Economic Scene: It Was the Economy after All (NYT ignores Roe effect)

Despite all the talk that the presidential election turned on the issue of moral values, it turns out that economics did indeed matter, and mattered a lot.

And those households with incomes below $50,000 generally voted for Senator John Kerry. The poorer the household, the more likely its members voted Democratic.

But the below-$50,000 group did not completely break Mr. Kerry's way. In particular, consider those households with incomes of $30,000 to $50,000 a year. In 1992 and 1996, Bill Clinton won this demographic slice. In 2000, Al Gore split it evenly with Mr. Bush, and that happened again with Mr. Kerry. Not counting minorities, Mr. Kerry probably lost the group by a substantial margin.

Yet these are the households most hurt by a changing economy, and they were once consistently Democratic, counting on the party's social policies to help keep them afloat as their incomes shrank. In 1979, the average hourly wage for a male high school graduate was $16.32 in 2003 dollars, according to the latest edition of "The State of Working America," published every two years by the Economic Policy Institute. In 2003, the average wage was $15.07.

Why couldn't Mr. Kerry capture more of these voters? Some political analysts say they may be lost to the Democratic Party. They turned against government and the Democrats in the late 1970's, when inflation was soaring under President Jimmy Carter. According to an analysis done in the early 1980's by Douglas A. Hibbs Jr., then a Harvard professor of government, nearly 80 percent of Americans had come to believe by April 1980 that government spending caused inflation.

But if economic frustration is at least partly behind this change, then a presidential campaign that emphasized strong policies for economic growth and reviving wages might bring them back.

Even if moral issues were the reason Mr. Kerry lost voters, economic frustration may well be behind the rise of some of these values. "It should not be surprising at all," said Richard Sennett, the New York University sociologist whose latest book is "Respect in a World of Inequality" (Norton, 2003). "When people are confronted with uncertain economic times, of course they would turn to cultural certainty."

Promising credible economic relief may have reduced anxieties about moral differences with the Democrats. But Mr. Kerry often diverted to other issues.

There is another reason to think a good economic plan might have overcome the moral questions. Moral values have been an issue in several recent elections. As two specialists on public opinion polls, Robert J. Blendon and John M. Benson, both of Harvard University, point out, surveys of voters leaving the polls that are conducted by The Los Angeles Times have included a question about moral values since 1992. Voters have consistently ranked moral values as either the first or the second most important reason for making their decision.

Yet a Democrat, Mr. Clinton, won in 1992 and 1996, and Mr. Gore won at least the popular vote in 2000. Mr. Kerry may not have had the same appeal on moral values, but Mr. Blendon and Mr. Benson say they also believe that a solid economic plan could have wooed more voters.

What is the source of the Democrats' inability to connect convincingly with their old base? The answer requires a little economic perspective. Despite the Clinton economic boom of the late 1990's, America's economic growth has been at historically low levels since the early 1970's. Had this country grown at the rates that were normal in America beginning in the late 1800's, revenue from federal taxes levied on that income growth would have been much higher than they are today, as economists like Martin Baily and Paul Krugman pointed out years ago.

A reasonable estimate is that the federal government would have had at least $300 billion more a year to spend, and probably more. With more revenue for social programs, Democrats could talk like real Democrats. Instead, they often try to offer social programs that appear costless, like Mr. Kerry's modest rules to limit the outsourcing of American jobs.

Mr. Kerry's first mistake was making the deficit the linchpin of his economic plan. He, like President Bush, would have cut the federal deficit in half in five years on the way to balancing the budget in 10 years. Even the credibility of his interesting but complex health care plan was undermined because balancing the budget would leave little, if any, room for expanding social policies.

Mr. Kerry's second error was to promise tax reductions to the middle class. More consistent with Mr. Kerry's position would have been to claim that the American government has too much work to do to cut taxes. Economists at the Economic Policy Institute point out that federal taxes as a proportion of the gross domestic product now come to just over 16 percent, the lowest level since the 1950's. Are Democrats bound to reduce them still more?

