Mitchell’s Musings 6-26-2017: It’s the Russia-thing, stupid

21 Jun 2017 2:40 PM | Daniel Mitchell (Administrator)

Mitchell’s Musings 6-26-2017: It’s the Russia-thing, stupid


Daniel J.B. Mitchell


After the Democrats failed to win a highly-contested congressional seat in Georgia on June 20, the political wisdom seems to be that their strategy for the 2018 congressional elections should aim at economic issues rather than the ongoing Russia-thing investigations.[1] The Russia thing, after all, didn’t flip the seat. And all the related and unrelated Trump/DC turmoil didn’t flip the seat.


There is an ongoing literature on the effects of economic conditions on presidential elections. But 2018 is not a presidential year. My personal sense is that what is likely to drive election results in 2018 is whether things seem to be OK in the economy. There could be some seat gains for Democrats in 2018, since there is said to be some tendency for the party in control to lose some seats in midterm elections. But that is not the same thing as a political revolution. Congressional seats remain in the same GOP-favoring gerrymander that characterized them in 2016. Still, as a strategy for Democrats, there remains the Russia-thing.


I recently attended the UCLA Anderson economic forecast. So let’s see what that forecast suggests for 2018. The two charts below basically tell the UCLA story:

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The economy, as projected by UCLA, keeps growing at something like 2% per year measured by real GDP. That’s a slower rate than the post-World War II average, and there is a debate as to whether 2% is a “new normal” or some kind of aberration. But note that if it is an aberration, the prospect would then be for faster growth, not slower. And given the assumptions that suggest 2% is a reasonable number, unemployment is projected to decline slightly and bottom out in 2019. Again, this economic story is not the stuff of political revolution. Democrats can complain about the economy, but the UCLA forecast suggests that issue will not be a plus for them.


Now you can always point to scenarios that could throw the economy into recession. But the time remaining for any such scenarios to develop before the November 2018 elections is diminishing. The forces that produce recessions take time to develop. So you could disagree with this or that assumption underlying the UCLA forecast and still come out with something like the above charts. The simple fact is that story on the charts is becoming more and more locked in for 2018. And that means the political ramifications of the story are also being locked in.


The argument for a focus by Democrats in 2018 on the economy seems to be embodied in the notion that the 2016 issues that might not have had sufficient resonance then will matter a lot a year from now:


“Democrats have to be hyper-focused on an economic message that tells people that the Republican Party is all about economic growth for millionaires and billionaires and the Democratic Party is about economic growth for everybody,” [Senator Chris] Murphy (D-Conn.) told MSNBC’s “Morning Joe” on Tuesday. “The fact that we have spent so much time talking about Russia, you know, has been a distraction from what should be the clear contrast between Democrats and the Trump agenda, which is on economics.”[2]


In this view, “economics” is not just real GDP growth and unemployment rates, but instead involves income distribution and fairness. Perhaps, if Republicans succeed in some version of repealing and replacing “Obamacare,” the economic fairness issue will have increased salience among voters. At this writing, however, it is unclear whether there will be a repeal and replace bill, or – if there is one – what it will contain.


There is the headline estimate of 20+ million people who will lose coverage in the House version of the Republican anti-Obamacare effort. But the problem is that such displacement is projected to occur over time, not immediately after repeal. Thus, if the GOP Senate leadership is smart – not a guarantee, of course – they could produce a bill that keeps the current health system going beyond the 2018 election cycle. The actual replacement could come later, yet still allow Republicans to say they did the repeal in 2017. That way, the losses of coverage occur later than November 2018 and perhaps become an issue for 2020. And note that if the Republicans fail to produce a bill, their failure will likely be due to Democrats’ efforts to block any repeal. In other words, the Democrats are committed to make every effort to prevent Republicans from doing something that could eventually hurt GOP prospects.


The fact is that the Russia-thing is the only lever the Democrats have. Maybe it isn’t a very effective lever. Maybe most people in the electorate are not political junkies who follow DC affairs closely. Maybe, to the extent that folks are aware of current White House turmoil and missteps, they tend to dismiss it as “just politics as usual,” even though the junkies and professionals know that it isn’t at all usual. But the Russia-thing is the only lever available to be pulled. After all, if you were driving a car and the regular brake failed, wouldn’t you yank as hard as you could on the available hand brake, despite its limited effectiveness? What else could you do?


In any case, you can think of the options as playing the probabilities. The odds that the Russia-thing will produce a smoking gun that could tilt the 2018 election results are greater than the economic equivalent.

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[1] "Sen. Murphy on Dem's Georgia loss: Russia has been a distraction," 6-21-2017, Politico. Available at: http://www.politico.com/story/2017/06/21/georgia-special-election-2017-democrats-lose-239798

[2] Ibid. 

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