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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Month: April 2012

Teixeira’s Field Guide to Swing Voters

TDS Co-Editor Ruy Teixeira has an article in The New Republic which brings clarity to the confused discussion about ‘swing voters.’ As Teixeira explains:

…There’s good reason to believe that the vast majority of Americans, including professional journalists and campaign operatives, wouldn’t recognize a typical swing voter if they met one.
Indeed, the application of the term “swing voter” deserves a lot more scrutiny than it generally earns. As it is, the term is thrown around carelessly to apply to large demographically or ideologically defined groups. The most common assumption, for example, is that swing voters are synonymous with political independents, but as I explained at length in a recent book review, that is an utterly fanciful notion.
Instead, the simplest and clearest way to think about it is on the level of the individual voter…The relevant criterion that needs to be fulfilled is persuadability. And that’s not a quality that’s exclusive only to those who are completely undecided, or who are only weakly committed to a candidate. Even those who are moderately committed can be persuaded to deepen their commitment. And the deepening of an existing affiliation with a candidate can be just as significant, both statistically and electorally speaking, as attracting mild commitment from someone who had previously been mildly committed to another candidate.

Teixeira walks his readers through some numerical exercises in “shifting probablility” in terms of commitment to candidates to illustrate the range of swing voters and adds,

Persuadability, then, is not logically restricted to voters in the center; it can potentially be far more broadly distributed. That is what William Mayer found in his analysis of swing voters based on National Election Study data. Swing voters are least likely to be found among strong partisans (12 percent of this group); more likely to be found among independent leaners (27 percent) and weak partisans (28 percent); and most likely to be found among pure independents (40 percent). But since pure independents are such a small group, they wind up being just 13 percent of all swing voters, actually less than the number of strong partisans among swingers (18 percent). Another 28 percent of swing voters are independent leaners, and the largest group, 42 percent, are weak partisans. Thus the overwhelming majority (70 percent) of swing voters are weak or independent leaning partisans–the kind of voters whose probability of support for “their” candidate is more usefully thought of as being movable from 70 to 80 percent than from 45 to 55 percent.

Nor do swing voters tend to be clustered in particular demographic groups, as Teixeira explains: “The idea that swingers are heavily concentrated in special groups like “soccer moms” or broader ones like the white working class or Hispanics is incorrect. In reality, swing voters are scattered throughout the social structure.”
But the broad distribution of swing voters does not mean they can’t be reached. “…Given the fact that the overwhelming majority of swing voters are partisans, the logical place for a campaign to start is by consolidating support among “their” swing voters–that is, by driving up their support rates among weak partisans and independent leaners.” He acknowledges that targeting swing voters with particular messages is very difficult, since “swing voters are everywhere.”
Teixeira suggests “setting support rate targets” for demographic groups,” then “figuring out how to hit each of the targets…however boring it may seem, that’s how you win elections.”


