It’s The Economy Stupid

As the presidential contest between Hillary Clinton and Donald Trump goes into the summer stretch, both candidates are saddled with higher unfavorability ratings than those ever seen for competitors in a presidential election.

Many analysts are saying that the election winner in the Fall could be less determined by the candidates’ personalities and more decided by an external issue — the nation’s economy.

It was in the election of 1992 that Bill Clinton declared, in a famous decree, “It’s the economy, stupid.” Now, however, Bill Clinton’s words could come back to haunt both he and Hillary as her bid for the White House may be threatened by dark storm clouds over the fiscal horizon.

Since 1992, when Bill Clinton uttered those famous words — which were originally penned by his campaign strategist James Carville — real wages for most lower- and middle-income workers in America had remained near frozen, with only marginal increases that had been vastly outpaced by inflation in the following two and a half decades.

Now, those Americans affected by the lack of real wage increases and tremendous rises in the costs of health insurance, medication, education, automobiles and food are feeling that they’re being pinched beyond what is tolerable and have seen their standard of living slip to unacceptable levels.

Many workers in minimum wage jobs are struggling just to put food on the table; as many as 20 percent have admitted that they no longer go to stores “to shop” because they’re unable to afford even the cheapest non-necessity items.

As the Wall Street Journal emphasized in an article on personal income earlier this year, “without accelerated wages, it’s difficult for [consumers] to step up spending.”

A long-feared winnowing of the middle class is taking effect, and politicians are finally realizing that the gains that have been wrested by the upper classes at the expense of lower and middle income voters are fomenting a populist revolution that increasingly looks like it will favor the Republican Party under Donald Trump rather than the Democratic Party under Bill and Hillary Clinton.

One prominent economist decrying the inequality is Robert Reich, probably best known as the Secretary of Labor in Bill Clinton’s administration.

Although Reich is regularly a critic of income disparity, he’s not a victim of it himself.  At the University of California at Berkeley, he pulls in a tidy salary in excess of $250,000 per year, in addition to his speaking fee of $40,000 per speech.

As Reich states, “Many Americans have almost no savings, so they have barely any wealth. Two-thirds live paycheck to paycheck.” (It’s worth noting that Reich declined to endorse Hillary Clinton in the current presidential race, instead supporting her rival Bernie Sanders.)

The recent international political event referred to as Brexit hasn’t done the U.S. economy any favors. Increasing uncertainty about what’s happening in Europe, a continuing meltdown of the Chinese credit bubble and depression of oil prices have created a financial outlook for the country that’s unhealthy-looking at best.

The employment numbers in the U.S. government’s May jobs report were the worst since 2010, and even though June’s numbers were slightly rosier, 90 percent of the new jobs created went to workers aged 55 and over, making it harder for younger workers to demand higher wages.

Employment analysts have said that many new positions that are being created are in the service sector, versus in manufacturing. An estimated 94.5 million Americans remained outside the workforce as of June.

The economy has been a central theme of Donald Trump’s campaign, as he’s hammered on the point that countries such as Mexico and China have taken the manufacturing jobs and industries that used to be the core of America’s strength.

From 1988 to 2008, China’s middle-class income grew 70 percent while America’s only increased a mere 4 percent. Trump has vowed in particular to bring China to task for illegal currency manipulation and unfair subsidies.

Since Bill Clinton signed the North American Free Trade Agreement (NAFTA), nearly one-third of all U.S. manufacturing jobs have migrated out of the country even as illegal immigrants have poured in, reducing wages in what’s left.

Trump has called NAFTA “the worst trade deal in history” and has argued that the U.S.’s trade negotiators allowed a then $57 billion trade deficit with China to mushroom to nearly $400 billion today. He declared the U.S.’s current policy of globalization is ruinous in the long run and that tariffs must be employed against trade cheaters.

Trump said that NAFTA and similar agreements have “left millions of our workers with nothing but poverty and heartache… Today we import nearly $800 billion more in goods than we export. This is not some natural disaster; it is a politician-made disaster.”

So clear is it now that NAFTA has had a negative effect, that Hillary Clinton has been forced to switch positions on the newest round of free trade agreements, the Transpacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), both of which are being actively pushed by President Obama.

Hillary was all in favor of both agreements, going so far as to say of the former in 2012 that it would be held up as a U.S. policy “gold standard.”

However, political heat from the middle class (and likely the tenacious campaigning of Bernie Sanders) forced her to flip-flop on the issue, at least publicly.

Many people suspect that if voted into office, Hillary’s “hardline” position against the agreements would weaken and possibly melt away entirely as she tries to persuade voters it’s in the country’s best interest to “compromise” on the agreements.

Trump has stated that enacting the TPP, for one, “would be the death blow for American manufacturing. Not only will the TPP undermine our economy, but it will undermine our independence… The people who rigged the system for their benefit will do anything — and say anything — to keep things exactly as they are.”

Trump declared that both agreements would encourage trade cheaters, allow for unfair trade practices and erode American sovereignty. He’s promised that if he’s elected, he will make sure the TPP, TTIP and any other trade agreements like them never come to fruition.

For voters, the future of the nation’s economy is just as important as the present, and the weakness of the U.S.’s current financial state would only be exacerbated by a Hillary Clinton victory in the Fall. If bad news continues to roll in between now and November, the “stupid” in Bill Clinton’s original edict may very well end up referring to himself and his arrogant wife.


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