Everyone hates the economy. Biden can still win
In my last piece, I tried to explain why it is that people think this economy is awful despite many positive things going on. Here, I’m going to discuss, you guessed it, the politics of it. On paper, Biden looks like a dead man walking. Traditionally, a president with his topline approval numbers would be doomed (see Jimmy Carter and George HW Bush), but he is very much alive. He has many things going in his favor and there are some things he can do to improve his fortunes, albeit only at the margins. Most of what will impact his chances next year is out of his hands.
That is the most important thing to remember when you hear or read pundits and commentators talking about his situation. Most of them will suggest or imply there is a way he can make his troubles go away with a few easy steps. Almost always that means saying/doing the things they him to say/do anyway, i.e., “If Biden would just rail against wokeness and fight on my side in the culture wars, he’d win in a landslide.” No joke, there are people out there who have said things like that.
The underlying reality is that the biggest problem Biden faces is dissatisfaction over the inflation that has happened during the last two years. I have written before about how I don’t blame him for it and think he made the right decision going big in early 2021. I have also written about how there was no scenario where inflation wasn’t going to be a problem regardless of which actions were taken. I mention that because (a) those who claim there was some alternative scenario where everything would be perfect are talking out of their asses and (b) politically, it doesn’t matter that inflation isn’t Biden’s fault.
When people are unhappy with the economy or anything else, they get mad at whoever is in charge. Incumbent leaders around the world are getting hammered by voter anger over inflation. Contrary to what some seem to think, there is not a right-wing populist surge around the world. Incumbent governments have been tossed out repeatedly since 2021 regardless of their ideological orientation.
The best thing Biden can hope for is that it continues to decrease while jobs continue to be added and productivity increases. The jobs report yesterday was very good all around. Not only did jobs continue to be added, but wage growth increased. Even media coverage of it was positive. If that continues, it would certainly help to improve how people perceive things.
A key metric of consumer sentiment also saw a substantial rise last month. As I mentioned in my last piece, those metrics aren’t as reliable as they used to be because of partisanship and it’s just one month so take it with what you will. That said, if consumer sentiment continues to pick up, it will help improve peoples’ views of the economy, which will be good for Biden.
Even if everything goes well, it’s unlikely it will be Morning in America. Polarization and partisanship are way too high today for anything like that to happen. The days of presidents winning reelection by double digits with forty or more states are long over.
The thing about high inflation is it means the overall price level has increased significantly. As I discussed in my last piece, people want the overall price level to fall. That is not going to happen and if it did they would hate it. It illustrates well the dilemma facing Biden. People are going to be unhappy about prices as long as the overall price level remains high even if it increases at a slower rate. The one sure way to bring it down would be a big recession, which would probably doom his reelection chances.
The only cure for a higher price level is time. Wages will have to keep increasing at a faster rate than prices. That has begun to happen, but only recently. Whether that will keep happening enough to significantly change peoples’ view of the economy by November, I don’t know and nobody else does either.
It’s possible the Fed will start lowering interest rates soon. If that happens and inflation stays low, it will make people happier. How much interest rates will be lowered, if at all, and how big of an impact that will have on economic sentiment and activity is unclear right now.
The fact is Biden can’t make the price of any items go down on his own, let alone lower the price of everything. He can’t magically make everyone’s incomes shoot up either without prices going up in tandem. If he could, he would have done it a long time ago. Contrary to what most people seem to believe, the president doesn't have switches in his office that he can pull whenever the price of an item goes up.
When a pundit or commentator suggests that Biden’s problems are all within his control and something he can easily solve, they’re telling you they’re clueless and shouldn’t be listened to. I know I beat on that drum a lot in my writings. I hate repeating it over and over again, but it’s so important to remember. A vast majority of those who talk and/or write about politics, consciously or not, want you to believe there are always obvious and easy solutions, that tradeoffs don’t exist, that their ideas are all politically sound, that they can predict the future and that if only politicians said/did the things they want them to say/do anyway, everything would be perfect.
