It Didn’t Have to Be Like This

Trump’s theft of the meager economic gains since the Great Recession may foil his bid for a second term.

Trump’s theft of the meager economic gains since the Great Recession may foil his bid for a second term. Shutterstock

 

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COMMENTARY | The desperation of American workers in the aftermath of the coronavirus was the product of a series of policy decisions and missed opportunities.

When president Donald Trump took office in 2017, he pointed to “mothers and children trapped in poverty in our inner cities; rusted-out factories scattered like tombstones across the landscape of our nation,” and vowed to end this “American carnage.” From now on, he said, “every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families.” And he made a promise: “The forgotten men and women of our country will be forgotten no longer.”

More than three years later, tens of millions of the Americans Trump promised not to forget are out of work, many of them relying on charities to feed their family. In the second week of April, more than 10,000 families lined up in their cars in San Antonio, Texas, waiting for food assistance. The city’s food bank and food pantries are under increasing strain. The number of people who need help is rising with the rise in unemployment, and many of those who are still employed are seeing their pay cut along with their hours.

“We've responded to hurricanes that have hit the Gulf Coast,” Michael Guerra, the chief development officer for the San Antonio Food Bank, told me. But they pale in comparison to the current challenge, he said, with the need stretching on for months. It’s “not even close.”

As I interviewed dozens of San Antonians at the food bank’s distribution center at the Alamodome in mid-April, a few things stood out. Very few had needed food assistance before the coronavirus outbreak. The unemployment rate in the area had rocketed to 13.7 percent that month, according to the Texas Workforce Commission, but that number didn’t account for all the people who remained employed but had had their hours reduced. Most of the people I spoke with remained employed in what would have been gainful work—among them were mechanics, customer-service workers, home-care aides, and food-service workers—but whether they had lost their jobs or just had their hours cut, they needed help now because they had never been able to save much money. Almost everyone I spoke with who was employed had been treading water since the Great Recession of 2008 and the painfully slow recovery that followed.

Before the coronavirus outbreak, Guerra estimated, the San Antonio Food Bank was feeding about 60,000 individuals a week. During the outbreak, he told me, that number went as high as 180,000, but now seems to have settled at around 120,000. “Seventy percent of the people who were gonna be in these distribution lines had never gotten food from the food bank before,” he said. “These are people who lost their work, lost their income. They didn't have the ability for financial savings along the way. They were just living pretty hand to mouth.”

San Antonio, a city of more than 1.5 million whose population is almost two-thirds Hispanic, is heavily reliant on the tourism and hospitality industries, which have been particularly hard hit by the epidemic. It is also one of the poorest and most unequal cities in America: Two-thirds of San Antonians make less than $50,000 a year. While the city’s wealthier residents cluster around its northern crest in spacious homes with glistening pools, the rest of the city struggles with a housing crisis that has made rents soar while wages have stagnated.

I made my way down the endless line of cars wrapping around the Alamodome. Most of the people I saw wore masks, either store-bought or cobbled together. They carefully leaned out of their driver-side window to answer my questions, their stories revealing a troubling consistency. Although a few had recently seen their finances improve, most had been struggling since the 2008 recession and the anemic recovery that followed. Very few of the people I spoke to saw a culprit—while some were inclined to blame the Trump administration, and others held the Chinese government responsible, the vast majority saw the pandemic as an unlikely event no one could have planned for.

“Our schedule’s been cut to basically three days a week now, so I worked on Wednesday and I’m off until next Thursday,” Michael, a mechanic at a nearby Toyota dealership, told me. (Like some others with whom I spoke, he declined to offer his last name.) His girlfriend has also seen her hours cut. “She’s maybe five hours a week at work; she does business marketing,” he said. “We’re just trying to make it by.”

Michael, like many of the people I interviewed, said that the past decade had been tough, although before the pandemic, things had started to improve. “It’s picked up a little bit,” Michael said. “I don’t think anything would get back to where it was 20 years ago, just because of economics and government and things that have just changed that we’ll never be able to go back the way things were.”

Melissa Gonzales, a bartender, told me that she, her son, and her husband, none of whom was currently working, were getting help from their neighbors. But even before COVID-19 hit, they were barely getting by: “We just have enough to pay for bills and food and all that. That’s about it.”