Dems Set to Benefit from Demographic Trends

The following post, by Dylan Scott, spotlighting research and analysis by TDS co-editor Ruy Teixeira, a senior fellow of the Center for American Progress, is cross-posted from governing.com
Current population and voting trends appear to favor Democrats for the foreseeable future, demographic experts said during a discussion at the Bipartisan Policy Center Wednesday, but they acknowledged that projecting long-term political behaviors is difficult.
The growing minority vote (which leans heavily Democratic), the shift of white college graduates from red to blue and the shrinking white working class (which traditionally votes Republican) are good omens for the left, said Ruy Teixeira, senior fellow at the liberal Center for American Progress. Sean Trende, senior elections analyst for Real Clear Politics, said he largely agreed with Teixeira’s analysis, although he sees room for the GOP to make gains down the road.
Teixeira and Trende told Governing that however these trends play out on the federal level, the effects are likely to be felt in state legislatures and governorships. The 2010 midterm elections, in which Republicans gained 69 seats in Congress and nearly 700 seats in statehouses nationwide, are the latest example of that correlation.
“It could have a huge impact,” Trende said. “The evidence definitely suggests that state politics follow the national trends.”
Teixeira concurred, with the caveat that state politics have their own peculiarities (such as the gerrymandering of state legislative districts) that distinguish them from national elections.
“These trends have got to filter down in some ways,” he said. “This will have a big effect.”
The increasing minority vote (led largely by the budding Hispanic population) framed Teixeira’s rosy forecast, based on population data and historic exit polls, for the Democrats. Minorities’ share of the overall voting population has inclined from 15 percent in 1988 to 26 percent in 2008. That electorate has consistently voted more than 70 percent for the Democrats in the last decade, reaching a peak of 80 percent in 2008.
Long-range projections expect minority population to only grow in the coming decades. The Census Bureau predicts Hispanics will jump from 16 percent of the American population in 2010 to 30 percent in 2050. Over the same period, whites are projected to drop from 65 percent to 46 percent.
Democrats are also making gains with white college graduates. Republicans still hold a slim advantage, but that difference has shrunk from 20 percent in 1988 to 4 percent in 2008. Like minorities, white college graduates as a share of the voting population have grown by 4 percent since 1988 and are expected to continue to do so.
Meanwhile, voters from the white working class (some college or less) are slowly disappearing. Their share of the voting population has declined by 15 percent from 1988 to 2008. That block is staunchly Republican with the GOP commanding a 20-percent advantage on average.
Rounding out the good news for Democrats is the emerging millennial generation. Young adults only slightly favored Democrats in 2000 (48 percent to 46 percent), but the gap widened to 66 percent to 32 percent in 2008. That population is expected to increase from 46 million eligible voters in 2008 to 90 million in 2020. Not coincidentally, the millenial generation is also expected to be more diverse.
Looking at some key battleground states, as Teixeira did in his presentation, illustrates how these trends could play out at the state level.
In Ohio, presidential candidate then-Sen. Barack Obama, D-Ili., decimated challenger Sen. John McCain, R- Ariz., among minority voters with an 83-16 advantage. Minorities are expected to add at least 1 percent to their share of the voting population in 2012. Obama also lost by only one point (49-50) among white college graduates and their share is expected to grow by 2 percent. White working class voters were firmly behind McCain (54-44 in his favor), but their share is projected to drop by 3 percent.
In Pennsylvania, minorities voted for Obama by an 86-13 margin and their voting share should increase by 2 percent. White college graduates favored the president-elect, 52-47, and their share is expected to grow by 3 percent. Once again, white working class voters solidly backed McCain (57-42), but their share could fall by up to 5 percent.
Nevada, Florida and Virginia (all of which went for Obama in 2008 and whose demographics are expected to shift in his favor in 2012) follow the same trend, according to Teixeira’s analysis.
It is noteworthy, however, that Ohio, Pennsylvania, Florida and Virginia have GOP majorities in their state legislatures and a Republican in the governor’s house. That fact, Trende said, reflects the difficulty in translating demographic projections to real-world politics. While population trends might suggest future gains for Democrats, don’t expect a sudden shift in majority control. “These things tend to seek equilibrium,” he said.
Generally, Trende acknowledged that Teixeira’s analysis was sound. He did, however, find a few bright spots for the right.
The Pew Research Center found that migration out of Mexico (the vast majority of which comes to the United States) declined from more than 1 million people in 2006 to 404,000 in 2010. Over the same period, migration into Mexico (again, more than 90 percent of which comes from America) stayed more steady, falling from 474,000 in 2006 to 319,000 in 2010. Those figures could impact projections on the growth of the Hispanic vote.
Trende also pointed to exit poll data that suggests Hispanic voters are more likely to vote for Republicans if they receive a higher income — much more so than African-Americans, although less frequently than whites. He theorized that, if the economic well-being of Hispanics were to improve in the coming years, a shift to the right could occur.
Regardless, both Trende and Teixeira recognized that demographic data tells only part of the political story. Party platforms and economic outlook also factor heavily into voters’ decisions.
“There is no guarantee that demographic trends will automatically lead to dividends. There is this thing called governance,” Teixeira said. “Parties always have to deliver. Elections are always contested.”
Trende pointed again to the 2010 midterm elections, which came right on the heels of Obama’s sweeping 2008 victory, as evidence that policymaking is as influential on election outcomes as more entrenched variables like ethnicity and age.
“Once you get into power, you have to start picking and choosing what you’re going to do,” Trende said. “You’re inevitably going to alienate somebody.”