I’m glad to not be part of that crowd. I prefer to be the one to tell you I have no idea what the future holds, tradeoffs exist and my policy preferences are often bad politics. Unlike most other political writers and commentators, I try to sympathize as much as I can with those in positions of authority facing tough decisions and not be a backseat driver, Monday morning quarterback or keyboard expert. I like to think I know what I don’t know and what I don’t know is virtually everything.
What’s within his control (not much)
While the bulk of what affects inflation is beyond his control, there are some things Biden can do to make marginal differences in some prices and to help change peoples’ perceptions of his priorities. One legitimate criticism of his approach to discussing the economy has been his emphasis on jobs. That’s certainly not a bad thing, but the problem is he’s a victim of his own success. Unlike after the financial crisis, the jobs recovery from the pandemic has been stellar. Unemployment is now at 3.7% and nearly every job market statistic is good.
The downside of that is talking about jobs has much less appeal. It’s one thing to tout job creation when unemployment is high. When unemployment is low like it is now, you have to shift gears. The problem now is prices, not jobs. Biden has done things that will help with inflation in some areas like allowing Medicare to negotiate prescription drug prices. That is something I expect him to talk about in his ads and on the campaign trail next year. It would be nice if left-wing advocacy groups would amplify that message, too, and shut up about student debt and other irrelevant obsessions of theirs.
Biden has presided over the passage of a whole host of legislation. That includes legislation dealing with infrastructure, semiconductors, energy and healthcare. The impact on prices of those initiatives is unclear and likely a long-term project, but he should emphasize the potential of all of them to make things cheaper. His administration has also focused on some niche areas when it comes to pricing such as going after “junk fees.” Those, too, would be good things to talk about.
Another thing I hope to hear him talk about soon is the increase in oil production that has happened on his watch. US oil production is as high as it’s ever been. That’s not been something he has wanted to talk about, probably because he doesn’t want to upset environmental groups, but he should do it. In general, he should take the left for granted and ignore them. That crowd is a small number of people who will vote for him no matter what. If they get mad and throw a fit, that can only create good press for him so all the better.
The emphasis of the Biden Administration regarding the economy now and going forward needs to be on efficiency. I have been critical of traditional macroeconomics before, but I think now is a good time to start looking at it again. With employment not being a problem, regulations and other sources of red tape that are making things cost more should be looked at and probably cut back on. Permitting reform would be a great thing to do to boost clean energy of all sorts.
The emphasis on efficiency is not just about getting reelected, but for lowering prices further in his second term. It will be important for Biden to articulate what he will do should he win again. Emphasizing a laser-like focus on lowering prices would be a good thing to run on.
To be sure, while I think he should do all of those things, it won’t likely move the needle very much. Even if he did all of it, the impact would be minimal between now and November. Things like permitting reform are critical for advancing clean energy and will have a big impact on lowering prices, but that is a years and decades long process. The same is true with housing. The Biden Administration has been good about emphasizing the need to cut back on zoning laws, but the federal government’s role in that is very limited and building sufficient housing will take years.
Change the subject
Barring some big change(s), the economy is probably not going to be an advantage for Biden against Trump next year. The good news is that’s hardly a death sentence. Not only is Trump a toxic candidate, but he also has vulnerabilities that he didn’t have in 2016 and 2020. The most obvious of those is abortion.
I don’t care how much he tries to weasel his way out of it, he’s responsible for Roe being gone. That is something Biden and other Democrats should talk about until they go hoarse. While we don’t yet know how potent abortion will be in a presidential election, the midterms and elections held since have shown it’s a huge, highly salient issue that Democrats have a big advantage on almost everywhere.
Contrary to what some may think, abortion is not just a state issue now. It’s unlikely Congress will pass legislation dealing with it any time soon, but there are executive actions a president and his appointees can take. In particular, Trump could appoint people to the FDA who will try to take abortion drugs off the market or make them much harder to get. He could also appoint people to the Justice Department who will try to go after abortion providers using laws like the Comstock Act. If that sounds like paranoia, just know that the Heritage Foundation, a right-wing group, is already making plans to staff the next Republican administration with people who will do that.
