- Economic points advocated by Kasich, Bush, Cruz embraced
- Wage stagnation, the new normal blamed on Obama, Clinton
Donald Trump rumbled over them all on his way to Cleveland.
John Kasich, the governor of Ohio, isn’t attending the Republican convention in his state. Jeb Bush is in Florida, and published an op-ed highly critical of Trump’s rhetoric. Ted Cruz will speak on the big stage, but hasn’t yet committed to endorsing his party’s nominee. But all three had ideas about the economy that showed up in the GOP platform. So did Janet Yellen.
Party platforms are like silly hats. There’s mixed evidence on how relevant they are to democracy, and yet there they are, at every convention. At the very least, they resemble a kind of Congressional caucus -- an indicator of the kinds of compromises a party is willing to make over the next four years.
A political party doesn’t just have to come up with a coherent list of solutions. It needs to agree on what the problems are. The political scientist Elmer Eric Schattschneider in 1960 called this "the conflict over conflicts." Political parties don’t just need to agree on weapons for the fight; they need to choose the field.
The solutions outlined in the GOP platforms for 2012 and 1980 were the same, almost verbatim: lower taxes, spending restraint and regulatory reform. The problems were slightly different. In 1980, Ronald Reagan’s Republican party chose to fight on the fields of unemployment and stagflation -- a combination of inflation and low economic growth. The problems a party proposes to solve have to be both real and identifiable to voters, as stagflation was back then. In 2012, Mitt Romney’s Republicans chose unemployment and federal debt.
Since the GOP met in Tampa four years ago, these problems have become less compelling. The federal debt held by the public as a percentage of gross domestic product had stabilized around 75 percent. Unemployment has been parked at 5 percent or less since last October. At the same time, the last four years have left economists scratching their heads.
The Great Recession had hidden several long-term trends that are now more apparent. Americans are leaving the workforce. GDP growth has slowed, and median household incomes are stuck in place. If you are an economist or a central banker right now, you’ve spent the last several years arguing over whether these problems are "cyclical" -- caused by the recession -- or "structural" -- something a recovery can’t fix.
In drafting its platform this year, the Republican party had a new conflict over conflicts. Donald Trump was well represented on the platform committee, which shows in the GOP’s new approach to trade. The platform, however, also pulled in these long-term economic challenges. They were championed by the primary candidates who didn’t make it.
"Our economy has been unnecessarily weak with stagnant wages," reads this year’s preamble. Data from the Bureau of Labor Statistics shows some wage growth in the last year, but the Census Bureau’s median household income, adjusted for inflation was just over $53,000 in 2014, about $350 more than in 1989. Wage stagnation, like stagflation in the late 1970s, is recognizable to Americans. But it’s never been Donald Trump’s issue.
Trump mentioned wages only once during the rollout for his economic plan in June. And he never used the word during the Republican debates. Cruz and Bush did. And in particular, Kasich did, making it the theme of his set pieces on the economy, and pointing out that wages in Ohio had risen faster than the national median.
The primary season doesn’t just test candidates, it tests ideas. On the second night of this year’s convention, Kasich was at the Rock and Roll Hall of Fame for an interview. Wage stagnation -- his choice of conflict -- made it all the way in to the convention hall.
So, too, Bush’s disdain for the "new normal," a core part of both his stump speech and his debate pitch. He was talking about the possibility of permanently low economic growth in developed countries. Different forms of the this concept have been put forward by academic economists like Robert Gordon of Northwestern University and Tyler Cowen of George Mason University, and popularized in op-eds by Lawrence Summers of Harvard University.
Growth in GDP has averaged about 2 percent during this expansion compared with 2.8 percent in the previous one and 3.8 percent in the record 10-year period that ended in March 2001.
Bush used it as a critique of Barack Obama’s presidency. He consistently cited 4 percent growth as a benchmark of success and there, in this year’s Republican party platform, at the convention the entire Bush family declined to attend: "Pundits and Democrats tell us that we should accept the new normal of a slow-growing economy," along with a goal of 4 percent growth. Trump never built a campaign as an antagonist of the new normal. Bush did. He lost the primary, but won the conflict over the conflict.
These issues are both supported by the data and felt by voters, in the same way as trade deficits -- one of Trump’s preferred conflicts -- or the growth in student debt, something both major Democratic candidates picked up on this cycle. And they’re worrying not just to politicians looking for something to complain about, but to central bankers, as well.
Under Chair Yellen, for example, the Federal Reserve started focusing on other measures of the labor market to highlight Americans’ struggles, beyond the top-line unemployment rate that’s now relatively low. She’s cited wage growth and involuntary part-time employment, for example, and wondered whether a stronger economy could pull more people into the workforce as participation has dropped.
That is, she’s still hoping that it’s a cyclical problem, not a structural one. The Republicans agree. Republican-led economic growth will get workforce participation back up -- that, too, made it into the platform in Cleveland.