Some of the people in the line had received a stimulus check from the government. But even those who had benefited from the aid soon found that the money, while a huge help, had melted away fast with all the outstanding bills to pay. “It’s good, but it’s not going to cover everything, because you’re not getting your current checks every week or every two weeks,” Tanya Vela, a stay-at-home mom whose husband works for the University of Texas at San Antonio, told me.

The financial strain from the coronavirus outbreak is significant, but it’s not the only source of stress. “We have food, but it’s not enough; it’s hard to find anything right now. There’s no money coming in, our bills are stacking up, my credit cards are going crazy—it’s not nothing I want to go through ever again,” said Anette, a stay-at-home mom with two children whose husband works in construction. “It’s freaking me out, not being able to be with family, not working, having two kids—one in college ready to graduate, and not able to walk the stage—it’s just hard.”

San Antonio’s food bank has been a lifeline for the city. But Guerra is unsure, in the absence of a recovery, how long they can keep feeding people in these numbers. “We are a fairly blue-collar city. We don't have as deep and broad philanthropy as others,” he told me. “We're very much trying to be cautious and thoughtful with the funds that we have. We want to spend it all now and feed everybody.” The food bank has relieved some of the pressure by directing newly struggling families to local food pantries in their area. But Guerra told me he was concerned that the longer the economic downturn persists, the more likely donations are to dry up. Guerra told me in June that he was “hearing from big donors that they are tapped out for now.”

The coronavirus outbreak has crippled the economies of most of the wealthy countries it has afflicted. But the particular desperation of American workers in its aftermath was not inevitable. It was the predictable impact of a series of policy decisions and missed opportunities in the past few decades that benefited the wealthy at the expense of everyone else.

The food lines in San Antonio, and across the country, are an indictment of the past four decades of policy making. But it was Trump who vowed to confront a rigged system, to drain the swamp, to break the power of entrenched elites whose greed had left the American people behind. Instead, tens of millions of hardworking Americans were swiftly forgotten by the man who vowed to remember them.

The great recession cleaned people out. When the economy started growing again, it did so very slowly. The U.S. only returned to its pre-recession unemployment rate in 2017, almost 10 years after the recession began. Because a housing crisis was at the root of the collapse, many members of the middle class, whose wealth tends to be tied up in their homes, lost everything. For most Americans, the recovery was arduous, but for those fortunate few with significant holdings in the stock market, the recovery was relatively rapid.

The coronavirus pandemic “is happening on top of long-standing economic inequalities. We know that significant numbers of Americans didn't have a lot of income to fall back on before the crisis,” Heather Boushey, an economist and the president of the Washington Center for Equitable Growth, who is also an adviser to the Biden campaign, told me. “We know that coming out of the Great Recession, the financial crisis, it took far longer for regular families—middle-class families, working-class families—to recover from that than it did those at the top, who recovered quite quickly.”

Since the 1970s, incomes at the top have diverged from those at the bottom, as wage growth has stagnated. Left-leaning economists identify this divergence as a problem of political economy—as labor unions declined, workers lost power relative to their bosses, and with it, their ability to negotiate a living wage or exert influence on lawmakers. As campaigns became more expensive, lawmakers in both parties became more dependent on, and beholden to, wealthy business interests. Those same business interests were also able to vastly outspend their opponents in lobbying and campaign donations, regardless of which party held power. Although policies and tax rates change depending on which party is in charge, this fundamental imbalance of power lingers unaltered.

“The thing that we have seen continue to march on is the rise of economic concentration at the top. That continued over the past 40 years, above and beyond a particular administration,” Boushey said. “We have thought about the distribution of the gains of our economy—who gets money when we see growth—as something that we could leave entirely up to the market, and that it would create these essentially fundamentally fair outcomes.”

In their book Winner-Take-All Politics, the political scientists Jacob Hacker and Paul Pierson found that this imbalance of power translates into policies that favor the wealthy, no matter how unpopular those policies may be. “If 90 percent of poor Americans supported a policy change, it was no more likely to happen than if 10 percent did. By contrast, when more of the well-off supported a change, it was substantially more likely to happen,” Hacker and Pierson wrote. “What about the middle class? They did not fare much better than the poor when their opinions departed from those of the well-off. When well-off people strongly supported a policy change, it had almost three times the chance of becoming law as when they strongly opposed it.”

