PLANK SEPTEMBER 4, 2012
Mitt Romney and Paul Ryan have caught the Obama campaign completely unawares by posing the most basic question any presidential challenger can raise: Whether Americans are better off today than they were four years ago. (So much for the cruel efficiency of Obama’s “Chicago-style” politics.) Now the economists Dean Baker and Paul Krugman say it’s a stupid question (it isn’t), while the lead story in today’s New York Times reports that the Chicago pros have found a way to answer in the affirmative (they haven’t). Having played some role in reviving this meme from the 1980 election (“You Are Probably Worse Off Than You Were Four Years Ago,” Aug. 24), let me try to clarify what the question tells us and what it doesn’t, and to give the Obama campaign a hand in how to answer it.
There can be little doubt that Americans are worse off, economically, than they were in 2008. Median household income has fallen since 2008, and (according to one study) it’s fallen even more steeply during the recovery than it did during the 2007-2009 recession. Back in 1980, Ronald Reagan tormented Jimmy Carter with the “misery index,” which was the unemployment rate plus the inflation rate. At the moment the misery index is 9.7 (8.3 percent unemployment plus 1.4 percent inflation), compared to 7.8 (7.8 percent unemployment plus 0 percent inflation) the month Obama took office. So by that venerable metric we’re worse off than we were four years ago. We just are.
Characteristically, Romney has taken this opportunity and hyped and distorted it into a lie. He’s claimed that under Obama the misery index reached a record high. But that is pure invention; the record occurred in June 1980, when the Great Inflation pushed it up to 21.98. Paul Ryan has gone so far as to say that “the Jimmy Carter years look like the good old days compared to where we are now,” but that isn’t remotely true if you look at the misery index. Nor does a growing misery index spell inevitable doom for a candidate. George W. Bush won re-election in 2004 even though the misery index on his watch rose from 7.9 (4.2 percent unemployment plus 3.7 percent inflation) to 8.9 (5.4 percent unemployment plus 3.5 percent inflation)—and that's before you take into account 9/11, two wars, and a suddenly exploding budget deficit. (Why did we re-elect Bush, anyway?) Still, “not as bad as Jimmy Carter or George W. Bush’’ isn’t much of a rallying cry.
Baker argues, and Krugman agrees, that reporters who ask, “Are Americans better off than they were four years ago?” are “not qualified to do their job” because it’s “a pointless question.” It’s like asking a firefighter who has just extinguished a fire whether the house is in better shape than when he got there. That, Baker says, would be a “ridiculous question.” I don’t follow Baker’s logic, because the firefighter could say, “Of course the house is better, you moron. It's not on fire anymore!” I think the stupid question Baker actually has in mind is whether the firefighter has restored the house to its condition before it caught fire. To which the firefighter could answer, “Not my job, bub. I put out fires.” But of course President Obama has more complex responsibilities. Putting out fires is his job, and that part he did pretty well; the economy was collapsing all around him when he took office, and he managed to avert an outright catastrophe. But restoring the house to the condition it was in before the fire is also his job, and that part he hasn't done so well. Yes, as Dylan Matthews* notes, the economy is improving; the recession is over and we're in recovery. But it’s a simple fact that unemployment is higher than it was in Jan. 2009 and median income is lower. Last week I had lunch with a group of economists (Baker wasn’t one of them) at a liberal Washington think tank. I asked them, “Is there any plausible way for the Democrats to argue that the economy isn’t as bad as Republicans say it is?” They all agreed that there wasn’t.
Baker says that a better set of questions to ask is “whether the stimulus was large enough, was it well-designed, and were there other measures that could have been taken like promoting shorter workweeks, as Germany has done.” Those are all good questions. But they’re all premised on the reality that Americans aren’t better off, and I don't understand why it should somehow be off-base to ask Obama to acknowledge that.
Jim Rutenberg’s lead story in today’s New York Times begins: “A day after fumbling a predictable and straightforward question posed by Mitt Romney last week—are Americans better off than they were four years ago—the Obama campaign provided a response on Monday that it said would be hammered home during the Democratic convention here this week: ‘Absolutely.” Er, no it didn’t—not on the evidence Rutenberg provides. Rather, the Obama campaign changed the question from “are Americans better off” to “would they be better off under Romney”? That, Krugman writes, is the more urgent question, and I don’t disagree. Romney, Obama pointed out, would have to raise taxes on the middle class to pay for his extravagant tax cuts on the rich. Romney would be worse. But I don't think Obama can leave the question “Are you better off?” unaddressed.
Vice President Joe Biden’s instincts have proven better on this point than Obama’s. He is answering the question, with his signature line that Osama Bin Laden is dead and General Motors is alive. But that answer is insufficient. What I’d like to hear Obama say is that Americans are better off because after nearly a century of trying, the federal government has finally found a way to guarantee health care for virtually all its citizens. “I have achieved this,’’ Obama can say, “in the face of unified opposition from the Republicans, including Romney, who for purely political reasons has gone from supporting precisely this type of reform—he instituted it in Massachusetts, for Pete’s sake!—to vigorously and cynically opposing it. You are also better off because I have begun the work, with passage of Dodd-Frank, of curbing the reckless abuses that wrecked our economy in 2008. These abuses, which built up over a generation, contributed substantially to our 30-year run-up in income inequality. Romney would repeal Dodd-Frank, too, and he doesn’t even want to discuss income inequality. One of Romney’s former Bain partners recently published a book arguing that more income inequality would be good for America, and I don’t hear the Republican nominee disagreeing!
“We are on an admittedly slow path to economic recovery. It would be a faster recovery if Republicans didn’t oppose at every turn every common-sense policy to assist the sluggish economy. But we are making progress, and if you re-elect me you will experience that progress in ways that, unfortunately, you are not today. In the meantime, you can stop worrying about not being able to get health insurance and you can stop worrying about Wall Street running roughshod over U.S. regulators as they have for decades.”
*Correction, 4:45 p.m.: An earlier version of this post erroneously identified Ezra Klein as the author of a Washington Post blog item that describes how the economy is improving. In fact, the author is a member of Klein’s “Wonkblog” atelier, Dylan Matthews.