Even Wendy’s Dumps ALEC

First McDonalds and now Wendy’s. The downers for the right-wing American Legislative Exchange Council (ALEC) keep on coming. Andy Kroll of Mother Jones reports that Wendy’s tweeted on Tuesday that “We decided late 2011 and never renewed this year. It didn’t fit our business needs.”
Chalk up an especially-gratifying victory for the progressive coalition that has organized specifically to challenge ALEC’s growing role in state legislative politics across the nation, as Kroll reports:

Wendy’s departure is arguably more significant than McDonald’s given Wendy’s past support for conservative and staunchly pro-industry causes. For instance, Wendy’s International has funded the Center for Consumer Freedom, a phony grassroots group that fights regulation of the food and beverage industries. And Wendy’s political action committee has given significantly more of its money in recent election cycles to Republican lawmakers than Democrats, according to the Center for Responsive Politics.

In response ALEC whined in an official statement about the coalition’s “well-funded, expertly coordinated intimidation campaign” and how “We are not and will not be defined by ideological special interests…” blah blah.
Kroll adds that Wendy’s joins McDonald’s, Pepsi, Coca-Cola, Kraft and Intuit in bailing out from ALEC. The coalition, which includes Common Cause and ColorofChange.org targeted the companies, in part because of ALEC’s support for voter suppression laws and more recently, the “Stand Your Ground” law in Florida and other states.
In addition to the good that comes from checking ALEC’s power as an advocate of right-wing legislation, the campaign has another important benefit — demonstrating how progressive organizations can creatively leverage the mere implicit threat of consumer economic withdrawal. These companies clearly feared losing customers as a result of their membership in ALEC and acted accordingly.
As Common Cause President Bob Edgar puts it, “Good corporate managers know that attaching their brand to radical and divisive legislation is not in the best interest of their shareholders…Sunlight is the best disinfectant, and we will continue to educate the public about ALEC’s agenda, and highlight the influence of corporate money in our state laws and public policies.”


Being “Too Conservative” Not Santorum’s Downfall–Not in This Republican Party!

