Obama’s new normal
Last winter, I had lunch with a junior White House official who works on economic issues. The unemployment rate had just dipped to 8.3 percent, and I asked if he was encouraged by the figure, and hopeful that it might be down another point by Election Day.
He shook his head. The positive news notwithstanding, he said, there were good reasons to think that we would still be staring at 8 percent unemployment in the fall of 2012.
“Well,” I told him, with all the authority a professional pundit can muster, “then you should assume that you’re going to lose the election.”
Today, just as he predicted, the unemployment rate is 8.1 percent. The year’s second-quarter growth rate was just downgraded to an anemic 1.3 percent, real household income dipped in the month leading up to the two political conventions, and the American Enterprise Institute’s James Pethokoukis suggests that 2012 might turn out to be the worst not-technically-in-a-recession year in modern U.S. history.
But President Barack Obama would win if the election were held today, and probably by a relatively comfortable margin. My wintertime prediction, Mitt Romney’s campaign strategy, the assumptions of Republicans and Democrats alike — all have been confounded by voters’ refusal to lean the way the unemployment rate suggests they should.
Why is this? In part, it’s the hangover from the Bush years, and the fact that Americans don’t yet trust the Republican Party given how little the party seems to have learned and changed since 2008. In part, it’s Romney himself, a deeply flawed candidate whose “47 percent” remarks look like the rare disastrous sound-bite that actually turns the polls against the candidate who uttered it.
But something deeper is going on as well. Remember that the economy is growing, however slowly, and most working-age Americans do have jobs. (A Bureau of Labor Statistics reassessment just found that there are now — finally — more Americans employed than when Obama took office.) It turns out that dreadfully slow growth isn’t nearly as politically damaging as decline, because voters can adapt to stagnation, and approach it as a kind of grim “new normal” rather than a disaster requiring an immediate response.
Over the last two years, then, what still felt like an economic crisis during the 2010 midterms has become a grim-but-bearable status quo. In this new normal, Ronald Brownstein reports in the National Journal, “a slim majority of Americans now say they define getting ahead as not falling behind — not losing ground or falling into debt — rather than the more traditional definition of enjoying steady increases in pay and income.”
It’s voters like these who are giving Obama his cushion. The president trails among people who report themselves worse off than four years ago. But he leads comfortably among Americans who are merely treading water.
These signs of resignation are good news for the White House, but they’re bad news for the country’s future. Even if a rich nation like ours can learn to live with 8 percent unemployment and slow growth for now, the costs of persistent joblessness and sustained stagnation could be devastating in the long run.
As Don Peck pointed out in his 2011 book “Pinched,” an analysis of the Great Recession’s likely consequences, the socioeconomic scars left by a period of mass unemployment get deeper the longer that period persists. Young people put off life decisions, delaying education, marriage, childbearing. Older people drop out of the work force permanently. Families are strained and split apart; people lose crucial years of saving and asset building; dependency on government assistance becomes a way of life. And a culture of fearfulness takes hold, discouraging risk-taking and entrepreneurship even when better times return.
Meanwhile, every year with subpar growth makes our government’s existing liabilities larger, and the fiscal adjustments the country is facing that much more difficult to make. All of these problems will gradually intertwine, as they already do in Western Europe. Today’s stagnation means that Americans a generation hence will face bigger-than-expected deficits, even as today’s recession-dampened birthrate means there will be fewer younger workers to help pay them down.
This grim prospect doesn’t necessarily make the case for electing Romney in Obama’s place. Indeed, Romney’s dismissal of the government-dependent 47 percent suggests a fatal misunderstanding of what should be his mission — namely, to persuade precisely those Americans clinging, understandably, to government programs in tough times to choose the risks of further change over the temporary security of stasis.
But the costs of stagnation definitely make the case against the kind of resignation we’re now seeing in the electorate. Whatever happens in November, American voters should be asking for more — both for themselves, and for future generations — than an economy in which stagnation is the best that we can hope for, and the American dream just means barely getting by.
Ross Douthat is a columnist for The New York Times.