There are at least three big myths about the economy in this year’s political campaign.
In 1992 campaign, strategist James Carville highlighted the key issue for the Clinton staff, saying, “It’s the economy, stupid.” Though there’s a lot of talk, positive and negative, about the recovery from the recession, the economy is not the biggest issue this year.
Second, despite claims to the contrary, incomes have begun to recover. While the rich have grown richer, state and municipal increases in the minimum wage have boosted incomes at the other end of the scale.
Finally, Donald Trump’s business success does not give him any special advantage in improving the national economy. Different rules apply, especially when it comes to using borrowed money. And presidents have less economic influence than they claim.
The economic proposals by the two major candidates run true to form.
Democrat Hillary Clinton would raise taxes on the most wealthy and use the proceeds to fund public works projects. Government would directly create jobs by hiring people to build roads and bridges.
Republican Trump just announced his plan consisting of traditional GOP proposals to cut government regulation and taxes. Business would have more money it could invest in expansion and new job creation.
Trump would reduce government revenues until the economy improves, yielding more tax income. Clinton would cover costs using funds from a tax increase on the wealthy.
Either way, voters are asked to believe that new jobs will turn part-time into full-time employment and bring some people back into the labor force. But the problems of the economy may not be that simple to solve, assuming the proposals would work.
Clinton made some remarks about coal miners that were ripped from their context. Yes, she said, “we’re going to put a lot of coal miners …out of business.” But she also proposed bringing them jobs producing “clean renewable energy.”
Contrast that view with one of a Trump voter shown in a now famous news video. He said that the GOP candidate would “preserve the culture I grew up in.” Trump wants to save the coal industry.
Trump advocates what amounts to recovery of the old economy with traditional incomes – “Make America Great Again.” Clinton looks for a new economy with more skilled jobs and new pay scales.
Jobs are coming back. Last week, the federal government reported 255,000 new jobs in July, topping economists’ forecasts averaging 180,000. And incomes have finally begun to move up.
In the depths of the recession, more than 80 percent of people saw the economy as the country’s biggest problem, according to the Wall Street Journal. Now, the paper reports than only about a quarter hold that view.
Still, President Obama has to do a better job explaining his successful policies. Auto sales had been down 40 percent until the federal government stepped in. The industry was saved and the government got a huge share of its investment back. The single government stimulus program also worked.
Perhaps the end of the economic crisis is why polls now give Clinton and Trump equal ratings on their ability to deal with the economy while showing Clinton ahead in the race for the White House. She leads on dealing with foreign affairs, including threats to the U.S., issues that are unusually politically relevant.
Trump argues that the economy would do even better if immigration was essentially halted and millions of people were sent back to their countries of origin. The implication is that immigrants are taking jobs away from Americans, plus some new arrivals are posing a security threat.
The opposing view is that immigrants both add consumers, needed for the economy to grow, and to take entry-level jobs that Americans don’t want. Deporting millions could undermine growth. Obama’s expulsion of two million immigrants may have slowed recovery.
Trump would also slam the door on major trade deals and try to roll back existing ones in the belief that others are stealing U.S. markets.
Trade provides lower priced goods in the U.S. market and many retail and import jobs. The main reason for huge Chinese imports is the lower price tag on its goods. If trade deals are dismantled and new ones blocked, prices will undoubtedly rise. Are Americans ready to pay more to buy American-made products?
The economy will always be a big issue. But this year, it’s increasingly difficult to make the case it is in bad shape. Voters focus now on candidates’ character and their ability to run the government, fight terrorism and keep domestic peace.