The outcomes these policies have produced, Boushey pointed out, have been anything but fair. Although Americans in the top 1 percent saw their wages more than double from 1979 to 2018, and wages for those in the top 0.1 percent more than tripled, wages for Americans in the bottom 90 percent grew less than 25 percent. When people earn less money, they have less money to save. The result is millions of Americans treading water between economic crises, which wipe out what little wealth they’ve managed to accumulate. As Boushey puts it in her book Unbound, “economic inequality reinforces differences in political and social power, and these in turn affect market outcomes.” As I wrote last November, the ability of the wealthy to block redistribution has also contributed to polarization, creating a bitter politics of artificial scarcity as the majority of Americans battle each other over scraps thrown to them from the high table.

America’s unjust economic policies have left the country more vulnerable to recessions and depressions, and left many Americans  just a week or two away from visiting a food bank, while also further concentrating power at the top. Inequality, it turns out, is not just a threat to people’s material well-being, but to democracy itself. Fixing the country requires a redistribution of income, which would in turn produce a redistribution of power.

“This has been driven by pretty intentional policy decisions, and the root of all those policy decisions has been an attempt to tilt the playing field away from typical workers and towards employers and capital owners in the labor market,” Josh Bivens, an economist at the labor-union-affiliated Economic Policy Institute, told me. “Ten years ago, if you would ask people about inequality, even people who call themselves liberal Democrats, they would have been genuinely concerned about it and genuinely thought it was a bad thing. But there's this predominant view that it was a sad accident of apolitical market forces or technological developments.”

The divergence between the political influence of the wealthy and that of everyone else helps explain the startling sight of thousands of Americans who never needed help before lining up outside food banks. “We definitely know that there's a gap where people can very much be working, but cannot make ends meet,” Guerra said of the cost of living in San Antonio. “The stagnation of wages over time, while housing, health care, other things continue to go up—it's just created more and more of a gap. And people, they have to fill in that gap.”

Many right-leaning economists deny that inequality is a serious problem at all. As the American Enterprise Institute’s Michael Strain wrote last month in The New York Times, “Capitalism isn’t broken. The game isn’t rigged. Hard work does pay off. Workers do enjoy the fruits of their labor.” Wages for the majority of American workers, these economists insist, can be raised without altering America’s concentrations of wealth.

The consensus of elite Democratic economists, who managed America’s recovery from the Great Recession, lay somewhere in between the complacency of the right and the alarm of the left. As Adam Tooze wrote in Crashed, although the Obama administration helped revive the U.S. economy, it displayed an urgency in stabilizing the financial system that faded where American homeowners were concerned.

“While the banks and lenders were bailed out, 9.3 million American families lost their homes to foreclosure, surrendered their home to a lender or were forced to resort to a distress sale,” Tooze wrote. “If maximum force was the best approach to financial stabilization, why, when it came to fiscal policy, was the approach so penny-pinching?” That disparity reflects not only the reality of implacable Republican opposition and President Barack Obama’s own ideological moderation, but the gulf in political power between the wealthy and everyone else.

The Obama administration did raise taxes on the wealthy and pass the Affordable Care Act, which, despite its problems, expanded health-care coverage for millions of households, particularly working-class and low-income ones. But its housing program largely failed to prevent a collapse in wealth for many middle-class families, and the administration’s refusal to support changes in bankruptcy law to help homeowners, as well as Republican obstruction, prevented a faster and more robust recovery. The anemic recovery that followed set the stage not only for Republican gains in Congress, but for the larger story that Trump would tell as he sought the presidency.

Four years ago, Trump offered voters a narrative that was closer to one usually embraced by the left than by conservative economists—the optical illusion of right-wing populism, which punches down while pretending to punch up. “No longer can we rely on those elites in media, and politics, who will say anything to keep a rigged system in place,” Trump announced in 2016 as he accepted the Republican nomination.

The stagnation of American wages, and the concentration of wealth and political power at the top, does look like a rigged system. Trump promised to stand with workers against “global elites” who, he said, had profited handsomely while workers’ wages stood still. They had brought in immigrant workers to take their jobs, he claimed, and were now conspiring against him, as well. Trump blamed “decades of record immigration” for “lower wages and higher unemployment.” Once in office, Trump staffed his administration with bankers as eagerly as he staffed his properties with undocumented workers.

