The big political question right now: Can Trump insulate himself from the massive political fallout of a deep recession by positioning himself as leading the party that most fully supports a major mobilization of government to stave off economic calamity?
The new forecast from Abramowitz, a professor of political science at Emory University, focuses on the prediction among some economists that GDP could shrink by as much 5 percent in the second quarter, with possible spillover into the third. We are only beginning to glimpse the massive economic disruptions that will be caused by extensive social distancing and other aspects of the coronavirus crisis.
Abramowitz points out that economic performance in the second quarter often tends to shape voter perceptions of the economy going into the fall. Approval of an incumbent in the spring of an election year shapes voter perceptions of the incumbent in the fall, too.
And so, if Trump’s approval rating remains upside down (it’s now at 43 percent approval, 53 percent disapproval) through the spring, and the economy contracts dramatically, that puts him in serious peril. As Abramowitz concludes:
If President Trump’s net approval rating remains where it is now or declines further, and if the recession is severe, with real GDP shrinking by three points or more in the second quarter, the result could well be a defeat of landslide proportions.
There are major caveats. Hyperpolarization could minimize the damage to Trump among Republicans and GOP-leaning independents. And voters might be reluctant to hold Trump responsible for a recession amid a global pandemic.
But it’s at least possible that a recession could end Trump’s presidency, since the economy is what’s buoying his chances amid his deep unpopularity.
The skirmishing over stimulus
In the face of all this, the White House is proposing a $1 trillion stimulus package that includes direct cash payments to Americans in two installments, as well as billions to help small businesses and prop up major industries, such as airlines.
Those cash payments might end up being two payments of $1,000, though they would not go to people of higher incomes, according to The Post.
The question now is whether Democrats are failing to put forth bold-enough plans themselves, thus allowing Trump to position himself as the true supporter of activist government, which could insulate him in a recession. Some fear Democrats have already let Trump “outflank” them.
My view is that these worries are somewhat overheated and premature, but that Democrats should take this possibility seriously, and act accordingly.
The Democratic approach will likely include direct cash payments as well. It is also focused on shoring up safety net programs — such as unemployment insurance and paid leave, though the proposal on this that passed the House and has since been signed into law fell well short — and federal funding for coronavirus testing and treatment.
A good north star for Democrats to follow is this blueprint from the Roosevelt Institute’s Mike Konczal. It calls for larger direct cash payments than the White House has offered.
It also calls for much more spending on paid leave than has passed Congress so far — the idea being that this injects money into the economy and facilitates workers staying home to socially distance.
It also calls for bailouts to major corporations to include strict conditions, such as restrictions on layoffs and on stock buybacks, which channel cash to shareholders and away from socially beneficial investment.
The overriding principle here, as Konczal puts it, is that “the risks of doing too little right now far outweigh those of doing too much.”
So are Democrats letting Trump ‘outflank’ them?
The thing is that Democrats actually are moving toward this ambitious blueprint right now. On “Morning Joe,” Senate Minority Leader Charles E. Schumer called for a similar set of restrictions on corporate bailouts.
“We don’t want to give them money unless they keep all their employees,” Schumer said. “We should not be allowing them to do buybacks.”
What’s more, Senate aides say at least 18 Senate Democrats now endorse a proposal that would send direct cash payments of up to $4,500 to all individual Americans, with a phaseout for top earners.
There is still some question over whether these will be means-tested — it’s faster to send payments to all and then claw back money from the wealthy at tax time. But right now, both sides appear to support some form of means testing — yet with Democrats gravitating toward the more generous and open-ended proposal.
Yes, Democrats should seek to outdo the White House in terms of the cash payments’ universality. But right now, there’s no real “outflanking.”
Finally, it remains unclear how Trump will get to Democrats’ left, when you consider his reelection strategy. Trump’s campaign is currently attacking former vice president Joe Biden’s plan for expanded health care via a public option as “socialism,” and he supports a lawsuit that would wipe out the Affordable Care Act and its Medicaid expansion entirely.
Meanwhile, Trump will be forced to tout his massive corporate tax cut as a major achievement, even though it caused an explosion of stock buybacks that made the rich a whole lot richer. If Democrats stick to their demand for conditions on bailouts, that will contrast well with Trump’s massive corporate giveaway.
None of this means Democrats should be complacent. They should stick to Konczal’s principle — more is more. But if they do, there’s no real reason to fear Trump outflanking them.
This is Trump’s economy. He’s the one who’s in trouble right now.