In the short term, the recovery looks shaky. In the long term, the economy looks shaky — so shaky that it may be many years before a president of either party or any ideology can count on winning a second term.
Polls show that President Obama’s lead over Mitt Romney is narrowing, but should Obama lose in November the decisive factor won’t be Romney (who is as inept a presidential candidate as this country has produced in decades). The real culprit will be the economy.
The winter’s encouraging signs of recovery have given way to spring doubts. Weekly unemployment claims have risen and housing starts have declined. The specter of a new European recession threatens to stifle U.S. exports and endanger global finance.
But it is the reasons behind the past month’s sobering economic news that really threaten Obama’s reelection — and would imperil Romney’s in 2016, should he unseat Obama this fall. As currently constituted, the U.S. economy looks less and less capable of generating the kind of prosperity that a president, or a party, needs to ensure a long run in power.
Consider the housing market. The problem isn’t just that 11 million homeowners owe more on their homes than those homes are worth. It is also, as the Wall Street Journal reported last week, that housing sales remain weak “because many buyers don’t have enough cash for a down payment or can’t qualify for a loan, despite the fact that mortgage rates have fallen to near-record lows.”
That’s what happens when U.S. incomes fall — as they’ve continued to do even in the midst of our semi-recovery. The stagnation or decrease in wages is partly due to our multinational corporations, which historically have provided about one-fifth of U.S. jobs, and disproportionately more of our high-paying jobs. More and more, however, they are hiring abroad, not at home. Commerce Department data released last week show that U.S. multinationals increased their domestic workforce by 0.1 percent in 2010, while increasing their overseas employment by 1.5 percent. Sixty-eight percent of those companies’ employees were based in the United States in 2010, down from 75 percent in 1999. And that doesn’t include those foreign workers who, like the million-plus employees of Foxconn, work abroad for the contractors of U.S. companies, rather than directly for U.S. firms such as Apple.
With offshoring comes lower wages for those American workers whose jobs could be shipped to the Foxconns of the world. The steady decline of wages at many of our marquee manufacturers is one of the major stories of the current recovery. The $28 hourly wage that workers in unionized plants outside the South used to count on looks increasingly like a relic of the broadly shared prosperity that America used to enjoy. With private-sector unions now weakened by ineffectual labor laws and implacable employer opposition, manufacturing wages have been slashed to $14 an hour, or lower, in many places. Meanwhile, wages in retail and most other service sectors are unlikely to rise while historically higher wages in manufacturing continue to plummet. No wonder more and more Americans can’t afford to buy houses, despite record-low mortgage rates.
None of this is news — at least, not experientially — to the American people. Last week’s CBS News-New York Times poll, which showed Obama and Romney running even at 46 percent, also turned up massive evidence of economic insecurity and the ratcheting downward of hopes that once were widely held. Two-thirds of the respondents said they were concerned about their continuing ability to pay for their housing. Forty percent of parents said they have had to scale back their expectations for their children’s college educations.
Nothing in Romney’s record suggests he would challenge these trends. Enhancing worker power to restore the share of corporate revenue that used to go to wages, or using the government’s power to help build domestic industry, are ideas not dreamt of in his philosophy. His tax proposals call for lowering taxes on the wealthy, though their investments are as likely to create jobs abroad as they are at home.
Unlike Romney, Obama acknowledges many of the factors behind the decline in Americans’ economic situations and has worked — as his embattled health-care reform and his push for low-interest student loans and a fairer tax system all indicate — to mitigate many of their consequences. But the imbalances in the U.S. economy — in part, both the cause and consequence of the growing political power of the very rich — are deeply rooted in the increasingly destructive form of capitalism in this country. Barring fundamental changes, they will vex any president who hopes to extend his tenure by delivering prosperity to an awaiting electorate.