Polarized politics in the Scrooge economy

November 21, 2018

Lance Selfa, editor of U.S. Politics in an Age of Uncertainty, a collection of essays on the Trump era, looks at the factors that underlie both hardening right-wing support for Trump and a swing to the Democrats in the midterm elections.

PERHAPS THE most often-used words to describe U.S. politics in the Trump era are “polarization” and “volatility.”

Both were on display during the November 6 midterm election: The majority of the electorate swung sharply against Trump and the Republicans (volatility), while the high midterm turnout showed that the bases of both mainstream political parties mobilized (polarization).

Perhaps this outcome isn’t too surprising given the uniquely vile nature of the Trump regime and its dalliance with the far right.

But it’s remarkable that the Republicans lost as badly as they did considering the economic climate that provided a backdrop to the election. The party of the White House incumbent traditionally loses seats in the first midterm election, but the party “in power” also historically benefits from a strong economy. Clearly, Trump and the Republicans didn’t get that economic bump.

Donald Trump appears at a rally in Mesa, Arizona
Donald Trump appears at a rally in Mesa, Arizona (Gage Skidmore | flickr)

An unusual but interesting economic analysis by Barry Ritholtz factored in economic conditions with the election results and concluded that no president in the last 100 years has fared worse in a midterm congressional election at a time of economic expansion and declining unemployment.

Election 2018 may have been “all about Trump,” but it turned out to be the latest “wave” election — of which there have been, arguably, four in the recent past: 2006, 2008, 2010, 2014. American political institutions have been known for their decades of stability, so this recent past represents a noteworthy level of polarization and volatility.

OPINION POLLS show that voters increasingly interpret their personal financial situation, their rating of the national economy and their sense of whether the U.S. is on the “right track” or “wrong track” through a partisan lens.

So in these midterms, two-thirds of voters said they thought the economy was “excellent or good,” but 75 percent of Democrats said it was “not so good or poor.”

The polarization of the U.S. electorate is usually explained as a decades-long process of political coalitions reforming around the Democratic and Republican Parties.

For Republicans, the backlash against the civil rights movement and Richard Nixon’s “Southern strategy” solidified the migration of conservative white Southerners from the Dixiecrat wing of the Democratic Party to the Republicans. The “Reagan revolution” of the early 1980s helped extinguish what used to be called the liberal/moderate “Rockefeller Republican” wing of the GOP.

This made the Republicans and their voting bloc much more uniformly conservative. And despite the hopes of socialists who looked for a “realignment” of the Democratic Party into a more consistently liberal formation, the flight of the Dixiecrats opened the door to “new Democrats” like Jimmy Carter and Bill Clinton, who shifted more decisively toward the pro-business right on economic policy.

For the last 40 years, mainstream politics in the U.S. has oscillated between a center-right Democratic Party and a firmly right Republican Party.

But just focusing on the politics at the top of the two main parties doesn’t actually provide insight into how voters (and nonvoters) polarize along standard left-right measures.

On this point, there is evidence linking the growth of economic inequality to political polarization, according to Stanford University researcher Christos Makridis:

[T]he evidence indicates not only a strong correlation between income inequality and political polarization but also potential causality: Greater income inequality can amplify political tensions by raising polarization. These results imply that income inequality can indirectly affect economic outcomes by increasing the fraction of people who identify as extreme liberal.

That the political system doesn’t necessarily register this increase in “extreme liberals” may point to two other well-established findings: that poorer people with more liberal views tend to be nonvoters, and that the political system reflects the views of the wealthy much more than those of the non-wealthy.

WITH OFFICIAL unemployment rates down to levels not seen since the late 1960s, and with median household income finally recovering after a “lost decade” since the Great Recession, you might think that the midterm elections would reward the incumbent party.

But that certainly wasn’t the case in 2018. In fact, the midterm electorate “threw the bums out” — at least in the House, and in a good number of state races for executive and legislative office — and for the fourth time in the last 12 years. If election results are crude measure of the public mood, they indicate a restless public.

This volatility is easier to understand if you look behind the headline economic data to the realities that they hide and to the long-term trends that they ignore.

Despite the economic recovery and the currently tight labor market, financial stress stalks millions of Americans who still have trouble keeping up with their bills. Workers may be able to (barely) get by, but any future economic downturn will expose millions to a financial reversal.

