are in a recession now that we can just stimulate our way out of.
I largely agree with the commenters above. The lead-up to the RNC in Tampa was focused on one question: are we better off than we were four years ago.
I don’t think too many people had to actually pull out their fourth quarter 2008 401(k) plan statements. We remember the carnage. We aren’t thrilled with gaining 130,000 jobs per month or whatever it is for the last three years, but it sure beats the heck out of losing 700,000 jobs per month.
I also agree with you about the lack of concrete details. But what that shows to be is that the Republicans as a party have not come to terms with the failures of their policies during the Bush administration. We had a terrible decision to go to war in Iraq, and no rethinking of foreign policy. We had an abject failure to respond adequately to a natural disaster in Katrina, and no rethinking of the government’s place in society. We had the worst economic crisis in 80 years, and no rethinking of the fiscal policy of tax cuts for the wealthy over all other considerations.
The RNC was a three day infomercial that should have demonstrated the Republican’s basic competence. It didn’t, and the blame for that should not be, in my opinion, on Romney and Ryan or Eastwood’s chair. The blame goes to the majority of Republicans who decided to spend four years just saying no without ever considering what they might say yes to. It was easy to oppose healthcare. But if they were serious about repeal and replace, they’d have at least the basic framework of a replacement. There is none.
The Republicans have proven themselves unfit for the keys of government for now, and the campaigns have highlighted that more than anything else. This is not something to be celebrated; our government works best with two responsible parties stuck in a creative tension. But this is also not unprecedented in American history either. At some point, the desire to win will trump ideological purity again, and a saner, more responsible party will emerge. I don’t see it yet, but I also wouldn’t have predicted that after the Democrats got Mondaled in 1984, they would then win five out of seven popular votes after that. And we are a month or so away from that happening.
@stonetools:
Absolutely, the headline plan is a head fake.
Any real plan would face the catch-22.
@michael reynolds:
BTW, here is absolutely the most audacious plan for growth out there:
The Case for Abolishing Patents (Yes, All of Them)
And I seriously think it would work.
@michael reynolds:
And the doctor whose recommended course of treatment isn’t bleeding you with leeches.
As you said, with the Democrats we don’t really know if what they’re doing will make things better. But we do know, for a fact, that what the Republicans want to do will make things a whole lot worse.
@michael reynolds:
Actually, if you poll the economists,they do know how to fix things. What we are going through is not that unique: it happened back in 1929. Is a financial collapse allied with a strong contraction in the real economy: IOW, a depression. The solution is a sustained period of deficit spending ( fiscal stimulus) along with expansionary monetary policy (that QE3 stuff the Federal Reserve Bank is doing now).
The problem is that such a program is counterintuitive, expensive, and easy to demagogue-which is what the Republicans successfully did with the stimulus. In Obama’s second term, he is just going to have to find a way to sell that , or we will see the economy stagnating for a long time. What’s clear is that more tax cuts for billionaires and cutting government spending is the wrong remedy: indeed it makes things worse. I think the public has now grasped that, which is why the Romney plan isn’t gaining traction .
@stonetools:
Not a surprise, this. He’s an Ayn Rand acolyte. That’s just half a step away from being an L. Ron Hubbard acolyte.
The Republicans pull this routine all the time. They get their captive pundits to describe someone as “Brilliant.” They never are. Gingrich was supposed to be brilliant. Dinesh D’Souza was supposed to be brilliant. Milton Friedman. Charles Krauthammer. That crook “Lord” Black. Now this ridiculous little man Paul Ryan.
And yes, by the way, I’ll include William F. Buckley a “brilliant” McCarthyite and racist. The ratio of people who claim Buckley was a brilliant man of ideas to people who can actually name a single Buckley idea is tens of thousands to one.
How many allegedly brilliant right wingers do we have to debunk before we figure out that conservatives just ain’t very bright?
Conservatism is just greed, tribalism and narcissism. It never does rise to the level of brilliant.
@Let’s Be Free:
I can only assume that you were of the opinion that deficits didn’t matter back when Bush & Co. pushed through the tax cuts that made deficits inevitable.