A third possibility for Mr. Kerry might have been to seek more federal revenue in indirect ways. He occasionally alluded to such possibilities, but never forcefully enough to make an impact. He could have argued more strongly to raise the salary ceiling on Social Security taxes, which is now about $88,000 a year. The ceiling on allowable home mortgage interest deductions could also be lowered.

President Bush claimed that the country could have tax cuts, pay for the war in Iraq, and have a good education and health care system at the same time. With more revenue to spend, Democrats need not have seemed like they, too, were trying to offer Americans a pipe dream. Mr. Kerry could have proposed a better health care plan. He could also have called for a stronger safety net for those who lose jobs because of globalization or technological change, including access to community colleges rather than just job training.

Economics did matter this time around. If Democrats think they lost simply on moral values, they are missing the message.

Where to begin? Can you find all of the errors? Here's one: although the author adjusts wages for inflation, he doesn't account for the shift of population to relatively low-wage states that have significantly lower cost of living than the high-wage states. The high-wage states, unsurprisingly, are heavily unionized blue states with a relatively shrinking labor supply, in part because of the "Roe effect" and the resultant low birth rates. He's probably cherry-picking dates; for example, he uses 1979, when the infamous Carter stagflation-and-depression miserable malaise just began.

And although federal taxation might be relatively low by historical standards, tax rates remain confiscatorily high. And we're not supporting the Cold-War military either; the great force on display in Iraq is a mere minor fraction of its former might (thanks, ex-president Clinton).

The last paragraph is correct, but Democrats still ignore the overriding issue in this election: terror-fighting versus serial treason.

Those households with incomes above $50,000 benefited most from President Bush's tax cuts

Wait a minute. Incomes above $50,000 benefited most? Did the RATS and their lapdogs in the MSM tell us for four years that only MILLIONAIRES benefited from the Bush tax cuts? How many times did they say "tax cuts for the rich"? Now, they tell us that people making only $50,000 benefited the most?

Moreover, only about one of three recent high school graduates now looking for work will receive health insurance on the job. In 1979, two out of three entry-level jobs for high school graduates provided health insurance.

Why couldn't Mr. Kerry capture more of these voters? Some political analysts say they may be lost to the Democratic Party. They turned against government and the Democrats in the late 1970's, when inflation was soaring under President Jimmy Carter.

..............................

Well, if these people turned away from the Party in the 1970's, why are they entering the job market now? Why should high school grads care about Carter's policies?

Economic Scene: It Was the Economy after All

Thank you G-d.
The Democrats are still in denial and won't admit to themselves that it was
"gay marriage", assaults on the Boy Scouts etc., trailer-trash billionairess
First Lady wannabee Tereza, sliming American military from Vietnam down to
Operation Iraqi Freedom and all the other Democrapic gospel that did it.

I hope they stay happy and blind.

I can't see this one. Most people realize that we have to address the deficit and Bush would have really laid in to the "tax and spend liberal" label even more if Kerry didn't take this tack.

These high-school graduates turned away from the Democratic Party when they successfully exited the birth canal. Actually, those were the Reagan years for new entrants into the job market, but the principle remains the same: anyone, beginning in 1973, who successfully received the gift of a live birth, abhors the Democrat policy of denying the same rights and privileges to others.

Oh, yeah, and what GOOD have the Democrats done for the working stiff since stagflation? Um.....can anyone help me? I'm still waiting for an answer

I caught that, too. It also struck me as entertaining that health insurance was some sort of huge interest to high school graduates entering the job market...since they don't NEED it. And since it's Edwards-type trial-lawyers and government interference that have removed incentives for companies to offer health plans.