This item is crossposted from The New Republic.
Rick Santorum’s withdrawal from the Republican presidential race earlier this week marked the end of a long, strange trip for the former Pennsylvania senator, who made himself the political vehicle for Christian Right resistance to Mitt Romney. But the lesson of Santorum’s inevitable defeat isn’t that he was too socially extreme. Ironically, it was his record of loyal support for the compassionate conservative agenda of George W. Bush that did Santorum in, not his 1950s-era values. In the end, the final “true conservative alternative to Mitt Romney” just wasn’t conservative enough to nail down his potential constituency.
How did this happen? Santorum’s long march to victory in Iowa (reported on caucus night, of course, as either a narrow loss to Romney or a “tie”) represented the classic tortoise strategy. Strapped for funds and largely ignored by the media, Santorum painstakingly visited all 99 Iowa counties and rarely campaigned elsewhere. And in a state where social-issues activism was immensely important to the GOP rank-and-file and conservative leaders, his Iowa calling card was his strong record of outspoken fidelity to the twin social conservative causes of outlawing abortion and resisting legalization of same-sex marriage (or in Iowa’s case, overturning the 2009 court decision that legalized it). It was probably Santorum’s late endorsement by FAMiLY Leader co-chairs Bob Vander Plaats and Chuck Hurley that signaled his emergence as the best bet for a Christian Right bid to stop Mitt Romney.
After Iowa, Santorum initially seemed to be going nowhere. He never had a chance in New Hampshire, and despite an effort by prominent national Christian Right leaders to unify their flocks behind him, he finished a poor third in South Carolina. But Team Mitt’s efficient destruction of Gingrich in Florida and in Nevada, based mainly on saturation ads calling into question the conservative warhorse’s ideological reliability, gave Santorum another opening, particularly when Romney, having depleted his treasury and probably thinking he had already won, made a weak effort in the three states voting on February 7–Colorado, Minnesota, and Missouri–all won by Santorum.
The second Santorum comeback set the stage for the rest of the primary calendar. There was a clear pattern: Romney regularly won a majority of delegates, while Santorum won popular votes in states with a sufficient white evangelical voting percentage. In the really crucial contests, in Ohio and Mitt’s native Michigan, Romney and his super PAC heavily outspent his rival, relentlessly pounding Santorum for heresies against conservative orthodoxy during his Senate career.
Romney’s success in exploiting Santorum’s reputation for ideological laxity was widely ignored by many media observers, fixated as they were by Rick’s more inflammatory social-issues statements, such as his criticism of John F. Kennedy’s famous separation-of-church-and-state speech in 1960. On primary night in Michigan, many wondered if Santorum’s failure to carry the state’s Catholic vote was attributable to the JFK gaffe, failing to realize that the Opus Dei candidate had been losing the Catholic vote everywhere (he did finally carry it in a blowout win in Louisiana). Far more important was Romney’s plurality over Santorum among the 61 percent of primary voters calling themselves conservatives. In Ohio, a far closer primary, Romney ran just six points behind Santorum among self-identified conservatives (66 percent of the Ohio primary electorate), and managed to convince 17 percent of voters that Rick was “not conservative enough,” a figure that rose to 23 percent in the March Wisconsin primary that finished off the challenger.
In other words, even though Santorum did consistently well among “very conservative” voters, outside his white evangelical base he never consolidated sufficient conservative support to topple Romney. The reason: He was the only 2012 candidate who was serving in Congress in the first term of George W. Bush, and thus voted for No Child Left Behind and the Medicare Prescription Drug benefit, and did not notably dissent from Bush’s comprehensive immigration reform initiative–all elements of Bush’s “compassionate conservative” agenda that were especially appealing to that era’s Christian conservatives, with whom Santorum was already closely identified. Santorum also voted regularly for earmarks, which had not yet become an ideological abomination to conservatives, and loyally followed Bush’s endorsement of his Pennsylvania Republican colleague Arlen Specter. All these highly conventional positions came back to undo Santorum in 2012, a year in which conservative activists were virtually united in believing the big spending and even “liberalism” of their one-time hero George W. Bush had caused the landslide Republican defeats of 2006 and 2008.
There were other factors, of course, that helped prevent Santorum from pulling off what would have been an astonishing nomination victory. For one thing, unlike Mitt and Newt, he never had a super PAC donor base willing to provide virtually unlimited funds. (His one big sugar-daddy, Foster Friess, pretty much disappeared from sight and curtailed his largesse after his infamous “aspirin” gaffe.) And he could not get Gingrich out of the race, which probably cost him Ohio. But anyone thinking his problem was that he was just too conservative for the GOP is wrong–it turns out that yesterday’s true conservatives have become today’s RINOs.


Lux: Dems Need Nuanced Populism in Messaging

Mike Lux’s HuffPo post, “That Old-Time Populism Debate ” provides a smart analysis of the recent Third Way study “Opportunity Trumps Fairness with Swing Independents.” Lux faults Third Way for what he considers some pretty extravagant claims in “their latest memo denouncing economic populism as a message.” As Lux frames his concerns about the survey:

When Mitt Romney is denouncing Obama for wanting to end Medicare, and Newt Gingrich and Rick Santorum are denouncing Mitt for corporate greed at Bain Capital — in a Republican primary, no less — it is hard to see how populism isn’t working as a messaging approach. And given that the entire Democratic Party including the Obama campaign — in spite of their earlier deep reluctance and the president not being a natural populist — is going for a strongly populist approach is further proof that most of the party’s pollsters and message people are in the same place…Suffice to say that there is overwhelming data to suggest that broad majorities of voters, including swing voters, don’t like Wall Street, love Social Security and Medicare (which Third Way has also argued should be cut), love taxes on the wealthy and closing corporate tax loopholes, deeply dislike big business lobbyists and special interests, are appalled by outsourcing, and all kinds of other populist topics.

