Democrats Should Heed Americans' Economic Anxiety
To recover from their debacle in the midterm elections, Democrats have seized on two questionable propositions: They lost mainly because of President Barack Obama's unpopularity, and the 2016 presidential election will be more favorable.
Across the U.S., Democrats ran away from the president, and the electorate this year wasn't the same as during the 2012 presidential campaign: It included three percentage points more white voters, with a corresponding drop in people of color; the number of younger voters fell by a third, while the number of older voters increased by that much. This helped Republicans.
Turnout, exit polls and other data suggest another Achilles' heel for Democrats: the lack of any real focus on the economy. Many candidates talked about raising the minimum wage and achieving pay equity for women. But Republicans often co-opted those issues. Minimum-wage initiatives carried in five states, sometimes with the support of conservative Republicans such as Representative Tom Cotton, who unseated Democratic Senator Mark Pryor in Arkansas.
Most Republicans had a coherent economic message: downsize government, reduce domestic spending, cut taxes and curb regulations on business.
The Democrats got trounced with the middle class, according to exit polls. Among voters earning $50,000 to $100,000 -- more than a third of the electorate -- Republicans had an 11-point advantage.
In several Senate races -- North Carolina, Colorado, probably Alaska -- the outcomes would have been reversed had Democrats lost fewer of these voters. In Wisconsin, Republican Governor Scott Walker's 15-point cushion with these voters provided his margin of victory.
Democrats, to be sure, will keep stressing pay equity -- appealing to female voters -- and raising the minimum wage, which will be higher in Germany and the U.K. They will also press to expand the valuable earned income tax credit for the working poor. However, these measures only marginally affect wage stagnation and the lagging middle class.
There are smart Democratic policy researchers who think about this a lot, including Alan Blinder and Alan Krueger, both Princeton University economists and former top Democratic officials.
In general, their message for Democrats is to shift from a defensive posture as deficit reducers to become proactive advocates of stimulus measures, especially a major infrastructure initiative. A robust economy won't end wage stagnation or income inequality, but it's a step.
Inequality is getting worse in the U.S.: The gap between rich and poor is growing, while the middle class is stalled. And upward mobility, a centerpiece of the American dream, is more limited. According to Raj Chetty, a Harvard economist who has done seminal work on social mobility, data show there's only a 7.5 percent chance an American born in the lowest economic quintile will move to the top quintile; the chances are almost twice as good in Canada.
An element in addressing this, Democratic economists say, is changes in tax policy, with the focus on the working and middle classes. Krueger also calls for creating more incentives for profit-sharing and employee stock options for workers.
Worker representation, they say, is critical to change.
"We need to tilt the playing field in favor of rather than against unions," says Blinder, who was an economic adviser to President Bill Clinton and vice chairman of the Federal Reserve Board.
Krueger, who was chairman of the Council of Economic Advisers for Obama, says Democrats "need to think creatively about worker representation in the workplace," citing models in Germany. He suggests expanding initiatives such as Sara Horowitz' Freelancers Union, with its support system and health insurance coverage opportunities for independent workers.
Democratic candidates, especially at the presidential level, have to fashion this and more into an economic message that addresses anxieties and frustrations and projects a more promising future. That is a tough task. But if they forfeit, as they did this election season, the outcome may be similar.
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