The answer to your question struck in an inspirational flash. The reason that they're just entering the job market could be one of three things

A) they're only now graduating
B) they're only recently out of prison
C) they're only now climbing out of the turnip truck

And, one last note: I don't recall a single middle-manager type person ever complaining to me that we can't have government programs because THEY'LL CAUSE INFLATION.

What a moronic article.

Despite the Clinton economic boom of the late 1990's, America's economic growth has been at historically low levels since the early 1970's.

Is he saying the 80's never happened? Did Mondale get elected after all? Did I step into an alternative universe?

Mr. Kerry's first mistake . . .
Mr. Kerry's second error . . .

A third possibility for Mr. Kerry might have been

When did it become the chief function of The New York Times to give advice to Democrat politicians? I thought their aides and handlers were supposed to do that. Newspapers are supposed to report the news.

And why is this jerk still trying to give kerry advice weeks after he lost the election? It's over, stupid. Move on.

(1) I'll never vote for a candidate who supports the slaughter of unborn children. Anybody who has an argument with that has an argument with God's Word the Bible (2) "in 1979, the average wage for a male high school graduate was $16.32 in 2003 dollars......In 2003, the average wage was $15.07." Bulletin to the New Yor Times: Maybe some voters understood that President Bush inherited a recession from the treasonous Clinton, and that Sept. 11 had a profound negative impact on the economy (3) author writes: "Mr. Gore won at least the popular vote in 2000." What does THAT ("AT LEAST") mean? Besides, if only legal votes are counted, and counted just once, Bush probably wins in 2000 by a million-plus, and probably wins this year by four million-plus.

John is exactly right. I can't recall a single instance, in the entire year preceding the election, where MSM mentioned Bush taxcuts benefitting $50,000 earners. It was always the millionaires and top 1% blah blah blah.

Also don't forget Bush received votes from the under $50,000 crowd because some of them are hoping and working on getting into the $50,000+ category someday.

In 1979, the average hourly wage for a male high school graduate was $16.32 in 2003 dollars, according to the latest edition of "The State of Working America," published every two years by the Economic Policy Institute. In 2003, the average wage was $15.07.

In 1979 the average high school graduate know how to read, write, speak English and show up for work on time. Consequently he was qualified for a better job then the average high school "grad" that is currently being produced.

Those households with incomes above $50,000 benefited most from President Bush's tax cuts, and they voted decisively for him. In fact, according to the surveys of voters leaving the polls, the higher the income, the more the support for Mr. Bush And those households with incomes below $50,000 generally voted for Senator John Kerry. The poorer the household, the more likely its members voted Democratic...this would seem to go under the familiar heading of the error of third-order correlation - the higher the income, the more votes for Bush - but also and probably more important, the higher the income, the higher the accomplishment, education , sense of responsibility, grasp of the issues, and general capability of the voter who is better going to appreciate the issues which Bush represents, such as personal responsibility, individual freedom, and reduced government. The lower the income, the more votes for Kerry, but also increased liklihood of spotty work history, limited education, irresponsibility, impoverished family life (especially high rates of illegitimacy), and most notably, increased reliance on big-daddy government to make it all right - it wasn't the economy, it was the moral values after all......

--Where to begin? Can you find all of the errors?

Nowhere. No, I can't! This kind of economic analysis is worthless. My family is "at the poverty level" and we are doing just fine! I don't need any one else's taxes to go up to pay for our expenses. Just keep your greedy tax-loving hands out of the private sector, Congress, and we will all be okay!

While this may be true, it is one of the most idiotic statements in the entire article. The author treats "health insurance" as if its value hasn't changed over the years. The reality is that: 1) health insurance is substantially more expensive today than it was in 1979, and 2) health care today is substantially better than it was in 1979.

If workers today were willing to accept a 1979-vintage standard of health care, I would venture to guess that the following two would occur: 1) health insurance would be less expensive today than it was in 1979, and 2) more than two-thirds of the entry-level jobs for high school graduates would offer health insurance as a paid benefit.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.