Lux comes down hard on the study, citing Third Way for “a rubberman type of stretch that is breathtaking in its creativity.” He notes that seniors and working-class voters are underrepresented and the survey sample, while college grads are overrepresented. he feels further that the survey questions were slanted to elicit responses and sees a failure to test “the kind of populist economic growth message they declared so certainly would not work.”
Lux concedes that Dems need a more thoughtful message for swing voters than has too often been the case — “A pure give’em hell eat-the-rich stem-winder of a message may not appeal to them without some nuance in it.’ But, he adds:

…Winning political messages can never work for just one slice of the electorate. Third Way may well have found that segment of swing independents who were less old, less blue collar, and less populist than any other group of voters in the potential Democratic electoral coalition. But your message has to appeal to all different kinds of folks. For a Democrat to win a national election, you need a message that inspires your volunteers and small contributors and fans who will talk to their neighbors about you; a message that generates enough excitement from blacks, Latinos, young people, and unmarried women to get them out to vote; a message that appeals to all those underwater homeowners and people without jobs that voted for Obama last time but may be leaning Republican or too discouraged to vote because of their own hard times; and a message that appeals to a wide array of different kinds of swing voters. If the message can’t do all those things at once, it will not get you 51 percent. That’s what makes economic populism so incredibly valuable: it is the message, if nuanced correctly per the paragraph above, which comes the closest to doing that. Even if I lost all my doubts about the Third Way analysis in terms of the small slice of the electorate they had identified, the message still wouldn’t work strategically because it would fail with all those other voters we Democrats need to have to win.

Any strategy that ignores the broadly-held populist sentiments unearthed by the Occupy Movement is courting a disaster. As Lux concludes, “Democrats, especially Democratic incumbents, who are trying to win elections in times like these when the middle class is being squeezed so hard, need to be willing to take the populist torch and carry it proudly.”


Strategic Decision by Obama Campaign?

At Washington Monthly yesterday, I looked at the new Obama campaign web video attacking Mitt Romney’s “severely conservative” statements of late. Since we’ve all been wondering if Team Obama would choose the “too conservative” line of attack on Romney as opposed to the “unprincipled flip-flopper” angle, I wonder if this is a sign of the future, or simply an initial foray to pin Mitt to the right side of the mat before his Etch-a-Sketch machine gets warmed up?


