In this weekend’s New York Times Magazine, there’s an interview with President Obama in which he assesses his economic legacy, and as you might expect, he has a complicated view of things. He thinks his administration did an excellent job pulling us out of the Great Recession: “I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform. By that measure, we probably managed this better than any large economy on Earth in modern history.” But he wishes he had been able to pass more infrastructure spending: “it was the perfect time to do it; low interest rates, construction industry is still on its heels, massive need.”
Obama also makes an argument about what Republicans propose to do on the economy that gets directly to the competing stories that the two parties are going to be presenting to the American public this fall.
Even if a contest between Donald Trump and Hillary Clinton may be more focused on personality than your typical presidential campaign, it’s still the case that the outcome of the election will be determined in significant part by which of these economic stories the voting public finds more persuasive. And each story has two parts: a description of the American economy as it is now, and a proposal for what the candidate would like to do and how that plan will change things. Here’s Obama’s assessment of the Republicans’ second part:
“If you look at the platforms, the economic platforms of the current Republican candidates for president, they don’t simply defy logic and any known economic theories, they are fantasy,” Obama said. “Slashing taxes particularly for those at the very top, dismantling regulatory regimes that protect our air and our environment and then projecting that this is going to lead to 5 percent or 7 percent growth, and claiming that they’ll do all this while balancing the budget. Nobody would even, with the most rudimentary knowledge of economics, think that any of those things are plausible.”
You won’t be surprised to hear that I happen to agree with him on this, though I’d describe how ridiculous it is in somewhat stronger terms. I can’t stress this enough: Republicans argue that if we just cut taxes on the wealthy and reduce regulations on corporations, then the economy will explode in a supernova of prosperity for all. You can call this belief ahistorical, or unsupported by facts, or baseless or implausible, but if you want to be frank you’d have to say that it’s absolutely lunatic.
But let’s put this in context of the stories the two candidates will be telling. Here’s Donald Trump’s economic story:
The economy is an absolute nightmare. Americans are living in such misery that they’re practically eating their own shoes in order to survive. If we cut taxes on the wealthy, reduce regulations on corporations, renegotiate trade agreements, and deport all illegal immigrants, then our economy will be spectacular and working people will experience American greatness again.
And here’s Hillary Clinton’s economic story:
The economy is doing pretty well, and a lot better than it was eight years ago when the Republicans were in charge, but it could be even better. If we pass some worker-focused measures like increasing the minimum wage, stronger overtime protections and guaranteeing equal pay, and make infrastructure investments, then our economy will improve for everyone.
Trump’s story is the same one other Republicans tell, with the addition of the idea that “bad deals” on trade have had a crippling effect on the country. For the moment we’ll put aside the merits of Trump’s claim that imposing enormous tariffs on Chinese goods will cause all those jobs sewing clothing and assembling electronics to come pouring into the United States, but the political question around Trump’s story is whether people will believe his over-the-top description of both what’s happening now and the transformation he will be able to produce.
We’ve known for some time that voters’ perceptions of the economy are colored by partisanship: to simplify a bit, when there’s a Democrat in the White House, Republican voters will say that the economy is doing poorly and Democratic voters will say it’s doing great; when there’s a Republican president, the opposite is true.
For instance, in 2012 when Barack Obama was running for reelection, 49 percent of Democrats told the National Election Studies that the economy had gotten better in the previous year, while only 17 percent said it had gotten worse. On the other hand, nine percent of Republicans said it had gotten better, while 56 percent said it had gotten worse. Go back to 2004 when George W. Bush was running for reelection, and we see the reverse: 43 percent of Republicans said the economy had gotten better and 22 percent said it had gotten worse, while only 10 percent of Democrats said it had gotten better and 63 percent said it had gotten worse.
So obviously, people aren’t just reacting in an objective way to what they see around them. At the same time, there is a reality that can eventually poke its way through the veil partisans place over their eyes. In 2008, when the economy was in a catastrophic decline, everyone in both parties agreed on what was happening (94 percent of Democrats and 88 percent of Republicans said it had gotten worse).
Times like 2008 are rare, though. Today, the objective reality is a lot closer to the way Democrats describe it, in large part because they aren’t offering an extreme version of their truth. If Obama and Clinton were more rhetorically similar to Donald Trump, they’d be saying that this is the greatest economy in the history of human civilization, everybody has a terrific job, and there’s so much prosperity that the only question any American has is whether to spend their money on everything they could ever want or just roll around in it like Scrooge McDuck.
But they aren’t saying that. Instead, they’re attempting the tricky balancing act of emphasizing the progress Obama has made while acknowledging the long-term weaknesses in the economy. Both of those things are real. Since the bottom of the Great Recession early in Obama’s first term, the economy has added 14 million jobs, and unemployment is now at 5 percent. On the other hand, income growth has been concentrated at the top and Americans still feel uncertain about their economic futures.
Donald Trump has chosen to pretend that the good things about the American economy don’t exist, and weave a laughable fantasy about what his policies will produce (“I will be the greatest jobs president that God ever created”). Can he convince voters — particularly those in the middle who might be persuaded to vote for either candidate — to believe it? I guess we’ll see.