@stonetools:
As usual the economists are wrong. The economic problems are related as much as anything to the price of oil and that’s not going to improve. The much touted Bakken shale oil requires $80 -$90 bbl. The tar sands are at about are at about $80 and rising. Deep water oil is in a similar $80 – $90. At those rates economic growth cannot see anymore that a sustained growth rate 3% at best. Bakken shale and deep water wells see production dropping off very fast, as much as 20% a year which adds to the expense. It’s frequently not possible to develop deep water resources because the pressure is too great. The problem is we have reached peak “cheap” oil and it was that cheap oil the economic growth was based on. What no politician will tell you is the “good old days” are not going to return -get used to it.
Column was written January 2008, mentions the 2008 presidential campaign of the future, and notes fears that the economy might slip into recession. The column is older than Obama’s presidency, which while showing this quoted sentence above as inaccurate also bolsters its point further that this isn’t something new.
Way to make an error that just proves you more right, Doug.
@stonetools:
I don’t think there’s that much consensus. I’d be heartened if there were, although there are definite limits to consensus per se. If you had polled all the best doctors in the year 1500 they’d have agreed on how to deal with the Plague. They’d have been wrong. They’d have been wrong not just as a matter of practice, but all the way down to the basic theory. They had not yet discovered the bacterium let alone the virus.
I have suspected for a long time that the mixture between science and bullsh!t in economics was not the acceptable 80/20 you might get in a real science, but closer to the 20/80 you get from astrology.
I don’t think they know the answer. And if they did, I don’t think it would matter any time soon because 1) The “science” is utterly debauched by politics, so directed, rational action is impossible, 2) The game is now global and interdependent and anyone who thinks he can write a script that covers the US, Europe, China and Japan all at once is insane, 3) No model or cosmology of economics accounts for randomness, mood, inspiration or innovation.
I think it goes deeper than any of that, though. I think the very notion of “the economy” is inherently wrong. You’re talking about something that is pretty close to being the sum of all human activity. I don’t think something that big permits handles and levers to be attached. We cannot yet come close to a grip on a single human mind, but we think we can steer six billion human minds around with some interest rates and a treaty or two? Instead of calling it “the economy” try calling it “the human race” and see how much confidence you have in deficit spending or tax cuts or any of the rest of it. 10,000 years of history argue strongly against the idea that a few dozen bankers and economists are going to steer anything anywhere, particularly when those poobahs have to squeeze their ideas through the machinery of politics.
Here is a good post overall, with an important bit for people who don’t follow fed stories closely:
@Ron Beasley:
The basic problem with resource depletion arguments is that they run on multi-decadal time scales. They don’t happen fast enough to influence markets or policies.
On the other hand, a newly affluent China can move oil prices like an SOB.
@michael reynolds:
How many econ blogs do you read, daily?
(I’m afraid Micheal, that your are like the guy who never goes to doctors, and doesn’t like them either.)
No, it’s human nature and groupthink. Perfectly natural.
Remember that “circumstances” included “a party-wide effort to stonewall any government initiative to do something about the crisis” post 2010, and in 2011 a political game of chicken over whether the nation would default. You seriously need to start incorporating the 2011 debt ceiling fight into your analyses when considering economic progress since that’s the point at which the recovery began to stall.
That said, 15% is really small. That groupthink is a pervasive bitch.
@john personna: You mistake resource depletion with the cost of producing the resource. The price is not going to go down because it will not be profitable if it does. There is plenty of oil left – we just can’t afford it. It hits the US harder because we use it less efficiently than any other country.
@john personna:
Hah. On that you got me. But I clearly recall economists mooing with great concern over the surpluses at the end of the Clinton years. And of course we had Laffer and trickle down. And we had the Obama stimulus that was going to keep unemployment under 6% IIRC. So I’ve seen some economic consensus come and go.
@Ron Beasley:
I understand that story arc, but again I think it moves slowly. Human beings emotionally map it to a summer’s gas price track.
Right?
We both know that oil companies use next-decade price projections to OK projects and that the slow cycle impacts the short two ways. First, oil is usually harder to find and produce (exception fracking), and second you can’t start or stop that fast.
@michael reynolds:
Just like Drew saw the ice age reports in his newspapers, right?
@john personna:
Okay, now that’s a low blow. I’m winded.
@john personna:
Wrong. fracking is very hard to produce and very expensive because production drops off so fast. Producers are already cutting back their tar sands projects because they realize the product won’t be affordable the deeper they have to go. Resource shortage indeed occur over decades, unfortunately it’s already been decades. Any economic recovery will be accompanied by an increase in oil prices which will halt the recovery.