Political Strategy Notes

This New York Times editorial explains why women voters may be the political force that sinks Scott Walker in the Wisconsin recall: “..He signed the repeal of a 2009 law allowing the victims of wage discrimination to pursue damages in state court…The principal reason for the original law was to narrow a significant gap in compensation between men and women. At the time the law was passed, women earned an average of 75 cents for every $1 men earned; by 2010, after the law was passed, the average for women had edged up to about 78 cents…Mr. Walker was acceding to the lobbying demands of business groups, including hotel and restaurant trade groups that employ large numbers of women in low-paying jobs and do not wish their wage scale to be challenged in court.”
GOP clown act summons unwelcome ghost of Joe McCarthy.
Dems need a stronger pitch for the votes of 11 million underwater or near-underwater homeowners, as SEIU activist Stephen Lerner reports at The American Prospect: “…In states like Florida, Pennsylvania, Nevada, Ohio and Michigan–where tens of thousands of homeowners are looking for leaders to make some sense of the last five years–the “homeowner at risk” could well be the “soccer mom” of 2012, a group that demands attention, and will vote accordingly…Many economists believe a second settlement is needed to bolster the housing market and the overall recovery, so in this case the right thing is a win-win for the White House.”
Apparently, the ‘fair and balanced” network has a low tolerance for candor and transparency in the workplace .
In his post, “Understanding Political Codewords,”Richard Brodsky of Demos Policy Shop exposes some conservative euphemisms, wherein “sustainability” = pension benefit cuts for public workers and “fairness” = tax cuts for the rich.
Paul Begala makes a cogent argument that Sen. Rob Portman, a former Bush budget director, will be Romney’s veep choice.
John Sides explains at FiveThirtyEight why Dems shouldn’t crow too loudly about President Obama’s 12-point “empathy gap” edge over Romney: “…Republicans win all the time without closing the empathy gap. This is because Democratic candidates are generally perceived as more empathetic — more likely to “care about people like me” — than Republican candidates, regardless of who wins. Ronald Reagan in 1984, George H. W. Bush in 1988 and George W. Bush in 2000 and 2004 were all perceived as less empathetic than their Democratic opponents.”
If the ‘War on Women” debate comes down to Ann Romney vs. Lilly Ledbetter, don’t bet against Ledbetter as a more authentic voice of working women, as is suggested by this Obama campaign video, via TPM Live Wire.
Poll Analyst Mark Blumenthal chews on a new Pew Research Center poll at HuffPo Pollster and concludes that at least this one poll indicates that registered voters are not all that dumb, as far as assessing differences between the two parties: “…Registered voters answered an average of 12 of the 17 questions correctly, compared to an average of just nine correct answers from the unregistered.” The questions seemed like pretty good indicators of basic political awareness. Even still, 70.6 percent correct answers isn’t all that great for grown-ups. Hard to avoid the conclusion that “low information voters” are still a problem.


The Latino Vote: Where it Matters Most

Much has been written about the growing power of Latino voters nation-wide. When it comes to the presidential election, however, their influence will likely be felt most in four to six states. Some interesting stats in that regard from Michael Scherer’s post “Predicting the Latino Vote in 2012” at Time Swampland:

In national elections since the early 1990s, Republicans have had a floor of about 20% among Latinos, a group that includes a large population of Cuban Americans in Florida. Democrats have always won at least 55%. So about 25% of the Latino vote is at play in the middle. (In one survey, Romney now polls at 14% among Latinos, though that poll, for the moment, is an outlier.)
So when we consider the impact of Latinos in 2012, we are looking at a swing between about a 20% vote share for Republicans and a 45% vote share. The question that follows is how much of an impact this swing will have on the final electoral college results. The polls that really matter are state-by-state surveys, not national ones.
Latinos are expected to make up about one in ten voters this year, but many of those votes, in big states like Texas, California and New York, will have no impact on the electoral college, since those states are not in play for Romney. But Latinos can have a big impact on the outcomes in Colorado, Arizona, Nevada and Florida, and a marginal impact in states like North Carolina and Ohio, all of which both parties will contest.
The polling firm Latino Decisions, which is the gold standard of Latino-American polling, recently put out a report on the impact of Latinos in these states. They found that for every eight points that Republicans lose among Latinos in states like Colorado and Nevada, the party needs to pick up another single point among non-Latino voters in order to not lose ground statewide.
For example, if Obama gets 69% of the Latino vote in Nevada (ceding to Romney just 31%), then Obama can still win the state by capturing only 47% of the non-Latino vote (ceding to Romney 53%). If Obama gets a little more than 63% of the Latino vote, then he needs to get 48% of the non-Latino vote….

Romney will be walking back a lot of his Latino-bashing primary talk in the months ahead to make even a little dent in the Democratic advantage with this key constituency. As Scherer concludes, “As the Romney campaign rejiggers for the general election, there will be a pivot, at least in tone, to appeal to Latino voters. The tough talk-advocating “self-deportation” and calling Arizona a “model” for the nation-will almost surely give way to more positive talk about the need for fair reforms to immigration law.”