In his 2016 convention speech, Trump vowed to “build the roads, highways, bridges, tunnels, airports, and the railways of tomorrow.” He invoked “the laid-off factory workers, and the communities crushed by our horrible and unfair trade deals. These are the forgotten men and women of our country. People who work hard but no longer have a voice.” The solution to these calamities was Trump himself: “I alone can fix it,” he declared.

But after Trump took office, his administration offered endless infrastructure weeks but little actual infrastructure. Despite his promises to replace the Affordable Care Act with “insurance for everybody,” the Republican-controlled Senate failed by a single vote to repeal the ACA and replace it with nothing. The following years saw the Trump Justice Department push federal courts to invalidate the ACA with no system to replace it. Trump’s greatest legislative accomplishment is a tax-cut bill more regressive than the one passed by his patrician Republican predecessor.

According to the nonpartisan Tax Policy Center, the top 1 percent of American households received about 43 percent of the benefits from the Bush tax cuts. Although most Americans will benefit from Trump’s Tax Cuts and Jobs Act, the top 1 percent will ultimately receive about 82.8 percent of the benefits. Trump’s populist rhetoric is a tawdry mask fitted on an economic policy that redistributes income upward even more aggressively than George W. Bush’s did. As my colleague Annie Lowrey wrote in 2011, “The Bush tax cuts were followed by low GDP growth, negative median wage growth, and little job growth.” Trumpists imagine the current administration to be a populist rebuke to Bush-style economics. But in the end, that rebuke was merely rhetorical.

“Our focus is on helping the folks who work in the mail rooms and the machine shops of America,” Trump said in a 2017 speech in Missouri. “The plumbers, the carpenters, the cops, the teachers, the truck drivers, the pipefitters, the people that like me best.” Trump helped more people in boardrooms than mail rooms—at least $1 trillion from Trump’s tax cuts went to stock buybacks as of 2018, according to a 2019 report by the Congressional Research Service, while “ordinary workers had very little growth in wage rates.” As with the Bush tax cuts, growth in wages and jobs was modest compared with the “rocket fuel for the economy” that Trump promised. “The growth effects tend to show a relatively small (if any) first-year effect on the economy,” the CRS report concluded.

“You could have imagined a populist administration saying, ’You know, we think it's worth putting one and a half trillion dollars on the deficit to do something good for working-class Americans,’” Josh Bivens said. “We definitely could have taken the fiscal resources spent on the corporate tax cut and done much better things with them to help low- and moderate-income people directly.”

The argument that if you grow the pie, everyone gets a larger piece turns out to be wrong. You can always grow the pie, and make sure the people who have more pie than they’ll ever need get more.

Trump ran against a rigged system. But once in charge, he rigged it even further, at the expense of the very people he claimed to champion. He took the fruits of a slow economic expansion in which workers’ wages were only beginning to creep upward, and harvested the spoils for himself and his corporate allies. Trump stole the boom.

As herbert hoover floundered in his efforts to ameliorate the Great Depression in June 1932, Franklin D. Roosevelt fired off a broadside in Liberty magazine, accusing the administration of “mistaking the tick of the [stock] ticker for the pulse of business” and trying to “make unworkable plans work, merely to salvage its pride.” Roosevelt warned that “no country could be half bankrupt and half sound.”

Nearly a century later, these criticisms seem eerily familiar. Two and a half million Americans filed for unemployment on May 21, raising the number of Americans out of work to nearly 40 million. The unemployment rate at the end of April was 14.7 percent, the highest it has been since 1948, the year the Bureau of Labor Statistics began compiling data in this fashion. Financial analysts expect the rate to reach as high as 20 percent by the end of June.

Among those still employed, the pain has not been evenly distributed. More than half of those making less than $50,000 have seen their hours cut, compared with 36 percent of those making $50,000 to $100,000 and 28 percent of those making more than $100,000.

Yet the mood in Washington is not urgent. Senate Majority Leader Mitch McConnell told the conservative radio host Hugh Hewitt in April that it was “time to press the pause button” on further aid. The Democratic House had passed a $3 trillion aid bill that month that contained funding for cash-strapped states, money that economists believe is necessary to prevent a deeper recession, or depression. But Republicans had balked, mocking such aid as “blue state bailouts,” while singling out items like funding for studies of the legal cannabis industry to ridicule the bill as a liberal “wish list.” A misleadingly positive jobs report this month persuaded Republican senators that there was no need to “rush to pass expensive legislation" to address the economic fallout of the pandemic.

