On October 28, 1980, the race between President Jimmy Carter and challenger Ronald Reagan was deadlocked. Despite the hostage crisis in Iran and a poor economy, the electorate was not sold on Reagan, and his advisors thought he was more likely to lose than win. But on that night - the night of the only presidential debate - Reagan used his closing statement to frame the remaining week of the campaign. He did so in four words - "are you better off?" A dead heat turned into a blowout.
28 years later America faces economic turmoil at home and strife abroad. Like 1980, it is one of the most uncertain times in American history. And like 1980, we have a presidential race that is essentially even. On one side is John McCain, a Republican who wants to continue the same economic and foreign policies as the current Administration. On the other side is Barack Obama, a captivating newcomer on the political scene, but one who still hasn't closed the sale with the American public.
Both McCain and Obama have, at different times and contexts, stressed their admiration of Ronald Reagan. McCain calls himself a Reagan Republican. Obama wants to be a transformational president "like Ronald Reagan," he has said. So with just over a month left in the race, what would Reagan do?
At Third Way, we took a page out of the Gipper's playbook. When Ronald Reagan asked if Americans were better off, he asked them to make that determination based on their gut and to then render a verdict at the ballot box. Well, we took out our calculators because that's what we do over here. We combed through dozens of government economic websites and crunched gobs of numbers. We created a typical American, working age family - a family that is employed, has health care, owns their home, sends a kid to college, and puts aside a little bit each month into a retirement account. We looked to see if this family was better off than 8 years ago - especially compared to the previous 8 years.
We found that on 8 of 9 individual measures of economic success and security, the last 8 years failed the Reagan test for the typical American family. On income, when inflation is taken into account, our typical family earned $96 more than they did in 2000. $96! That covers two tanks of gas - if you own a Subaru. Over the course of 8 years, this family would have earned nearly $60,000 more in total if their incomes had risen at the same level as the Clinton years.
What about investments? If our family set $200 aside each month and put it into a retirement account that mirrored the S&P 500, they would have taken a bath. They would have actually done better if they shoved their savings into a freezer. On college, the same degree from the same university cost $7,000 more even counting for inflation in 2008 compared to 2000. And of course there is gas - over the last 8 years, the typical family spent $5,000 more on gas than in the previous eight.
What are the political implications of this report? Well, there are two admitted admirers of Ronald Reagan running for President. It probably makes sense for one of them, to use the presidential debates to issue the Reagan challenge - are you better off. And may the best Reagan admirer win.