By Chris Satullo
Joe Biden’s American Rescue Plan will cost taxpayers $1.9 trillion.
This is a factual statement.
Yet it is also rife with embedded bias. Its sly tilt is the residue of Ronald Reagan’s political genius. It’s evidence of how, four decades on, we’re still living inside Ronnie’s mind.
To show what I mean, let me rewrite that sentence for you:
Joe Biden’s American Rescue Plan invests $1.9 trillion to fuel America’s recovery from the pandemic.
This wording is also tendentious, for sure. But no less accurate than the opening sentence whose action word is cost.
Point is: Most Americans wouldn’t notice any bias in the first sentence. With the second, they’d experience a little tug on the brain, some cognitive dissonance: Invest? Invest?? Governments don’t invest. Businesses do. Governments spend. They spend other people’s money. And mostly on unproductive nonsense.
Yes, the Great Communicator is still communicating, sending signals to our hive mind from beyond the grave.
Americans have never loved taxes. The country was founded upon a grievance against taxation – and a rather overwrought one at that. But it was Reagan – and the array of think tanks, pundits, radio talkers and clean-cut activists that sang backup to his supply-side siren song – who planted this sturdy framing deep in the national psyche:
Government is not the solution; it’s the problem. It’s your money, not theirs. Taxation is fundamentally illegitimate. Whatever the nation’s current economic or fiscal challenge might be, only we know the right solution: cutting taxes. Businesses can be trusted to invest money wisely, governments cannot.
What’s astonishing is how this framing continues to rule most Americans’ understanding of economic and fiscal policy – even though the last 40 years offer just about no evidence that it’s correct.
In opinion polls, even a president as generally unpopular as Donald Trump and a Republican majority as devoid of accomplishments as Mitch McConnell’s and Kevin McCarthy’s still score higher on questions such as “Who do you trust more to run the economy?” or “…the nation’s finances?”
Yet here are the facts, crisply laid out last month by David Leonhardt and Yaryna Serkez in the New York Times, building off research by Princeton economists Alan Blinder and Mark Watson:
They looked at the economic records of the last 14 presidents – seven Democrats, seven Republicans. (They even did the GOP a solid by using FDR as their cutoff point, leaving Herbert Hoover and his dismal record out of their analysis.)
Whatever measure of economic health you want to look at – growth in GDP, job growth, Dow Jones average (dumb one, but whatever) – Democratic administrations do markedly better at it than Republican ones.
Average annual GDP growth under Democratic presidents since 1933: 4.6 percent.
Under Republicans: 2.4 percent.
The top four records on GDP: all Democrats. “Morning in America” under the sainted Reagan was the top GOP performer, sneaking into fifth, just a touch ahead of Jimmy Carter (wait, wasn’t he just four year of malaise?).
Obama, though saddled in his first years with the horrible stats of the Great Recession, easily tops both Bushes. Deep, bigly, in last place: Donald Trump.
Same for job growth. There, Dems hold the top six spots. Obama is the only Dem in the bottom half – but, again, largely because he had to dig the nation out of the rubble W left behind (with McConnell constantly trying to yank the shovel out of Obama’s hand).
A couple of points of fairness to note: It was easier for mid-20th century presidents to rack up higher GDP growth percentages because their baseline numbers were smaller. (Math!) And a president’s first year in office probably should count more on his predecessor’s ledger (but this mostly helps Obama, hurts Trump and devastates W).
And yes, a thousand times yes, presidents – like NFL quarterbacks – get far too much credit when economies win on their watch and far too much blame when they lose.
But it’s not as if Presidents have no impact. Clinton’s 1993 budget, passed with no Republican votes (sound familiar?), raised taxes to close the federal deficit, in hopes of taming rising interest rates that were hampering business investment. Republicans howled that Clinton’s tax hikes would “destroy the economy” (also sound familiar?).
