The Change That Voters Are Looking For

The Pitch: Economic Update for November 7th, 2024

Friends,

I’d like to briefly set economics aside and talk with you as an electoral politics veteran who has participated in and managed both winning and losing campaigns. I’m sure that many of you are still feeling hurt, surprised, and confused by Tuesday’s election results. I want you to understand that those feelings are valid, and you should take as much time and space as you need to process the outcome. 

You have no doubt seen plenty of armchair pundits attributing the swing in the electorate to a failure to properly address their own pet issue. Respectfully, those claims aren’t based in fact. The rightward swing of the national electorate was so large and decisive that you can’t point to any one error, choice, or issue that caused Harris to lose. It closely follows trends in post-pandemic elections in all wealthy nations around the world, in which voters have aggressively rejected the status quo in favor of a change agent. Derek Thompson tweeted that “For the first time since WWII, every governing party facing election in a developed country this year lost vote share.”

It’s clear that this is a global trend, meaning that this week’s results would not have been affected by a different VP pick, or different messaging around one policy. 

In fact, while many folks are undoubtedly looking for someone to take the blame, Vice President Kamala Harris and Governor Tim Walz ran a strong campaign under historically challenging conditions, including a drastically compressed timeline and economic and societal pressures caused by the aftermath of a once-in-a-century pandemic. If you donated, knocked on doors, made calls, or found other ways to support your candidate of choice, you should be proud of your contributions.

There’s much more to say below about the economics of the election, but if you’re still feeling raw your takeaway should be this: Politics isn’t a road race with a finish line. It’s a neverending process, with twists and turns and heartbreaks and triumphs. Political progress never moves in a straight line, but we always work with the overall hope that the future we hand to our children will be better than the one that was given to us. Sometimes we fail. But we only lose if we stop trying.

And one thing I know for sure is that politics works better for everyone when more people participate. This will be a time of reflection, examination and experimentation. We need to come up with new ways to include people in the process, new policies to improve peoples’ lives,  new ways to talk about political economy, and find new channels with which we can reach people who feel disenfranchised from the process.

 That is hard and joyful work, and we’ll need you to join us in it when you feel ready to fight again.

Inflation Was Too Painful to Overcome

Putting our economics hat back on, we’re going to devote the rest of this week’s newsletter to examining how economics fared on the ballot across the country. 

The Washington Post’s Heather Long offered strong analysis of what we can learn about the economic mood of the nation. She sums it up in two major factors, beginning with  “1) Inflation. People are angry about high prices,” Long writes. “The situation has improved a lot since 2022, but this chart (below) was top of mind for many.”

It is true that globally, America vastly outperformed other nations in terms of managing and lowering inflation. And it is true that our economy is the envy of the developed world right now.  But Americans saw prices skyrocket in the wake of supply-chain disruptions during the pandemic, and those price increases continued for another two years due to a wave of greedflation, in which corporations used inflation as a cover to raise prices even higher and jack up their profit margins. 

Just because the inflation rate has mostly been tamed doesn’t mean those prices will decline, and Americans are unhappy about how much more it costs to buy groceries, eat in restaurants and—most importantly—buy or rent housing. Jason Furman recently shared a graphic showing the average cost of a Thanksgiving dinner that illustrates the problem perfectly: While the average cost of Thanksgiving did drop significantly last year—the biggest drop since the Great Recession, in fact—prices were still tremendously elevated overall due to that inflationary bump. People don’t feel relief from that relatively tiny dip in prices. Instead, they’re still suffering vertigo from how high the giant spike was: 

So while America’s macroeconomic numbers are doing well, when you look under the hood and see how that economy interacts with individuals, as economist Isabella M. Weber explained in a conversation with Furman, “the economic troubles of people are real, the inflation worries run deep, and are much more than vibes.”

To her credit, Harris tried to address these concerns when she talked about taking on corporate price-gouging, and she did use a middle-out economic framework when discussing how her economic policies would help the middle class. As you can see in the graph below, she was able to close the huge trust gap that had emerged between President Biden and Donald Trump, which is a remarkable feat for a Democratic candidate, and she kept the economic trust gap tight in the swing states.

But in the end, a majority of voters took out their anger over prices on Harris, who they perceived as the proxy for the Biden Administration. And in their experience inflation was far lower under Trump, and that experience likely won out. It’s not a line of reasoning that tracks how the economy really works, but it is a clearly delineated path that’s easy to understand.

Change Worked for Trump, but Now It May Turn Against Him

Long’s second point about the economic influences on the election is particularly interesting. “2) Change. Americans want change, especially from neoliberalism. That's the one thread that explains how voters could go big for Obama, then Trump '16, Biden '20, and now big for Trump in 2024. There's an outcry for a dramatic shift, esp. Economic.”

Again, in reality, the Biden Administration made great strides against trickle-down neoliberalism: His was the first presidential administration in 40 years to fight giant corporate monopolies and mergers, he was the first modern president to join a picket line and fight hard for unions, he made big investments into building a green-energy economy and bringing semiconductor manufacturing back to America, and the Administration passed a number of consumer protections, wage increases, and student loan forgiveness programs that directly benefited the paychecks of the American people.

In fact, in the overwhelming global shift toward change elections that I mentioned earlier, the truth is that Harris and the Democrats outperformed every other global incumbent party, likely because the economic conditions in the US had improved so much compared to our peers.

But rebuilding an economy takes time, and the American people didn’t see the results of big investments like the Inflation Reduction Act, the CHIPS & Science Act, and the Bipartisan Infrastructure Bill in time for it to affect their view of the economy. Other programs were held up in court or overturned by conservative judges. And some of the benefits of programs were under-reported by the media or otherwise never broke through to voters. Additionally, many of the pandemic programs that began under Trump expired under the Biden Administration, which probably led to increased economic stress. So with all that in mind, it was relatively easy for Trump to characterize Biden, and then Harris, as just another status-quo neoliberal while also casting himself as the change agent that people seem to crave. 

