It was 30 years ago that Bill Clinton’s presidential campaign manager James Carville got so tired of answering the question “What is this election about?” that he placed a sign on his desk: “It’s the ECONOMY, Stupid!”
Truer words were seldom spoken.
In fall 1992, Americans were in a sour mood about the direction of the economy and their family finances. Clinton rode that voter anger and angst to his historic victory.
Here we are three decades later, and the same political dynamics are in place. Since the beginning of the summer, polls have shown consistently that more than two-thirds of Americans believe the economy is headed in the wrong direction. Unlike in 1992, when Americans were worried about losing their jobs, this time around voters say they are worried about runaway inflation and/or the economy crash-landing into a severe recession.
For most voters, these midterm elections are not primarily about abortion. The elections are not about racism or inequality or climate change or President Donald Trump. They are worried about their paychecks and the money in their wallet.
Ominous inflation signs
Inflation over the past seven months has hovered between 8% and 9%. These are the worst consumer-price-index numbers since the early 1980s. The last time there was an election with inflation this high, Ronald Reagan won a landslide against incumbent Jimmy Carter, and the Republicans won massive gains in Congress.
Americans have good reason to worry about runaway prices of groceries, gas at the pump, health insurance and utility bills. The “essentials” that all Americans have to buy every week are up closer to 15% to 30%. Inflation averaged just 2% during Trump’s four years in office and only 1.5% the day Biden entered the Oval Office. The claim by the Biden White House last year that inflation was just a “high-class problem” or was “transitory” today sounds laughable. Even more out of touch was Biden’s recent declaration that the economy is “strong as hell.” Maybe that’s true inside the bubble of recession-proof Washington, DC. But not so much in the rest of the country.
On those rare occasions when Biden at least acknowledges inflation is a problem, he points his finger at the oil and gas drillers, Big Pharma, Russian President Vladimir Putin and local gas-station owners for raising their prices. He even pitifully tries to blame the nation’s economic collapse on Republicans — when the Democrats control every lever of power in Washington. Last week he said for the umpteenth time, “I am doing everything in my power to reduce gas prices,” as he takes away oil and gas permits, cancels pipelines, increases taxes on energy, passes out billions of dollars of subsidies to wind, solar and electric-battery companies while promising to “close down” all domestic oil and gas production over the next 12 years.
Instinctively, Americans are on to this blame-shifting gambit. It’s not hard to understand what match lit this forest fire of rampaging inflation. Biden came into office and immediately embarked on seizing upon the aftermath of the COVID crisis as an excuse to pass four massive spending bills with a price tag of $4.1 trillion. Nearly every single penny of that is paid for by running up the federal credit card with more debt. And because the Federal Reserve Board has bought most of this debt, the spending has been ultimately paid for by printing money.
Let’s see. Where has this economic strategy been tried before? A few countries leap to mind: Argentina, Bolivia, Greece, Mexico, Venezuela, Zimbabwe. In every instance the result was runaway inflation and a financial crisis. Why is anyone in Washington even surprised that inflation has quadrupled since Biden started spending money like he was playing Monopoly?
I and others on these pages in recent weeks have pointed out that when you have roughly 8.5% inflation and less than 5.5% wage growth, the real take-home pay to workers has shrunk by about $4,000 for the average family in the last year. This is the Biden inflation tax — the cruelest tax of all because it socks the poor and middle class right in the nose. Then on top of that you have the $30,000-plus reduction in the value of average 401(k) plans for tens of millions of Americans because the stock market has fallen in value and inflation is reducing the value of any small gains that Americans may have experienced in the last 20 months.
The stock market is lower today than it was when Biden entered office. Interest rates on the 10-year Treasury bill have risen from 1% to more than 4.25%. The national debt has risen by more than $3 trillion, mortgage rates are at or above 7% — up from 2.85% when Trump left office — housing starts have collapsed, manufacturing is at a near standstill, and Americans are running up record amounts of debt on their credit cards to pay their bills. Since the year’s start, the economy has basically grown by 0%.
Quick. Can you name one thing on the economy that Biden has done right?
Economists and business leaders are almost unanimously saying America is going to drive off the road into an economic ditch of recession. Hello! For most Americans we are already in a recession. The idea that things are expected to get worse is a hair-raising proposition for the half of Americans who live paycheck to paycheck.
Most worrisome of all, Biden and the Democrats who run Congress have no Plan B, after Plan A of saturating the economy with debt, inflation and multi-trillion-dollars in government spending. We have had a grand exercise in “Modern Monetary Theory,” a dingbat idea that America could borrow and spend whatever we wanted to and there would be no cost. Well, America, how do you like it now?
Riding the red wave
Republicans could and should win a historic 1980, 1994 or 2010 red-wave election in November if they understand what Democrats don’t but voters do. This year’s election is about inflation, $4 to $5 a gallon gas prices and a national debt that’s risen to more than $30 trillion.
I’m not under any illusion that Republicans are going to make everything better. (They like to play Santa Claus, too.) But if you have a football coach that goes 0-16 for the season, you start by firing the coach. This isn’t complicated. Carville had it right: It’s the economy, stupid!
Stephen Moore is a senior fellow at the Heritage Foundation and chief economist at FreedomWorks. He is the author of: “Trumponomics: Inside the America First Plan to Rebuild Our Economy.”