The stock market recently hit record highs, unemployment has dropped significantly in the last few years, and GDP growth has been strong lately, so do Americans react to this seeming economic "boom" by singing the song from the Lego movie, "Everything is Awesome"? Hardly, and quite the contrary.
Today, in every single poll, at least two-thirds of Americans think the country is on the wrong track or are dissatisfied with the direction we are going in. Further, most Americans still think we are in an economic downturn or recession and they are dissatisfied with their own finances. They aren't positive about today or optimistic about the economic future.
How do we explain what seems like this disparate or illogical reaction?
Democratic leaders argue that it is a communications problem or a marketing problem, and that average Americans just don't realize how awesome things are. They focus on the inability to get the message out that everything is great on the economy, either blaming poor communication skill at the White House or blame Fox News or some other conservative media outlet for blocking positive information.
Republican leaders don't want to talk about the economy because they think the data shows it is a winning issue for Democrats, so they focus on some other issue the GOP thinks they have an advantage on. Or Republicans blame the negativity of American voters on the fact President Obama has grown government too much and is a bad leader.
Neither side seems to want to go deeper to discover what is really going on, or their solution for the problem comes out of their traditional out-of-date playbooks.
Let's start with the fact that these old indicators of a booming economy no longer tell the true story of what is going on in people's lives. Big economic data or global statistics are out of sync with the economics of citizen's personal lives. Unfortunately many including the media use this data as the way to tell the story of the American economy. It just isn't so. Through the booms that have occurred numerous times in over a generation, the average American's household income has not grown. Average Americans haven't been impacted by booms in Republican administrations or in Democratic administrations. Whether you look at the Reagan, Clinton, Bush or Obama presidencies, the majority of the country has seen no real rise in their personal economic situation.
Recently the New York Times featured some data that provides an explanation for why the overall data seems to convey a broad economic expansion, but most Americans feel very little if any impact. Up through the 1970s a majority of the income gains during economic expansions went to a majority of the citizens.
Starting in the 1980s this shifted dramatically when 80 percent of the gains went to the top 10 percent, continuing this same unfortunate pattern in the 1990s, and has gotten even worse today. The data shows that in this recent expansion 95 percent of the gains have gone to the top 1 percent of the country! No wonder a majority of the country sees no relationship to positive economic data and their life.
And what is the partisan response to this troubling development? Many Democratic leaders want to grow the size of the federal government and vest Washington, D.C., with more power; Republicans think cutting taxes even more will free more money to be in the economy and this will raise all boats. Both are wrong, and these old school attitudes and responses are one of the main reasons we have arrived at this level of pessimism and inequality in our society.
What should we do?
My humble suggestion is that we need to have a well-paying jobs program tied to infrastucture improvements administered locally by cities, counties and states where people still trust government to get the job done. And this should be funded by tax policies at the federal level which put a much bigger burden on the wealthy in this country. The federal government would merely be a collector of the money, then disburse it to more trustworthy entities, and the money would be managed and spent at the local level.
Cutting taxes and growing the federal government bureaucracy have been shown not to work in the last 30 years in solving this now entrenched problem of economic expansions only helping a select few. If we really want to help the middle class, and most Americans, we need a set of policies that are new and truly address the systemic problem. It's time to let go of the partisan talking points, and get to work. If we want a majority of Americans to trust our leaders and be satisfied with the direction of the country, then let's do something that helps them.
There you have it.