I think that a problem for skepticism about the economists is that there is often a chasm between what the economists tell politicians and what comes out of Congress. Take the stimulus. Paul Krugman correctly foretold that the economic crash was going to be the worse since the 1930s and recommended a Depression style stimulus of $15-2T, with mostly government spending and programs like the CCC. Christine Romer , the President’s adviser, recommended a $1.2 T stimulus, with more government spending. What came out of Congress, after mostly futile attempts by the President to make it attractive to Republicans, was an $800 B stimulus, made up lately of tax cuts and credits (Tax cuts are less stimulative than direct spending).
The Administration, I think, just underestimated how bad the crisis would be and also underestimated just how obstructionist the Republicans could be. I blame the Republicans more though-I think its clear the Republicans did all they could to stop attempts to revive the economy. The Administration never figured a way to make them pay for sabotaging the recovery-but that’s a political problem. The economists have been clear about what to do-politicians hav stood in the way.
@stonetools: The number Paul Krugman picked was conveniently high. It’s easy to take the position, “Oh, more stimulus would have solved everything!” when you recommend a number you know is politically impossible.
I’m not saying he had no intellectual or philosophical justification for it, just that he was always going to have the, “We didn’t spend enough” argument in his quiver. People made well reasoned arguments for doing nothing or taking more extreme measures. Their hypotheses, like a larger stimulus program, will remain untested.
I ‘d like to hear the “well reasoned ” arguments from doing nothing.
Lots of the economists in the 1930s argued for “doing nothing” too.-folks like Hayek and Treasury Secretary Andrew Mellon. For them, the the economy would naturally bounce back for the government didn’t intervene. They were proven dead wrong then too.
Romney was gambling that no one was paying attention when he put his economic plan out there – a significant tax cut to the top bracket, increased defense spending and deficits as far as the eye can see, unless we close c=some unspecified tax loopholes and cut entitlement spending.
And just what could those loopholes be? He won’t say say, but I will – eliminate the mortgage interest deduction and thereby effectively increase taxes on the middle class. What else could it be?
Romney deserves to lose, he’s earned that.
An important segment of the American economy is in a recession. Brisk consumer spending continues anyway because people feel they can pay off their short term debt using their nest eggs. Unfortunately, the nest eggs were based on a financial bubble. The bubble collapses, and people cut back on their spending and start saving. Businesses stop expanding because consumer demand isn’t there. Proposals to fight unemployment by large scale deficit spending are defeated because of worries about budget deficits and long term inflation, and the recovery is slow and painful.
In the 20’s it was agriculture in recession well before the bubble broke, in the 2000’s it was manufacturing. In 1929 stock prices collapsed, in 2007 housing prices fell. Banks failed in the early 30’s because they had bet on the stock market. Banks failed in 2008 because they had bet on the housing market. Lloyd George, out of power in the 20’s and advised by John Maynard Keynes, tried to get the British government to engage in deficit spending to put people back to work. He wasn’t successful. Barack Obama, supposedly in power in 2009 and advised by disciples of Keynes, tried to get get the American government to engage in deficit spending to put people back to work. He was successful a little, but not enough. And so it goes.
My point in all this is that there is nothing novel about our present economic difficulties. A statement explaining the Great Depression by Marriner Eccles, FDR’s chairman of the Federal Reserve, quoted by Robert Skidelsky in Keynes: A Very Short Introduction, could have been made almost word for word in 2009. We’ve seen all this stuff before, but we can’t seem to learn from history. So we’re doomed to repeat it.
@michael reynolds: The bit about the stimulus will keep us under 6% unemployment (wasn’t it 8 actually?, bad memory) was a forecast, not a commitment. And a forecast based on bad input numbers as the bottom was falling out faster than the economic statistics seemed to show. Given, with hindsight, the real state of the economy going in, the stim worked pretty much as forecast.
Krugman has talked about inter-generational forgetting. During and after the thirties we learned how to prevent this sort of collapse and how to deal with it if it happened. Or at least we learned the econ. It’s the politics that’s hard. Before ’08 we deregulated banks. If history teaches any lesson, it’s that banks fail if they aren’t tightly regulated. Now four years after ’08 Bernanke has come as close as a Fed Chair can to begging congress for fiscal stimulus. McConnell and Boehner and their accomplices won’t allow it. And they won’t allow it purely for partisan political reasons. Once that plan fails on Nov 6, it’ll be interesting to see whether they double down or become a bit more reasonable.
The Europeans have the same issues. Rather than deal with the situation, Merkel would rather take the easy way out politically and blame it all on lazy southerners.
