“The economy is fine”
“The economy is fine”
Polygraph | Newsletter n°276 | 7 Nov 2024
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2020 vs. 2024
Exit polls show that the 2020 and 2024 presidential elections were in many ways mirror images.
In 2020, the Democratic Party candidate was supported by most voters who were angry or pessimistic about the status quo, experiencing financial hardship, and not high-income. These demographics flipped in 2024 — most voters in each category went for the Republican Party candidate instead.
Kamala Harris did well with voters who are high-income, haven’t experienced financial hardship recently, and think everything’s going quite well. Donald Trump won all these demographics in 2020 and lost; Harris won all these demographics in 2024 and lost.
In 2020, 50% of voters rated the economy as "not good/poor." Biden got 80% of this group's vote. In 2024, 68% of voters rated the economy as "not good/poor." Harris earned just 28% of this group's vote.
Democrats capitalized on economic disaffection in 2020 and lost because of it in 2024. That’s the best oversimplification I can think of right now.
“The economy is fine” vs. data on three economic well-being metrics from Sep 2020—Sep 2024
I stuffed three economic well-being metrics into the chart below: the share of people in the US living paycheck to paycheck (relying on regular paychecks to meet financial obligations with little to no savings left over); the percent facing financial hardship (difficulty covering basic household expenses in the last week); and the percent who are food insecure (people who didn’t have enough to eat in last week). You can measure these things in different ways, but you wouldn’t measure them using GDP or stock market data. Those indicators are for gauging economic health on a national level, not a human level.
The chart below should tell you three things. First is that you can’t equate the country’s impressive economic growth since 2020 with people’s economic well-being. Lots of people do anyway. Please feel free to share my chart with those people. The graph shows a deterioration, not an improvement, in economic well-being across three different metrics. Things are worse now than they were in 2020.
Second, the legislation with the $600 tax rebates from December 2020 and the massive American Rescue Plan (ARP) from March 2021 instantly improved economic well-being across all three metrics. See how all the graph’s lines drop in sync with the passage of those bills? I find it oddly satisfying to look at.
Third is how the expiration of the ARP’s suite of welfare provisions left a sizable chunk of the US population with little to no recourse during a historic bout of inflation. Key social programs and worker protections were taken away as the cost of nearly everything spiraled upwards, resulting in widespread suffering. No wonder so many voters were livid.
^Alt text for screen readers: The national economy has improved since 2020. People’s economic well-being has not. This line graph has three lines showing the trends in the percentage of people living paycheck to paycheck, facing financial hardship, and food insecure from September 2020 to September 2024. Paycheck to paycheck, 58% to 66%; financial hardship, 32% to 37%; food insecure, 10% to 12%. Data: US Census Bureau, PYMNTS. Range: Sep 2020–Sep 2024.
BBB was supposed to make ARP’s provisions permanent
The main purpose of the Biden-Harris administration’s Build Back Better (BBB) plan was to make the American Rescue Plan’s (ARP) temporary welfare superstructure permanent. National economic recovery wasn’t enough; the administration publicly insisted that economic recovery happen on a human level, too. Here’s the White House in April 2021, introducing the American Families Plan (which later became the bulk of the House-passed BBB bill): “It is not enough to restore where we were prior to the pandemic. We need to build a stronger economy that does not leave anyone behind — we need to build back better.”
But in March 2022, the Biden-Harris administration decided that it would “help” people deal with inflation by reducing the deficit, not by enacting social programs. Cruelly, the White House started using the nation’s strong economic recovery as an excuse to not make the American Rescue Plan’s provisions permanent, the same provisions that dramatically improved economic well-being the year before. As these vital programs expired, Biden bragged about reducing the deficit and preached “fiscal responsibility”:
“The budget I’m releasing today sends a clear message to the American people that we — what we value…The first value is fiscal responsibility. The previous administration, as you all know, ran up record budget deficits…My administration is turning that around.”
“Record economic and job growth has made it possible for us to responsibly and significantly cut back on emergency spending. Early in the pandemic, it was right to give people help to make ends meet…But because of the progress we’ve made dealing with these emergencies, the labor market is strong.”
Again, the point of BBB was to make those emergency programs permanent fixtures in the US’s social safety net. Instead, those programs became fodder for deficit reduction. Here’s Treasury Secretary Janet Yellen discussing a particularly gruesome part of the Biden-Harris administration’s deficit reduction in October 2023: “The expiration of the expanded Child Tax Credit…decreased outlays by $103 billion…Spending by the Food and Nutrition Service, which includes the Supplemental Nutrition Assistance Program (SNAP) and Child Nutrition Programs, also decreased by $21 billion from 2022 due to the pandemic-related emergency allotments ending in March 2023.”
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Very Useful. I would also recommend reading Ferguson and Storm here:https://www.ineteconomics.org/uploads/papers/WP_221-Ferguson-and-Storm-Second-Coming-final-May-17.pdf. The paper argues that in terms of net income lower 60% doing better under Trump than Biden. If correct, it argues that perception of many that Trump years were better had a decent basis in fact. This makes the claims that working people never had it so good as under Biden (the new FDR!) pure gaslighting. It also enforced the perception that Biden (and then Harris) would not fix these problems because they didnt even recognize their existence. Say what one likes about Trump (and I could say a lot) he at least talked the talk and insisted that problems existed. If recognizing a problem is a necessary condition for fixing it, this made voting for Trump and against Harris eminently rational.