Falling Off the Gravy Train

If, like Doyle McManus and a whole lot of other people, you are trying to understand the utter vacuity of the Republican presidential primary, listen to Bernie Sanders.

McManus, a regular on the Los Angeles Times op-ed page, is just plain perplexed by the Republican contest. Understandably so: there is a lot of weirdness floating around out there, including, but not limited to, the enormous size of the field, the presence of loopy candidates who have absolutely no prospect of winning, and, of course, the emergence of Donald Trump as the front runner.

But those aren’t the oddities that have McManus scratching his head. No, for him,

“The strangest thing about this year's Republican campaign (other than Trump) is how it's been hijacked by social issues: immigration, abortion, even whether a Muslim can serve as president. The issues most voters list as their biggest concerns — economic growth and jobs — have taken a back seat.

“Yes, the leading candidates all promise they'll spur the economy by lowering taxes and cutting government spending — standard conservative boilerplate.

“But except for Trump, Jeb Bush and Marco Rubio, none of them have said exactly how. “

Now I don’t want to take anything away from McManus - he’s got a point - but really, there’s no mystery here. The reason Trump, Huckabee, Fiorina, et. al. aren’t talking about economic growth and jobs is that they can’t, at least with a straight face. Because if they’ve paid any attention at all, they know that Sanders has got it right: since Ronald Reagan entered the White House 35 years ago, economic growth, wherever it came from, has benefited the average American household hardly at all.

You’ve no doubt heard how the Republican prescription is supposed to work. Cut taxes (especially for the rich), reduce the size of government, and get rid of all those pesky regulations, environmental laws and consumer protections, and we will liberate the private sector and the economy will flourish. And despite the fact we seem to be handing out all the goodies to the richest people in the country, everybody will be better off because they’ll all be riding on the same gravy train. Unless, of course, they fall off.

One part of this scenario played out as expected: the economy did grow. Between the end of 1980 (just before Reagan took office) and the end of 2014, real per capita GDP grew at an average of 1.7 percent per year. Whether Republican policy was responsible for that growth is another matter. Growth was just as robust under Clinton as it was under Reagan. The worst growth record was compiled by the senior Bush. The junior Bush and Obama come out about equal.* And over the entire 34 years since Reagan was elected, growth has been almost exactly the same as it was during the 34 years before he entered the White House.

The real problem, as Sanders tells us over and over again, is what happened to the distribution of income. Since 1980, as income grew, the share of income received by the least wealthy 80 percent of all US households went down, which of course meant that the share of the wealthiest 20 percent grew. And the farther up households were in that wealthiest 20 percent - up there in the lofty regions of the top 5 or the infamous top 1 percent – the more their share grew.**

Of course, when income is rising, the fact that a household’s share of income is falling doesn’t necessarily mean it’s getting worse off - one tenth of a 14 inch pizza is more pie than one eight of a 12 incher. But for people at the bottom of the income pile, loss of share pretty much offset total income growth. In 2014 households in the bottom fifth had almost exactly the same real income as they had in 1980. Over the same 34 years, income of households in the second and third fifths had grown 10 percent or less. At the other end of the scale, households in the top 5 percent saw their real income increase by more than 70 percent.

As the New York Times reported last week, to date just 158 families have bankrolled the campaigns of the current crop of presidential candidates, with the vast majority of the money going to Republicans. Needless to say, these are the people who have won the income distribution lottery, and they are not giving any of the jackpot to Bernie Sanders. And what are Republicans benefitting from this largesse supposed to do when the inconvenient issue of income inequality comes up? Well, as McManus says, talk about something else.

*That’s comparing the average annual rate of growth over 8 years for Bush (0.8 percent) to 6 years for Obama (0.7 percent). In the two years left to Obama, that average will no doubt rise (over the past year growth was about 2 percent), and the two Bushes will end up with the worst economic records in the past four decades.

** The share of the wealthiest 20 percent grew by about 7.2 percentage points, with three fourths of that gain going to the wealthiest 5 percent.