Political Economy: Topics Where Facts Matter
We look at some of the hard factual data that probably won’t get addressed in tonight’s Presidential debate.
We look at a few economic facts and some question ideas with the debate season starting and some high-stakes economic issues to consider.
We hope some facts might even be discussed in the debate since they matter to any intelligent, conceptual analysis of trends (not a typical debate virtue in US politics).
The idea of quizzing more candidates on both sides (who knows when or if the Dems will have debates) on basic economic knowledge around “what is going on” would certainly be useful as we dare to dream.
Below we list a few easy questions that will not be asked since they require factual answers.
The reality in politics is that facts “can” matter, but they seldom “do” matter in debates. A small minority of the audience will read the post-debate “fact checks” except for the diehard few who already made up their minds.
Most hardcore political candidate fans are like the fan collections in the NFL end zones (The Vikings look edges out the Cleveland Browns for our favorite image). We also find the look in the end zone get-up as reflective of the political mindset in the US these days. Most visceral partisans are about as rational as the end zone fans after tailgating (for hours), so the comparison is not without relevance. That said, we should at least give a nod to the Green Bay Cheesehead fans below with tonight’s debate being held in Wisconsin.
Now for the serious part…
The political climate has gotten worse than ever in a political world that just passed 1968 on the left in the race to be the ugliest since the Civil War. Some reckless “leaders” are trying to make 2024 look more like the election of 1860. In recent times, election results are rejected and jury systems ignored as a part of a legitimate legal process. That is not good for 2024.
If you step back and look at it, a Presidential candidate who is 0 for 2 in popular votes professes to be the people’s choice. On the other side, a President who was nominated for not being Bernie Sanders and elected for not being Donald Trump raises more than a few questions. Good times.
If the candidates and moderators ever get off the topics that deliver ratings (conspiracies, indictments, China, Putin, etc.), the discussion could get back onto what is really going on in the US economy (GDP, employment, US fiscal erosion, investment in the future and how to pay for it, etc.). The global stage should include trade questions that are there for the asking since everyone will be making a lot of sweeping statements on the topic while ignoring the cost to price and supply chain health.
There are plenty of questions that can be thrown at the Democrats later (even if just post-nominations). Some questions for Biden will be head-spinners on some target topics such as the border. Biden has the clear factual edge in economic performance based on the objective metrics – which is why the Trump period economic metrics will be dodged in the GOP debate.
Debt and the US Balance Sheet
We included the above chart in a recent commentary (see US Debt % GDP: Raiders of the Lost Treasury 5-29-23), and it tells a story about what a bipartisan cluster of circles the budget and balance sheet has been since a very successful end to the Clinton years. Across two terms, Clinton worked through a tough but productive working relationship with a GOP-heavy House after the 1994 “Republican Revolution.” The new world in Washington today shredded that playbook.
As noted in the chart, the record high debt % GDP came under Trump (without an infrastructure bill but with a record tax cut). That said, there is a clear post-2000 trend of rising systemic debt that leaves no bragging rights for anyone—unless you misrepresent the facts (aka lie).
GDP Growth Across the Presidential Administrations
The GDP growth trends open up a lot of topics across the line items, and there is no hiding from the basic fact that it gets reported every quarter (see GDP 2Q23: The Magic 2% Handle 7-27-23).
The theory is that highly leveraged sovereigns will see slow growth (see “This Time it is Different: Eight Centuries of Financial Folly”). The US has posted slow annual growth since 2000, which seems to fit the theory. That slow growth includes GW Bush, Obama, Trump, and now Biden (making an allowance for the outsized 2021 post-COVID bounce).
For the GOP, if you want to blame Biden for inflation, then you have to give him credit for soaring jobs and the big GDP bounce in 2021. You can’t have it both ways. Soaring jobs feeds spiking demand. If any GOP candidate wants a “do-over” with higher unemployment they should weigh in and say so.
A demand spike with supplier chains broken brings supply-demand imbalances and price increases. Logistical breakdowns bring higher costs to move product, which feeds the price hike chain.
Washington has too many trial lawyers with severe economic learning disabilities. They are about advocacy first and everything else fourth.
The above chart tells a simple story on annual GDP growth since Nixon/Ford. The factual questions are obvious in political context since GDP growth is as basic as it gets. Line them up by height and ask the question “Who had the greatest economies on this timeline?” It was most certainly not after the year 2000.
The above chart looks at a tighter timeline, so we can get down into the quarterly numbers. We post the quarterly rates across Obama’s two terms, Trump’s single term and the quarters to date for Biden. Trump’s case on “greatest economy” does not win this comparison either. Comparing any of these terms to the Clinton and Reagan years would be the point where the referee stops the fight.