The sloth of American lawmakers is difficult to understand in the face of deep American suffering, absent an understanding of the broken relationship between the governed and their government. Congress approved trillions in necessary aid in March, including direct financial aid to individuals and a major but temporary expansion of unemployment insurance, which has kept tens of millions of families afloat during the pandemic. But that bill was also heavily skewed to the priorities of American businesses and their shareholders, providing the Treasury Department with more than half a trillion dollars in corporate aid, whose recipients it has refused to disclose.

Although the recent job losses are so massive that they are difficult to fathom, the stock market has rallied, and with it the finances of the wealthymuch as during the anemic recovery from the Great Recession. Even the Democrats’ emergency relief proposal contained a tax cut for the educated suburbanites who have become such a crucial element of the anti-Trump coalition.

Joe Biden, the prospective Democratic nominee for president, has vowed to raise taxes only for those making more than $400,000, a vanishingly small percentage of taxpayers, and to raise corporate taxes only to 28 percent, seven points less than the 35 percent rate when he was vice president. But his pledge to tax capital gains and inheritances may help reduce inequality.

“Biden’s pledge not to raise taxes on people making less than $400,000 is a terrible idea,” Bivens told me. “But my take on his tax plan generally is pretty positive. It raises a lot of money and is quite progressive when compared to, say, the last couple of budgets proposed by the Obama administration. This all reflects, I think, a move a couple of notches to the left in the economic-policy-making center of gravity in the Democratic Party, including on taxes.”

If Democrats win back the Senate and the White House, Biden may be able to finance ambitious public programs with deficit spending that materially improves the lives of those devastated by the coronavirus. But unless he strengthens the political power of labor, he will not alter the imbalance that has helped cripple the American political system and its ability to respond to economic catastrophe. A world where both the power of labor and capital is more balanced will not necessarily be one where Democrats win more elections, but one where both parties are less beholden to the power of the very wealthy.

“By itself, I don’t think the Biden tax plan is a silver bullet for inequality—but I do think that’s okay. We don’t need to rely on taxes alone for this,” Bivens said. Much of the rise in inequality was due to “a redistribution of power within the labor market away from typical workers and towards capital owners and corporate managers, and Biden has a genuinely ambitious set of plans to help address this.” The Obama administration did too, but its labor agenda was swiftly abandoned in the face of bipartisan opposition from conservative Democrats and Republicans. The shape of the recovery in a hypothetical Biden administration may depend on whether he heeds the advice of the progressive economists in his brain trust—or that of the Obama-era centrists who managed America’s halting recovery from the last recession.

Biden recently told CNN that the coronavirus crisis was “probably the biggest challenge in modern history,” one that “may not dwarf, but eclipse what FDR faced.”

The New Deal was not just about money, but also about power. Not just about deficit spending and tax rates, but also about democracy. At the 1936 Democratic convention, accepting his nomination for a second term, Roosevelt cast the New Deal in the tradition of the American Revolution, pitting himself and the American people against “economic royalists” who sought to “hide behind the flag and the Constitution.”

“For too many of us, the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor—other people's lives,” Roosevelt said. “These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power.” Roosevelt was no Marxist. He did not believe in class war for class war’s sake. But he also did not believe in unilateral disarmament in the face of oligarchy.

Roosevelt failed to keep many promises. At Howard University in October 1936, he pledged that “among American citizens there should be no forgotten men and no forgotten races.” But the New Deal was a segregated affair, owing to the Democratic Party’s powerful southern barons and their determination to restrict prosperity to white people. Time and time again, Roosevelt yielded to their influence.

The disparities in wealth and power that Jim Crow Democrats insisted on maintaining as the price of their support for the New Deal persist today. But the Dixiecrats could not fully contain the democratizing impact of the New Deal, and despite their efforts, it inspired a revival in black political participation. In turn, black Americans’ stake in the Democratic Party resurrected the promise of multiracial democracy that had lain dormant since Reconstruction.

Trump’s theft of the meager economic gains since the Great Recession may foil his bid for a second term. But if Biden takes office and fails to heed Roosevelt’s example, then he will be leaving the majority of Americans in the same place they were at the end of the last recession: defenseless against calamity. The vast queues of struggling Americans lining up for food will not just be the nation’s present, but its future.

Reviving the economy will be difficult. Reinvigorating American democracy will be much harder.

Adam Serwer is a staff writer at The Atlantic, where he covers politics.

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