The Deepening Economic Crash and the 2016 Election

 

AP Photo/Paul Sancya

Republican presidential candidate Donald Trump speaks during a campaign stop Monday, February 15, 2016, in Greenville, South Carolina. 

A version of this article originally appeared at The Huffington Post

If this bizarre election year needed one more twist, it is now likely to play out against a deepening economic crisis. Advantage: Trump and Sanders.

The global economy is weakening, due to a perfect storm of a cratering economy in China, a crash of oil prices, slower growth in the Third World and a realization by central banks that they can't fix what's broken. There is a lot of whistling past the graveyard that the U.S. can somehow continue our (rather tepid) recovery, but in a global economy, no country is an island.

Fears of a recession push the stock market downward; then the wipeout of stock values helps bring that recession nearer. (Who said markets were rational?)

Consumers benefit for now from the cheaper gas prices at the pump. But with wage growth minimal, and real careers giving way to a succession of on-demand "gig" jobs, that's small comfort.

As the election year wears on, you can expect Republicans to blame the economic slide on the Obama administration and the Democrats. You can expect Hillary Clinton to intensify her attacks on Bernie Sanders as the candidate of tax increases and big government. And you can expect the economic anxiety that drives the Trump and Sanders campaigns only to grow.

On the GOP side, why are Republican elites so terrified of Trump? Let us count the ways.

First, he doesn't need their money. So all the billions that were set to buy the election are suddenly like the worthless marks of Weimar Germany. And if Trump doesn't need either their money or the votes of their political toadies, then the GOP elites have no leverage on him and no IOU's to call in. Uh-oh.

Second, it becomes clearer every day that Trump isn't a conservative. He's an anti-Wall Street, anti-foreign populist. And anti-foreign doesn't necessarily mean more interventionist. At the most recent Republican debate, he actually said that he would have voted to impeach George W. Bush over the invasion of Iraq. 

That comment set pundit tongues wagging: This time, Trump finally overreached. W. is popular in South Carolina, isn't he? Well, maybe among the swells, but not so much among the white working class good old boys who are Trump's constituents. It is their sons, fathers, brothers (and some daughters and wives) who got killed in W.'s pointless war in Iraq.

And all Jebby could do was pitifully blather about what a great man his dad was, and how much he admired his mother. Maybe she should have run, Trump shot back. This man is crazy like a fox.

Third, unlike GOP conservatives, Trump doesn't hate government. In a severe economic turndown, you could imagine a President Trump sponsoring, say, a massive public works program to Make American Great Again. 

And fourth, the Trump phenomenon suggests that the supposedly ultra-conservative Republican base isn't all that conservative either. Yes, the Evangelicals are religious conservatives, and the base doesn't like foreigners, and a dwindling number hate gays, but that doesn't make them economic conservatives.

Until Trump, there was an awkward alliance of convenience in the GOP between social conservatives and Wall Street conservatives (who have little in common), in which each one did the other's bidding. Trump unmasks and blows up that alliance. 

That fracture, over the long run, is even more serious than the oft-stated risk of Trump somehow destroying the Republican Party entirely. What he really does is to weaken the party as the instrument of Wall Street conservatives.

And what Trump is doing to the GOP is mirrored on the Democratic side by Sanders's impact on the Democrats. Hillary Clinton, at the most recent Democratic debate, doubled down on her attacks on Sanders as a big-government Democrat.

Sorry, but a dose of higher taxes and more social investment is just what the economy and the disaffected people who are flocking to Sanders need right now.

Take the case of tax-financed debt relief for college grads. That's not a case of building a big government bureaucracy. On the contrary: Money would flow in, via more tax dollars collected from the rich, and it would flow out for debt-free higher education. Does Hillary really want to bash Bernie over that?

Or take Medicare for All. That's less bureaucracy, not more. Medicare is an exemplar of the efficiency of government. It spends 98 cents of the premium dollar on medical care. Most private insurers are down in the 80s. If you want to see bureaucracy in action, take a good look at private medical and health insurance bureaucracies. (And you have, if you've been to the doctor or filed a claim lately.)

Hillary's biggest blunder was to try to tag Bernie as a one-issue candidate. If that issue is the economy, bring it on.

What Trump and Sanders are forcing is a debate about the declining prospects of most Americans. For all of its power, Wall Street, in the driver's seat on both parties for at least three decades, suddenly has the weaker horse in both parties. Amazing!

Of course, Hillary Clinton is still the more likely Democratic nominee. And in a head-to-head with Trump, she is probably the favorite barring some new horrendous disclosure about Clinton Foundation conflicts of interest or emails. 

Clinton, presumably, is a good enough reader of public opinion and of sources of political energy, that she would be a more progressive president that one might have expected. But Wall Street would still have a good friend in the Oval Office—too good a friend.

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