If we average up the quarters (see 1Q23 GDP: Facts Matter 6-29-23), Trump’s one term beats Obama I but Obama II beats Trump. Biden’s quarterly average beats them both.
Obama I had a systemic crisis rolling into 2009. Trump had a pandemic in 2020. Those are legitimate explanations for the results. On the other hand, you don’t get to make up new results. Otherwise, there would be thousands of Super Bowl and World Series winners (that’s a lot of rings) and Newmont Mining would get tapped out making Gold Medals.
The Employment Picture Across Presidential Administrations
Many of us tend to focus more on jobs than GDP and Debt % GDP. The above chart frames the jobs added under each President (see Employment Across the Presidents 8-15-23).
Those of us who grew up in fading industrial towns remember jobs as the main event for the families in our towns and cities. This is still another one of those factual topics that is purely objective. We can look at Trump for 3 years ex-2020 or Obama ex-2009. Either way, the percentage adds and gross job adds are on the scoreboard.
This is one metric where Trump is closer to the bottom than the middle and nowhere near the top. Biden is winning the race so far in total job adds even if he goes sideways in 2024. He needs a steep recession and massive job losses to lose the crown for total additions. Believe it or not, Carter wins on the best % increase. Biden should keep that in mind on how far rising jobs will take you!
SUMMARY ON Q&A
There are some very basic factual considerations in what the GOP Fox Q&A will avoid, and we know the softball questions will not look to lock in some very simple, basic facts. It is about the show and not the facts. We pick a few obvious categories below.
The GOP could face some quite straightforward objective factual questions that would be easier to ask if so many had not been egregiously misrepresented by Trump. Too many total falsehoods in his frequent bouts of bragging make life more challenging for the Fox-led debate. Like election results, that makes some topics off target for Q&A unless journalists can find the gumption to frame some objective facts in their questions. My favorites go like this:
Trade
Do you favor the Trump and Biden tariffs? (A specific policy question for the candidates.)
Who pays the tariffs, the buyer in the US or the exporting supplier? (Factual question. Answer: buyer pays.)
Did Trump collect billions and billions from China? (Factual question. The answer is “No”.)
Are tariffs inflationary? Do they make the price go up? (There is more nuance in that answer.)
GDP growth
Did Trump post the best GDP growth ever? (Fact. No. Not even close.)
Did Trump’s numbers beat Reagan? (Fact. No. Not even close.)
Did Trump’s numbers beat Clinton? (Fact. No. Not even close.)
Did Trump ever post total annual GDP growth in any year above 3%? (Fact. No).
Has Biden’s average GDP growth beat the first 3 years of Trump excluding the COVID year of 2020? (Fact. Yes.)
Note: Biden did not beat Reagan or Clinton either in these numbers, but so far is soundly beating Trump’s years.
Employment
Did Trump’s first 3 years of average employment increases beat Obama’s second term? (Fact. No.)
Did Trump’s first 3 years before COVID average higher job increases than the average for Biden’s term to date? (Fact. No.)
The Weak US Balance Sheet
Did Trump drive the US Debt % GDP higher in his one term relative to Obama? (Fact. Trump’s rose to a record high.)
Has Debt % GDP declined under Biden vs. Trump? (Fact. Declined under Biden. So far. Hold that thought.)
The deficits and funding demands is one where people can and will play politics even though these numbers have soared since 2000 under both parties. It is a bipartisan mess. It will not look good in debate for Biden either.
The problem for Biden is he has to have some grasp of the numbers without a teleprompter. Trump has the “debating virtue” of just making it all up or lying and answering whatever he wants. That is risk-free in politics today. Biden tends to stumble and leave out the straight answer before saying things like “I am being serious” and “I am not being facetious” and “I mean it” and “This is not hyperbole.” (Those phrases should be in a drinking game.)
“Best 4 years”
A very expressive and ever-eloquent Marjorie Taylor Greene (read sarcasm) was on the screen this week preaching her view on why Trump could skip the debates. She proclaimed on one segment I saw, “As far as I know, Trump had the best four years of any President!” In her case, we could have stopped at “As far as I know” but that view on those 4 years (never mind the million who died in 2020-2021) has been repeated so many times you just have to wonder if economic facts will matter at all in politics.
We don’t know how economic topics will be addressed by the parties in debates in such a toxic environment.
On a semi-serious and completely unscientific note, the mere concept of a debate between Biden and RFK Jr. and Cornel West could probably cost the Democrats 5 points of popular vote, the Midwest, and a swing of the election to the GOP – that is, if Trump was not the GOP candidate.