Let’s imagine that the captain of an airplane becomes suddenly ill in the middle of a transoceanic flight and that his co-pilot has to take over the control of the aircraft.
The weather is nice; the sky is clear; there is no turbulence to disturb the handover so the transition takes place without problems.
At the end of the trip, the passengers are asked to give their opinion about the flight and the skills of the cabin crew and, since everything went well, the feedback on the ability of the copilot is positive.
Now let’s assume that the same thing happens on a different flight at the moment when the plane is in the middle of a storm and the captain, before becoming ill, has lost control of the aircraft.
The passengers are in a panic but, fortunately, once she takes over, the co-pilot manages with exceptional effort, to stabilize the plane, bring it back on the right course and land it without problems at the airport of destination. Everything worked out in the end but, chances are, the passengers’ comments on their experience are not going to be as rosy.
However, if we were asked to give our objective opinion on the aviation skills of the two co-pilots in the examples, even without being aeronautical experts we would be inclined to give the second one more credit given the extremely difficult conditions she had to recover from.
I have given these examples to highlight an interesting trend on one of issues that will decide the November elections: the electorate’s view of the economy which, together with immigration and abortion, seems to be among the most relevant ones.
A quick glance at the situation of US finances from the 1980s until today shows some intriguing details: in 1979, the last year of the Carter administration, the United States budget deficit was equal to 1.55% of the Gross Domestic Product.
During the following twelve years of the Republican administrations of Ronald Reagan and George H. Walker Bush, several rounds of tax cuts, a massive policy of deregulation and large increases in military spending caused the imbalance between deficit and GDP to grow to 4.45%.
The two subsequent Democratic mandates of Bill Clinton, brought the government finances back in the black: in 2000, his last year in the White House, Clinton’s surplus was -2.3% of the deficit/GDP ratio.
A surplus quickly wiped out by his Republican successor, George W. Bush, thanks to the usual tax breaks for the rich, the spike in military spending due to the war in Iraq (started on false premises) and the catastrophic economic crisis of 2007-09 caused largely by the liberalization of financial markets (although, with Bill Clinton’s complicity).
Having been elected right at the peak of this financial crisis, Barack Obama’s tenure as president began in very difficult circumstances. As a matter of fact, we could say that Obama found himself in the same situation as the co-pilot who takes control of a plane in free fall (with a deficit/GDP ratio of 9.7% in 2009) but managing to gradually restore stability (2.4% in 2015 despite the obstructionism of the Republican opposition having slowed down the recovery).
In 2016, the year of Donald Trump’s election, the American economy was coming from a stretch of 5-6 years of constant growth and therefore Trump’s takeover is comparable to that of the co-pilot of the first plane that replaces the captain while the weather is nice and sunny and that seems to be what his supporters remember the most.
In 2020, the situation changed drastically following the Covid pandemic and the severe recession that it triggered in America and the world. Once again, the new Democratic president, Joe Biden, found himself in the “cockpit of a nose-diving plane” (deficit / GDP ratio at 14.7%!…) managing, nevertheless, to “regain altitude” by halving the deficit (6.2% in 2023) and leading the United States to the best economic recovery of the post-pandemic period among all other industrialized countries.
The economic performances of all presidential administrations are shaped by intentional policies that are part of their agenda and by unforeseen events that are completely unpredictable and force politicians to adapt to new situations that often emerge suddenly and destructively.
The pandemic was one of these completely unpredictable event that had an extremely negative impact on the global economy and for which Donald Trump cannot be blamed.
But before the pandemic emergency exploded in all its severity, Trump had already created a gigantic hole in the federal budget (7.8 trillion of dollars added to the debt) thanks to those tax cuts that remain the central linchpin of every Republican economic policy and that, in every progressive tax system, favor the richest segments of the population.
Before him, George W. Bush had done the same thing first by cutting taxes, creating a huge budget hole and then having to face two unforeseen emergencies: the attacks of September 11 (with related wars in Afghanistan and Iraq) and the mega-crisis of the real estate markets of 2007-09 that forced the hand of the country’s financial management and wreaking havoc on the federal coffers.
All the Democratic administrations of the last thirty-five years found themselves in the situation of having to remedy the financial disasters inherited from their Republican predecessors and, during these periods, Democratic presidents have always managed to improve the public ledgers compared to when they took office.
Despite this regular alternating of Republican disasters and Democratic remediations that has been going on for decades, the American political stereotype is that, on economic issues, the electorate traditionally places greater trust in the GOP. Why??!…
If we were to ask independent voters, the answer would almost certainly be that the two parties are equally guilty of worsening the fiscal landscape: Republicans because they starve public finances by cutting taxes and Democrats with their reckless increase in public spending.
Even admitting this double culpability, what are the tangible and concrete effects of these policies on people’s quality of life?
While it is true that both parties have indulged in profligate spending for many years, there is a difference in how the money is used. Public spending, favored by Democrats, is more akin to what a private sector company, would consider an investment: that is, spending now to collect more in the future. Investing public money in order to provide health care (as Obama did), building infrastructure (as Biden did), ensuring free or almost free access to public universities by providing higher education to those who otherwise could not afford it (as Bernie Sanders proposed) are initiatives that, in the long run, increase the opportunities for growth in human capital, the economy and communities at large.
In a progressive tax system instead, cutting taxes, as Republicans like to do to accommodate the interests of the rich, is like giving a nice bonus to the shareholders of a company. A bonus that further enriches the already wealthy minority while doing little or nothing for everyone else.
