The 2018 midterm elections are mere weeks away. What is the economic message the Democrats are pushing in their attempt to win back the House and Senate?
In the leadup to the midterm elections, the economy, as always, is front and centre in the minds of US voters. The US economy is relatively strong at present. Unemployment is low and GDP growth is quite high. As of the 2nd quarter for 2018, GDP growth was a healthy 4.2%. Most measures of economic growth are on an upward trajectory, including business and consumer confidence, company profits and consumer spending. On the surface, campaigning on the economy should be disadvantageous ground for the Democrats, given these statistics. However, a closer look at the economic situation of many Americans shows that this may not be the case. For all the promise of the tax cuts passed earlier this year, six months is too short a time for most people to feel the impact of these cuts – a point I argued for Conatus News back in January. While many of the early signs are encouraging, there are also signs that the promised growth of the tax cuts has not materialised for many workers. Interestingly, the GOP has largely abandoned campaigning on the tax cuts; only one in eight TV ads from the GOP mentions the tax cuts.
GDP as a measure of economic health, while useful, also doesn’t paint the full picture. While GDP growth is steady, wage growth has been anaemic. By some measures, wage growth has declined recently, even when factoring in the GOP tax cuts. In the case of the United States, this can seem particularly perplexing, as unemployment is also low – at just 4 per cent at present. Part of the reason for this is that while unemployment is relatively low, the utilisation rate for the workforce is also relatively low. The rate of underemployment, that is, people in the workforce working less than full-time is still stubbornly high. As a result, wage growth has not risen at the rates normally expected for an economy with low unemployment.
Recent polling memos put forth by the Democrats give some clues as to how they will tackle the issue of the economy. One of the ways in which Democrats plan on presenting their economic message is focusing on the personal and the individual rather than the aggregate. The stagnation of growth in wages is central to this message. Another key issue that Democrats have identified concerning the economy is the healthcare debate. Issues such as pre-existing conditions are fundamental to their message on the economy, as well as other policy decisions made by the GOP and Trump which cut away at the social safety net. In stark contrast to previous election cycles, where Democrats shied away from the issue, Democratic candidates are now embracing it, especially legislation on pre-existing conditions, which resonates with voters across the board. Some of the more progressive Democratic candidates have also campaigned on universal health care.
There is also the debate as to just who is responsible for the state the economy is currently in. While Trump can rightly point to strong economic indicators across the board at present, Democrats argue he is also reaping the benefits of an economic recovery that started under former President Barack Obama. They have a point in this regard. Since the end of the recession in 2010, jobs growth has been remarkably consistent. Under Trump, the trend has certainly continued but has not jumped up in a way which suggests he can take total credit for the state of the economy at present.
There is an important point to raise in all this – that the effect any president can have on the economy is overstated. For the most part, what happens to the economy is largely outside the control of any president. In any case, this perception is an important one in the minds of voters. Whichever party can successfully convince the electorate they are primarily responsible for the state of the economy will be in prime position to win come November.
Much has been made of the divide between the moderate, establishment wing of the party and its more progressive, activist base. The surprise win by Alexandria Ocasio-Cortez over senior Democrat Joe Crowley shows that the progressive wing of the Democrats is at least somewhat ascendant at present. Though her newly-found public profile and unabashed promotion of democratic socialism may be grabbing much media attention, there is reason to believe that her win was more circumstantial than indicative of an imminent push by the Democratic Party to embrace socialist economic policies. The majority of candidates selected by Democrats through the rest of the country, especially in red states, have taken a far more moderate and traditional approach to their campaigning, reflecting the states they are in. Take, for instance, the case of New Jersey’s Jeff Van Drew. He has campaigned as a conservative Democrat and has voted against bills proposing an increase in the minimum wage. Despite progressive activist groups campaigning against him, he has the support of the national Democratic Party.
Another Democratic candidate who has taken a more centrist tack in their campaigning is Texas’ Beto O’Rourke. In his campaign against prominent Republican Ted Cruz, O’Rourke’s pragmatic approach, combined with his personal charisma has made what was initially a long-shot campaign a surprisingly competitive one. A look at O’Rourke’s campaign website shows the centrality of economics to his campaign messaging. On his ‘Issues’ page, the first statement begins as follows: “We should all have a chance to succeed. That means jobs for Texans who are ready to work and the education and training to be competitive for them.” Recent polls have O’Rourke just one point off Cruz, a highly unusual position for a Democrat to find themselves in a state like Texas.
The bulk of the Democrats’ overall campaign messaging, it must be said, has been outside the realm of economics. Issues such as the collusion between Trump and Russia as well as identity politics have dominated the Democratic message in the midterms thus far. General opposition to Trump has also been a focal point of the Democrats’ message. Considering the current approval ratings for the POTUS, this may be enough for success in the 2018 midterms. There is some recent history in which Democrats can take comfort in. In many ways, with the exception of the economy, the 2018 midterms parallel those of 2006. Back then, as is the case now, Democrats had the momentum behind them. The incumbent President, George W Bush, was unpopular among voters and the Democratic opposition was motivated and mobilised against him, as are Democrats against Trump now. As well as personal unpopularity, Democrats in 2006 argued that the Republican Party had engaged in legally and ethically questionable behaviour. Back then, House Majority leader Tom Delay had been indicted on felony charges over campaign finances. In addition to this, another House Republican resigned due to a sex scandal, and yet another was imprisoned for accepting bribes.
Most polling has indicated a strong surge toward the Democrats in 2018. According to these polls, the Democrats are tipped to retake the House of Representatives. The Senate, however, will be considerably harder for them to win. Whether this will be enough to retake the Senate and the House from the Republicans remains to be seen.