What remains to be seen is what will happen when the Trump Administration's trickle-down policies begin to take hold. You’ll notice that the operative word I’ve been using to describe Trump voters’ motivations above is “change.” 

While we have to acknowledge that a some of Trump’s voters were driven by racism, sexism, and xenophobia, other voters simply believed they were voting for the candidate who would shake things up—and by shaking things up, they believed that Trump would do the most for them. Those voters did not sign on for the wholesale stripping of the administrative state that Trump’s allies and staffers from the Heritage Foundation have been planning, or the trillions of dollars in tax cuts for billionaires that Trump has been promising. Those voters will likely recoil from the trickle-down-on-steroids that the Trump Administration has promised in the pages of Project 2025.

Consider the fact that voters in three states that went firmly for Trump—Alaska, Missouri, and Nebraska—all passed initiatives establishing paid sick leave on the ballots this year. Alaska, Missouri, and Arizona all passed measures to raise the minimum wage, and Arizonans also rejected an initiative that would have decreased the tipped minimum wage. Five of seven Trump-voting states also passed right-to-abortion laws that enshrine women’s autonomy into state law, and Florida’s right to abortion initiative garnered a clear majority but fell just short of the 60% approval rating required to pass. 

These are popular, populist policies that broadly benefit the majority of Americans, and they do not resemble the Trump Administration’s trickle-down policy agenda at all. At some point, these two diverging ideas of change are going to butt heads.

The Future of Middle-Out 

In my home state of Washington, popular economic policies reigned. The Washington Observer newsletter notes that a slate of trickle-down initiatives funded by a local millionaire went down in flames on election night:  

Initiative 2109, which would have repealed the capital gains tax, failed 37 percent to 63 percent. Initiative 2117, which would have axed the cap-and-trade system for large carbon emitters imposed by the Climate Commitment Act, went down 38% to 62%. Initiative 2124, which would have weakened and perhaps gutted the state’s long-term care insurance system by making the payroll tax that pays for it optional for more people, is losing 44.5% to 55.5%.

A number of middle-out candidates in Washington won statewide races, and in Washington’s traditionally conservative 3rd Congressional District, the Observer notes, “First-term Democratic Rep. Marie Glusenkamp Perez was leading MAGA Republican Joe Kent, 52% to 48% in a rematch of the 2022 election.” 

Contrary to the urgings of the hypercautious neoliberal advisor class, Glusenkamp Perez won a red district by embracing important progressive issues like middle-out economics and climate sustainability. She focused her policies squarely on growing the paychecks of working Americans, and voters responded by voting her in for a second term and again rejecting a candidate who many pundits considered to be a rising star of the MAGA party. 

In fact, Washington as of this writing is one of two or three states whose voters rejected Trump even more forcefully than in the last two elections, even as voters in traditionally blue states like New York, New Jersey, and California lurched to the right. Just a few minutes ago, Civic Ventures founder Nick Hanauer explained Washington’s blue-state lean in a Twitter thread. Voters in Washington went blue because leaders have spent the last ten years consistently delivering middle-out policies like  “high minimum wage, best [overtime] policy, paid family leave, working family tax credit, expanded childcare, high road employers, top research institutions, diverse industries, focus on trades, and strong labor unions. Just to name a few.” 

Nick concludes, “Our leaders have done more to grow the economy from the middle out than just about any place in America. When you deliver for voters, voters deliver for you. Period.”

So let’s be clear: The majority of voters didn’t run toward trickle-down austerity. In fact, voters in red and blue states and districts embraced policies that raise wages, invest in working Americans, and grow the economy from the middle out. 

So when we chart our course forward, it’s important to not throw the baby out with the bathwater. During the pandemic, we saw the positive results of progressive policies like a Child Tax Credit and enhanced unemployment benefits. And In the economic recovery from the pandemic we saw the paychecks of the workers at the lowest end of the income scale grow faster than the richest few for the first time in decades. And we also saw the economic strength that comes from those bigger paychecks.

But we have to work on our messaging, our campaigning, and our policies if we want to get our message to an American public that’s clearly hungry for it. The Democratic coalition assembled by Barack Obama has crumbled, and it’s time for progressives to build a new working-class coalition devoted to growing paychecks and broadly improving outcomes for all Americans.

As a CNN exit poll found, a large number of voters are angry:

But that anger doesn’t automatically translate to support for exclusionary policies that favor the wealthy and powerful. In fact, they’re angry at leaders for not doing enough for them. Yesterday, Vermont Senator Bernie Sanders issued a statement that harshly and candidly  assesses the economic state of play that the party is facing.

 “It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them. First, it was the white working class, and now it is Latino and Black workers as well,” Sanders wrote.  Sanders also addressed worker concerns about artificial intelligence and automation in his statement, which are two policy areas which Democrats have largely ceded to Big Tech.

 “While the Democratic leadership defends the status quo, the American people are angry and want change. And they're right. Today, while the very rich are doing phenomenally well, 60% of Americans live paycheck to paycheck and we have more income and wealth inequality than ever before,” Sanders writes. “Unbelievably, real, inflation-accounted-for weekly wages for the average American worker are actually lower now than they were 50 years ago.”

Nobody has a clear strategy for exactly what progressives should be doing in the wake of the election. But it is clear that we can’t go back to trying to carve the same old constituencies out of the electorate in hopes that we’ll muddle through to 270 electoral votes. It’s time to dream big, take big swings, and reimagine what a 21st century economy should be. If we can present a clear and compelling vision of an economy that works for all working Americans, I believe that we can win.

Onward and upward,

Zach