Romney Tanking in Battleground States

Kos has an interesting analysis of the latest polling from Talking Points Memo’s aggregate data and finds Romney ahead in only 3 (AZ, IA and MO) of 14 ‘battleground’ states, and in one of those (IA) his lead looks awfully close to m.o.e. territory.
Even better, Kos notes, “…the aggregates would look even worse for the GOP if I omitted Rasmussen’s bogus results. Omit the GOP’s favorite pollster, and Arizona is suddenly a 2.5-point Romney lead. Missouri is a 45-45 tie.” He adds “…The end result is still a 341-197 landslide…And with Romney losing Latinos and women by landslide numbers, any effort to turn this slide and claw back some of these states will be particularly difficult–and he still has to hold on to those few states in which he currently leads.”
As for the GOP’s gas prices boogieman, Kos says “So what do Republicans have to say about all this? Gas prices! Gas prices! Gas prices!…Last time I checked, gas prices were high now. It ain’t doing Romney a lick of good.”


Creamer: How ‘Buffett Rule’ Can Spur Growth

The following article by Democratic strategist Robert Creamer, author of Stand Up Straight: How Progressives Can Win, is cross-posted from HuffPo:
It’s not rocket science.
The chief goal of our economic policy is to increase per capita economic output — measured by per capita Gross Domestic Product. That’s what allows people to live better next year than they did the year before. That’s what allows our children to live a better life than we do. That is the basis of the American Dream.
Increased per capital economic output is made possible by increases in productivity. When productivity increases, the same number of hours of work generate more goods and services.
But it should be obvious to anyone that if all of the income that results from increases in economic output flow to the top one percent of the population, then the rest of us won’t have that income to buy the increasing number of products and services that result from the increased productivity.
What happens, then, is simple: economic growth stalls. Companies won’t hire people to produce more products and services if no one has the money to buy them, so they lay people off. Taken as a whole, the economy then has even fewer people with the money to buy new goods and services.
Simply put, increasing economic inequality is a straight-forward formula for economic stagnation.
At the beginning of the Great Depression, income inequality, and inequality in the control of wealth, were very high. Then came the great compression between 1929 and 1947. Real wages for workers in manufacturing rose 67 percent while real income for the richest 1 percent of Americans fell 17 percent. This period marked the birth of the American middle class. Two major forces drove these trends — unionization of major manufacturing sectors, and the public policies of the New Deal.
Then came the postwar boom 1947 to 1973. Real wages rose 81 percent and the income of the richest 1 percent rose 38 percent. Growth was widely shared, but income inequality continued to drop.
From 1973 to 1980, everyone lost ground. Real wages fell 3 percent and income for the richest 1 percent fell 4 percent. The oil shocks, and the dramatic slowdown in economic growth in developing nations, took their toll on America and the world economy.
Then came what economist Paul Krugman calls “the New Gilded Age.” Beginning in 1980, there were big gains at the very top. The tax policies of the Reagan administration magnified income redistribution. Between 1980 and 2004, real wages in manufacturing fell 1 percent, while real income of the richest one percent rose 135 percent.
The Republican Congress has staunchly resisted President Obama’s attempts to pass tax policies that require the wealthy to pay their fair share and stem the flow of income to the very top. As a result, economic concentration has continued.
In 2010, according to a study published this month by University of California economist Emmanuel Saez, 93 percent of income growth went to the wealthiest one percent of American households. Everyone else divvied up the seven percent that was left over.
In order for companies to hire new workers, consumers have to have the money to buy their products. This is not hard. But Mitt Romney and the Republican Party don’t get it.
Yesterday the Brazilian President Dilma Rousseff visited Washington and met with President Obama. Last week, I attended a seminar in Sao Paulo on Brazilian economic and energy policy along with my wife, Congresswoman Jan Schakowsky.
The most striking thing you come away with after visiting and studying Brazil is that there is a clear political consensus that the top priority of Brazilian economic policy is to reduce economic inequality.
The Brazilians have pursued this policy, not only because it is right, but also because they understand it is critically necessary to their long-term economic growth.