One such “canary in a coal mine” came from a recent New York Federal Reserve report on household debt. The percentage of debt that moved into delinquency increased from 4.5 percent of total debt in the second quarter of 2018 to 4.7 percent, the largest quarterly increase in seven years.

Those percentages may not sound like much, but they amount to bad debt of $638 billion — most of which involved student loans going into default. Meanwhile, auto loan delinquency has been steadily increasing since 2012.

There are plenty more sobering economic statistics: Eighty percent of U.S. workers live paycheck to paycheck. Just under half of Americans would be unable to come up with $400 if they needed it fin an emergency. The 2008 housing crash cost a generation millions in lost wealth. Unaffordable childcare costs burden families. The median retirement account savings for workers 55 and older is $15,000, about a year’s worth of income for an individual at the federal minimum wage of $7.25 an hour.

Journalist Ron Brownstein summarized the situation this way in 2016: “The 2008 downturn — and the slow, unevenly distributed recovery that has marked its aftermath — crystallized for many Americans a new normal, one that presents them with reduced economic security and heightened risk even while it provides them with new opportunities and flexibility.”

The Great Recession exposed how social provision and workplace rights and benefits have eroded over the long term, the hallmark of government policy as it has been shaped by free-market ideology for a generation.

As political scientist Jacob Hacker wrote, the end result of all of these policies was a “risk shift” that placed greater burdens on individuals and families, while letting employers and governments off the hook:

Instead of guaranteed pensions, these policymakers argued, workers should have tax-favored retirement accounts. Instead of generous health coverage, they should have high-deductible health plans. Instead of subsidized child care or paid family leave, they should receive tax breaks to arrange for family needs on their own. Instead of pooling risks, in short, companies and government should offload them...

Economic insecurity strikes at the very heart of the American Dream. It is a fixed American belief that people who work hard, make good choices, and do right by their families have a good shot at stable membership in the middle class.

The rising tide of economic risk swamps these expectations, leaving individuals who have worked hard to reach their present heights facing anxiety about whether they can keep from falling. And anxiety is just what millions of middle-class Americans increasingly feel.

FEAR, LOATHING and insecurity dominated both parties’ campaigns for the midterm elections.

In pledging to uphold Obamacare’s safeguards against insurance company discrimination against people with pre-existing medical conditions, the Democrats related to one aspect of the economic insecurity that stalks millions. For the Republicans, the chief issue was immigration — which was nothing but fear and loathing playing to the most retrograde sentiments of conservative America.

Following on the predictable explosion in the federal deficit caused by their tax-cut giveaway to Corporate America last year, the Republicans have promised to look for cuts in Medicare and Social Security. If they succeed, the changes to these programs will leave more people in fear for their health and their future.

Having campaigned on health care, the Democrats should be planning bold plans to fix the broken system, right?

Instead, Minority Leader Nancy Pelosi is floating what even the mainstream liberal MoveOn.org called a “staggeringly bad idea”: requiring a congressional supermajority to raise taxes.

Framed as a “tax cut for the middle class,” the supermajority requirement would effectively give conservatives and Republicans a veto over whether the Congress could ever pass expansive social programs, from paid family leave to Medicare for All.

“Equating support for middle-class families with opposition to increasing their tax rates is a conservative project, which Democrats have no business advancing,” wrote New York Magazine’s Eric Levitz. “If the party wishes to establish structural barriers to policies that would hurt the middle class, why not require a three-fifths majority to cut Medicaid, Medicare or Social Security?”

Pelosi’s trial balloon may not go anywhere, but it does show what she meant on Election Night when she talked about welcoming a “bipartisan market place of ideas.” It’s been a bipartisan commitment to austerity and the long-term decline in working-class living standards that have stoked discontent with the status quo.

Demagogues like Trump seek to channel that discontent into racism and xenophobia, as Hacker cautions: “The Great Risk Shift has led many to direct their anger outward: to search for scapegoats, to envy those who are perceived as still having a good deal, to see the problem in zero-sum terms (one person’s gain is another’s loss).”

But if that discontent is channeled into collective struggle, as we saw in the “red state rebellion” of teachers earlier this year, people can break through their isolation, overcome their fears and win gains.

Further Reading

From the archives