Will the Economy Decide the Midterms?

By many indicators, the US economy is strong. As Donald Trump travels around the country campaigning for Republican candidates, he touts the economy as evidence that his policies are working. Will this be enough to determine the outcome of the November 6th midterm elections?

Probably not.  But there’s little dispute that the US economy is strong.  Since Trump became President, 3.4 million jobs have been created; 7 in 10 Americans say they are doing fine or living comfortably; the official unemployment rate is 3.9 percent; and the stock market (Dow Jones Industrial Average) is up 33 percent.

Trump’s problem, and the problem for Republicans in general, is that many Americans are looking beyond the glitzy economic numbers.  And, depending upon their Party affiliation, many voters don’t like what they see when they examine their own situation.

The July 2nd Quinnipiac Poll (https://poll.qu.edu/national/release-detail?ReleaseID=2553 ) asked, “What is the most important issue to you in deciding how to vote in this year’s election for the U.S. House of Representatives: the economy, taxes, health care, immigration, or gun policy?”  Nationally, 27 percent said immigration, 23 percent said the economy, 22 percent said health care, and 12 percent said gun policy.  But the preference depended upon political Party: Immigration was the number one issue for Republicans and Independents; for Democrats it was health care.

50 percent of Quinnipiac respondents said they would vote for the Democratic candidate for the House, versus 41 percent who said they would vote for the Republican candidate.  Of this 50 percent, 71 percent said that health care was their most important issue; their second choice was gun policy.  For Republicans, their most important issue was immigration; the economy was their second choice.

The Quinnipiac poll is another confirmation of political polarization.  Approaching the midterm election. the issues for Democratic voters are costs, wages, and corruption.  The issues for Republican voters are immigration and support for Trump.

Democratic voters are concerned about healthcare costs and the cost of living in general.  That’s the result of a harsh reality: while corporate profits have surged, the economic uptick hasn’t produced real wage increases.  According to the Center for American Progress   (https://www.americanprogress.org/issues/economy/news/2018/08/09/454589/workers-wages-remain-stagnant-despite-gains-top-earners/ ), “Despite the fact that the country is experiencing positive GDP growth, the benefits are not trickling down the way Trump predicted they would.”

Of course, whether you believe this or not depends upon whether you trust what Trump says.  The July 25th Quinnipiac poll contained this question: “Who do you trust more to tell you the truth about important issues: President Trump or the news media?”  75 percent of Republicans trusted Trump; while only 5 percent of Democrats trusted him.

Recently AP News factchecked Trump on his exorbitant claims about the economy (https://apnews.com/1759c19598e9431db20b604232725871/AP-FACT-CHECK:-Trump’s-economic-fiction:-‘record’-GDP,-jobs ) and concluded: “Trump is distorting the truth on U.S. economic growth and jobs, pointing to record-breaking figures that don’t exist… He cites the highest-ever gross domestic product for the U.S. that’s not there.”

Rising costs, inflation, are wiping out any wage gains garnered by working families. (https://www.motherjones.com/kevin-drum/2018/08/chart-of-the-day-inflation-keeps-going-up-but-wages-are-going-down/ )   In July, Inflation rose 2.9 percent; the highest level in seven years.

Nonetheless, consumer confidence in the economy is at the highest level in eighteen years (https://www.advisorperspectives.com/dshort/updates/2018/07/31/consumer-confidence-increases-marginally-in-july ).  And, while Trump’s overall approval rating remains negative, the latest CNBC poll (https://www.cnbc.com/2018/06/25/majority-of-americans-approve-of-trumps-handling-of-the-economy.html ) indicates that 51 percent of respondents approve of his handling of the economy.  (A recent New York Times article  (https://www.nytimes.com/2018/08/10/business/economy/trump-economy-credit.html ) suggests this is because Trump has done a good job of selling his positive spin on the economy.)

The current economic figures indicate the economy is not working for all Americans; the uptick is disproportionately helping corporations and the top one percent.  (A recent Guardian article (https://www.theguardian.com/business/2018/aug/16/ceo-versus-worker-wage-american-companies-pay-gap-study-2018 ) reported, “The chief executives of America’s top 350 companies earned 312 times more than their workers on average last year.”)

This economic imbalance is why it’s a good idea for Congressional Democratic candidates to focus on costs, wages, and corruption.  Costs because consumer prices are increasing for health care, housing, and energy.

Democratic candidates should focus on wages because Trump’s economic policies have increased corporate profits but this hasn’t translated to more money in the wallets of working families.  Republican largesse has enabled corporations to raise their dividends, increase CEO salaries, and buy back their stock; but it hasn’t benefited their employees (https://www.usatoday.com/story/money/2018/04/13/how-companies-spend-tax-windfall/505122002/ ).

While Trump promised to “drain the swamp,” he’s actually deepened the swamp.  The issue of Republican corruption complements the economic issues of costs and wages for two reasons.  The first is that an unusual number of Trump associates appear to be corrupt.  For example, this week New York Republican Representative Chris Collins — the first member of Congress to endorse Trump — was indicted for insider trading.  Also in this week, Trump cabinet member Wilbur Ross (Commerce) was accused of having stolen $120 million at his investment company (https://www.newsweek.com/ross-accused-stealing-120-million-1060598 ) — Ross is also accused of violating conflict-of-interest laws and filing false information.

More generally, Trump Administration corruption ties to its economic policy.  For example, this week the New York Times   (https://www.nytimes.com/2018/08/05/us/politics/nucor-us-steel-tariff-exemptions.html ) reported that the implementation of the steel tariffs has guided by Trump supporters at two large US steel companies, Nucor and US Steel.  As another example, Trump plans a coal company bailout that will help some of his biggest donors.  (https://www.marketwatch.com/story/trump-sells-regulatory-favors-to-his-donors-2018-06-14 )  And, of course, it’s well established that the 2017 Trump-sponsored tax cuts primarily favored big GOP donors (https://www.politico.com/story/2018/01/29/big-donors-republican-tax-cuts-374842 ).

Will the economy help Republican candidates in the midterm election?  Probably not.  Democratic candidates will run on the interconnected issues of costs, wages, and corruption.  That should be enough to influence most contested Congressional districts.