Over the last 20 years, Brazil’s policy of reducing economic inequality has brought 40 million people out of poverty and into the consumer economy. The Gini coefficient of inequality fell from .63 in 1989 to .53 in 2011.
As a result, Brazilian Gross Domestic Product per capita has grown to $13,000 in 2012 from $3,000 in 2002. It has more than quadrupled over only 10 years. The political consensus in Brazil is that the reduction of poverty — decreased economic inequality, creating more consumers and educated producers — is the principal engine of long-term economic growth for the entire society.
Brazil has a long way to go. But it is now the sixth largest economy in the World.
Two examples of Brazil’s policies aimed at reducing economic inequality are particularly instructive.
Brazil just raised the minimum wage by 14 percent. And it indexed the minimum wage both to inflation, and to increase in Gross Domestic Product. In other words, if the GDP goes up 2.7 percent, so does the share of income going to the lowest earners in the society.
Brazil has a program of cash transfers to women in its poorest families. To receive these payments, mothers have to make sure that their children attend school and get medical care. That program alone has converted millions of formerly desperately poor families into consumers. By the way, it has also reduced levels of domestic violence. Men are apparently not so eager to abuse women who have their own sources of family income.
In other words, then, the Brazilians are committed to the economic principles that America once embraced — principles that lead to the creation of the American middle class.
But in the mid seventies, the corporate CEO class and the far right organized a movement to undermine the American consensus that ending income inequality was necessary for our economy. They set to work cutting taxes for millionaires, putting the brakes on spending for education and children, attacking Social Security and Medicare and — perhaps most important — attacking unions whose muscle defended middle class incomes, both at the bargaining table and the ballot box.
In the end, that has increased income inequality in America. That, coupled with the deregulation of the big Wall Street banks and their reckless speculation, led to the Great Recession.
Next week the Senate will vote on the “Buffett Rule” — a bill supported by President Obama and Democrats in the Senate that is aimed at requiring that, at the very least, millionaires should not pay a lower percentage of their income in taxes than ordinary people like their secretaries.
The Buffett Rule — named after billionaire Warren Buffett, who is its chief advocate — would be a major first step in eliminating the spectacle of multi-millionaires like Mitt Romney paying an effective tax rate of less than 15 percent, while ordinary middle class people pay substantially more.
It would effectively end the so-called “carried interest” rule where hedge fund managers like John Paulson, who made $5 billion dollars in 2010, pay marginal tax rates of only 15 percent on what they made speculating (and creating nothing of value) while ordinary working people may pay 20 percent, 25 percent or even 35 percent of income earned by producing useful goods and services.
There is simply no excuse for the Republicans in Congress fighting to maintain these kind of tax give-aways for millionaires and billionaires — especially while Republicans argue they are “forced” to cut Social Security and Medicare benefits.
But Republicans like Mitt Romney will throw themselves on the railroad tracks to prevent increased taxes on the top 1 percent. It is their chief political mission. It is why people like Paulson and the Koch brothers give huge sums of money to Republican candidates and super PACs.
They think of their investments in politicians the same way they think of investments in other financial assets. They are looking for a return — in some cases a return of billions of dollars in lower tax bills. And of course, as a guy worth $250 million, Mitt Romney himself would benefit handsomely from his policies.
Of course, the Senate vote on the Buffett rule will not be the last opportunity to turn the economic tide against increased inequality. In the fall election the choice between President Obama and Mitt Romney could not be more stark.
Over the next seven months, we must mobilize Americans to reject economic inequality — to embrace the politics and economics of inclusion — to vote for a society where we all stand together, where we have each other’s backs — and where we return the goal of reducing inequality to center stage where it belongs. And we should do it both because it is right and because it is the only way to create long-term economic growth for us all.