Instead, interest rates did settle down, investment boomed and so did the Clinton years. Sure, the tech innovations of the ‘90s fueled those happy days. Clinton was “lucky.” But as baseball’s Branch Rickey once said so wisely, “Luck is the residue of design.”
Maybe you’re thinking that the secret sauce here was Republican congressional majorities forcing Democratic presidents to curb deficits and cut taxes? Nope. The economists and Leonhardt reran the data while controlling for the congressional factor. Made no difference in outcomes.
Or maybe, with your brain trained by Reagan and his acolytes, you think Dems only prospered because they spent like drunken sailors, leaving Republican successors huge deficit messes to clean up.
Again, no. The two Bushes, Reagan and Trump all increased deficits, reckoned as a percentage of GDP. Carter, Clinton and Obama all reduced red ink, looking at the same measure. Obamacare, another Democrats-only big initiative – which Republicans of course said would “bust the budget and destroy the economy” – actually helped reduce deficits on his watch.
These are the data. This is the evidence. The kind of hard numbers savvy businesspeople are supposed to grasp, swear by and form strategies with. (If you look at the stock market’s rise since Nov. 3, well, maybe they are.)
The data indicate – heck, they scream – that supply-side economics don’t work. Cutting marginal rates for corporations and the top tier of individual taxpayers never produces the levels of growth in GDP, job growth and tax revenue that its evangelists predict. What this tax-cut fetish does do quite effectively is explode deficits.
Meanwhile, the kind of things that Democrats do – at least when they are not in the grips of left-wing fever dreams or their chronic delusion that politicians are better at picking winning innovations than markets are – tend to work better.
When you invest in the fundamentals – education, basic research, infrastructure, child care – that government really does do better than corporations, the economy goes better.
When you don’t shrug as corporations wantonly damage common goods – air, water, public lands, spectrum – then “externalize” (a fancy word for “foist”) the costs onto society, the economy goes better.
When you don’t let Wall Street do whatever it can dream up to get richer quicker, the economy goes better. When you focus on the demand side, putting extra money in the pockets of ordinary people who will spend it on common goods (not park it in bullion, Van Goghs or Panama bank accounts), the economy goes better.
The numbers are stark, so why don’t more Americans heed them? Why do they trust the people who’ve been consistently – sometimes catastrophically – wrong on economic and fiscal policy for 40 years?
Because a simple, well-crafted narrative is seductive. It’s durable. It saves the brain from having to work too hard.
Meanwhile, math is hard. Cognitive dissonance is painful. Forcing yourself to spot and dislodge deeply embedded assumptions and biases is exhausting, particularly when they lurk in a word as common and deceptively simple as cost.
Finally, weaving seductive narratives was Reagan’s superpower, which he bequeathed to his acolytes. Meanwhile, Democrats are pretty bad at it. Even when they think they’re doing “story,” often all they’re doing is spewing self-righteous slogans. What they are particularly bad at is crafting stories that can persuade people who don’t share their assumptions and underlying values.
With the facts so on their side regarding GDP growth and deficits, why don’t Dems do more with them?
Because, frankly, GDP bores them. It’s not their thing; it’s the 1 percenters’ thing. And worrying about deficits – that’s become anathema to them, after decades of Republicans using deficits as a club to beat back liberal dreams.
Liberals get enchanted not by numbers on CNBC, but by glittering ideals of social justice, lifting up the oppressed, helping people. All righteous things. If only much of the current progressive rhetoric about them didn’t tend to cause eyes to roll and spines to stiffen across Middle America.
What’s needed is a Democratic Reagan who can weave Leonhardt’s stats about economic stewardship into a captivating narrative to open the eyes of the average Americans who keep falling for discredited supply-side fantasies – to the detriment of their wallets and their children’s futures.
Uncle Joe is doing great so far, but I’m not yet sure he can be that person. But some Democrat must rise to the challenge, and soon.
—
Chris Satullo, a civic engagement consultant, is a former editorial page editor/columnist at The Philadelphia Inquirer, and a former vice president/news at WHYY public media in Philadelphia