@michael reynolds:
The fact that you heard people say things doesn’t mean there’s a consensus among economists.
@Ron Beasley:
I didn’t say fracking was cheap, I said it came on-line fast. It did.
@stonetools: “…a still poor but slowly recovering economy. ”
Wrong – the economy was recovering strongly – from a horrible level.
One thing that the Chicago School of Econ has done quite well is to hide the basic shape of the Great Depression. The first few years under FDR saw massive economic growth.
@michael reynolds: “Neither do the Democrats of course. Because the fact is no one knows. What we have is a bunch of politically-skewed economic theory none of which is proven. None of which has ever been applied to this unique situation. No one knows how to “fix” the economy. ”
Wrong – read Krugman.
Unless you’re using ‘this unique situation’ in a very strict sense, under which nobody really knows anything about anything because everything is unique.
@michael reynolds: “I don’t think there’s that much consensus. I’d be heartened if there were, although there are definite limits to consensus per se. If you had polled all the best doctors in the year 1500 they’d have agreed on how to deal with the Plague. They’d have been wrong. They’d have been wrong not just as a matter of practice, but all the way down to the basic theory. They had not yet discovered the bacterium let alone the virus. ”
Except that, as has been pointed out, we have seen this sort of situation before.
@michael reynolds: “But I clearly recall economists mooing with great concern over the surpluses at the end of the Clinton years. ”
No, I recall a few right-wing sh*theads talking smack.
Please understand that there will always be hacks, liars, wh*res and frauds.
@michael reynolds:
Like john Personna I read quite a lot of economics articles blogs and if you want to feel heartened have a listen to this podcast.
http://www.npr.org/blogs/money/2012/07/18/156928675/episode-387-the-no-brainer-economic-platform
NPR Planet Money got a bunch of economists from across the political spectrum in a room and came up with the “No Brainer Economic platform” made up of ideas that they all could agree with. However several of them were things that are politically hard sells such as getting rid of the mortgage interest tax deduction and legalizing pot.
As a follow up they chatted to political consultants on how their fake presidential candidate could market those ideas.
http://www.npr.org/blogs/money/2012/09/28/161967973/episode-406-making-economics-sexy
Maybe as more than 50% of the voters in the U.S. become automatic Democratic Party voters, issues have become unimportant. The economy is an unimportant issue for the core blocks of the Democratic Party and that attitude bleeds over to the marginally independent voters who lean toward the Democratic Party.
Maybe people should realize that as the U.S. becomes a one party state, issues will be irrelevant during elections and everything will be based on personalities. Look at how the mayoral election is Chicago meant nothing to do with issues. Look at how the last mayoral election in DC has nothing to do with issues.
What is amazing is how little wonks and wannabes want to think about how the demographic changes occurring in the U.S. are going to affect policy, governance, elections, and the economy. I guess pretending everyone will eventually act like wasps makes things easier to think about.
@superdestroyer: Seriously, dude, these “one party state” comments in every thread are beyond tiresome. Come up with some new material.
@James Joyner:
I guess I cannot bring myself to be like all of your progressive commenters who write one of two comments “Democrats good, Republicans bad” or “Romney is stupid.”
I think it is much more interesting to think about the end of two party politics and what it means for the future rather than think about how stupid Romney is. Romney will be totally irrelevant in a couple of weeks but the large Democratic Party major will still be around. Why not focus on what will be around after the election than focus on what will be totally irrelevant by mid-November.
Do you really think that conservative politics can become relevant in the U.S. again or to you think that the U.S. really needs two political parties? Do you really see a Green Party that is to the left of the current Democratic Party become the second political party in the U.S.? If you look at the current platform of the Green Party, there is not much differences between it and the current Democratic Party in proposals but the difference is in the implementation.
When the economy is no longer an issue in a presidential election, what conclusion can be drawn other than the Republicans are irrelevant. When no incumbent Democratic Senator is gong to be voted out of office for the third election out of the last four, maybe political scientist needs to rethink their models on how politics works in the U.S. When California has a double digit unemployment rate and a horrible economic condition but the major will automatically vote for the majority Democratic Party and no thought is given to doing anything differently, maybe people should really think about how demographics affects politics.
However, I guess believing that all of the voters in the U.S. will eventually act like wasps ( the Matthew Yglesias model of politics) makes for a less complicated view of politics than realizing that demographics is much more important than political positions, money, or campaigns.