Even in states that protect abortion rights, they won’t be safe with a federal government trying to go after providers. There has already been one Trump-appointed judge who ruled (on completely made up grounds) that mifepristone, an abortion drug, was wrongly approved by the FDA. Voters should be reminded that he appointed judges who are not just anti-Roe, but want to inhibit abortion access by any means necessary.
It’s not enough to talk about potential threats to abortion rights. It’s just as important to talk about ones that already exist. There are many states now where abortion is almost entirely banned with no exceptions for rape or incest. Those laws are in effect because of Trump.
In Texas right now, a woman who is twenty weeks pregnant is trying to get an emergency abortion. Her fetus has a fatal genetic disease and her life is potentially at risk from carrying the pregnancy to term. She has still not been allowed to have an abortion. The state attorney general, Ken Paxton, has argued that she should be forced to carry her pregnancy to term.
I certainly hope she is able to get an abortion or can go to another state to get one, but even if that happens it has been a needless and painful ordeal. This is not the first time something like that has happened and it won’t be the last. Stories like hers should be shared far and wide. I have no doubt an overwhelming majority of voters will be horrified by those stories. They should know that Trump is the reason laws forcing women to go through all that misery are in effect.
Personalizing stories is critical. That is what makes them concrete and not just a bunch of numbers on a screen. In Ohio, a ten year old girl who had been raped was forced to go out of state to get an abortion. That story was part of what drove people there to get an abortion rights amendment on the ballot. It was approved last month by a wide margin, meaning Ohio now protects abortion rights as if Roe was still the law.
Abortion is not the only issue that Trump is vulnerable on in ways he wasn’t before. Democracy is another issue. I think the most encouraging thing to come from the midterms is that people really do care about being able to choose their own leaders. I didn’t think people wanted to end democracy, but I thought anger over inflation would override everything else and would sweep in a whole bunch of election deniers to state and federal offices. Thank god I was wrong.
In the midterms and elections held since, candidates who were seen as hostile towards democracy were heavily penalized for it. There were many races where, on paper, Democrats had no business winning, but they won in part because their opponents claimed the 2020 election was stolen. There is no bigger claimant of that than Trump.
Trump didn’t just deny losing an election, he incited an insurrection at the Capitol to stop the results from being certified. Voters should be reminded of that. Footage of that day should be shown in ads. Not only do most people think what happened on January 6 was terrible, but reminding them of that day also reminds them that Trump is an agent of chaos. Most people don’t like chaos. Whatever complaints people have, most don’t want to burn everything down and don’t like arsonists.
While abortion and democracy are issues Trump is newly vulnerable on, there are other issues that have been liabilities for him before and could be used against him again. It’s ancient history now, but Trump’s lowest point in his approval rating other than after January 6 was in 2017 when he was pushing to repeal the Affordable Care Act. That effort was toxic and failed and Republicans have wanted nothing to do with it since.
Trump now looks like he wants another bite at the apple. He has said he wants to repeal it and Republicans should try to do it again. Arguing over the fate of the ACA would be every Democrat’s dream come true. Since 2017, it has become even more woven into the healthcare system and more popular. Repealing it would cause immense disruption and kick millions off of their insurance. That is something Trump and other Republicans should be attacked on non-stop.
Another old vulnerability Trump has is with taxes. The only significant legislative achievement he had was cutting taxes, which disproportionately benefitted those at the top. It did very little for the working-class voters who had propelled him into office. Cutting taxes is what he plans on doing should he win next year.
Unlike in 2017, today interest rates are higher and inflation is a concern. Cutting taxes for rich people is unpopular in its own right, but is going to be especially unpopular if it’s paired with cuts to social programs. That didn’t happen in 2017 because of low interest rates and inflation. If taxes are cut again without any offsets, that risks a surge in both. To prevent that, the only available route is to cut programs like Medicaid, which now covers millions more people than it did in 2017.
Voters need to be reminded of what Trump spent his first year doing and that he will do it again if given the chance. It wouldn’t hurt either for Biden to mention that Trump wants to impose 10% tariffs across the board. That would make many items a lot more expensive. Biden probably can’t win the inflation argument, but he can at least reduce Trump’s advantage on it.