Struggle of Every Day People

Simon Rosenberg On Fox News Talking About President Obama's Address To Nation's Governors

Simon Rosenberg along with Brad Blakeman; former Deputy Assistant to President George W. Bush, discussed President Obama's remarks about Wisconsin's labor union debate at the National Governors Association's 2011 Winter Meeting.

Rob Shapiro on Fox News re Unemployment Benefits

NDN's own Rob Shapiro was on Fox News this morning to talk about Senate Republicans' refusal to extend unemployment benefits to millions of Americans. Now that Robert Byrd's successor has been appointed (I won't say "replaced" since no one can replace this), let's hope the stalemate comes to an end soon.

The Relationship Between Perception of Economy and Political Instability Abroad

Laura is the summer Globalization Initiative Intern at NDN and a Summer Academy Fellow with the Roosevelt Institute. She is a Political Economy and Mathematical Economics double major at Tulane University in New Orleans, Louisiana.

NDN has long argued that the state of the economy is the most important driver of instability in the American electorate. Unsurprisingly, the same tends to be the case globally. The Pew Global Attitudes Project released a survey June 17th that included information on public perception of the economy in different countries (see graph).

Pew Graph
Interestingly, no countries in the survey where 50% or less of the population felt that the economy was in trouble were experiencing significant political instability. Conversely, only 5 out of 17 countries surveyed where 55% or more of the population felt that the economy was in trouble were experiencing relative political stability. The other twelve countries exhibited signs of political instability, such as governing party changes and declining approval ratings for elected officials. Below are some comparisons between the economy and the political climate in each country:

Japan: In Japan 88% of the public feels that the economy is doing poorly. This has been reflected strongly in Japanese politics: Prime Minister Yukio Hatoyama stepped down June 2nd in part due to his inability to fulfill economic improvement promises made during his campaign. The Finance Minister from his cabinet, Naoto Kan, was voted to replace Hatoyama 291 to 129.

Spain: Eighty eight percent of the Spanish public thinks that the economy is doing poorly. This has been strongly reflected in Spanish politics as well - Prime Minister Jose Luis Rodriguez’s proposals to bring down the deficit have only been seen as desperate acts to remain in office. The Prime minister, whose economic policies have been called inconsistent at best, might have to call early elections due to looming budgetary disagreements. 

France: Eighty seven percent of the French people feel that the economy is doing poorly. This has strongly affected French politics – due to the deficit fears, the French government proposed a series of austerity measures, including raising the retirement age by two years and increasing income taxes on the rich. Nicholas Sarkozy, whose ratings in opinion polls have been tumbling, has spread these reforms out over the course of several years to ease the pain, but still show that he is taking measures to reduce France’s budget deficit.

Lebanon: The economic situation in Lebanon has had less of an impact on politics, perhaps due to the strong growth prospects. The IMF predicts that Lebanon’s GDP growth could top 8% in 2010 thanks to improved domestic stability and prudent policies. Yet, serious structural problems remain, including a debt-to-GDP ratio higher than that of Greece, gaps in infrastructure (particularly electricity), and weak domestic production, which contribute to the weak opinion on the economy.

 South Korea: The economy has had a relatively weak effect on South Korean politics. South Korea recovered relatively quickly from the global economic recession and before President Lee shifted the focus of mid term elections to the sinking of the Cheonan, his public approval rating hovered around 50%.

Pakistan: Pakistan is plagued with several economic problems, including severe energy deficits, water shortages, and rampant corruption across most of the government. These problems have resulted in a very unstable political environment. In 2008, The Eurasia Group’s Global Political Risk Index found Pakistan to be the most unstable emerging market in the world, with a score of only 41, citing events like the assassination attempt on Prime Minister Yousuf Raza Gilani. 

Egypt: The improving economic outlook in Egypt is keeping the political environment relatively stable. Although surging inflation and food shortages last year led to vast public unrest, President Mubarak was able to maintain control. Now Egypt is experiencing significant growth, though markets are somewhat rattled by the lack of a clear successor to Mubarak.

The poor economic situation in Britain did in part lead to a change in party control. Britain recently underwent a change in Prime Ministers. Gordon Brown, who presided over one of the worst periods in recent economic history, was ousted for David Cameron, who pledged fiscal austerity while reviving the economy.

Mexico: Politics in Mexico were strongly affected by the economic downturn. Mexico’s economy took a hit in 2009 due to its ties to the U.S. economy, the decline in tourism due to violence and the threat of H1N1, and declining crude oil prices. President Calderon’s PAN political party took a hit in the midterm elections, losing control of Congress.

Argentina: The economy played a big role in political change in Argentina. President Fernandez lost control of Congress in the mid term elections in part due to a slowing economy. However, the recovery that Argentina is now experiencing is boosting President Fernandez’s ratings.

Jordan: The economic downturn has played a significant role in Jordan’s politics. King Abdullah II dissolved parliament in late November 2009, a move seen as an attempt to clear the way for new elections and speed up economic reforms.

Despite recent economic troubles, the political climate in Russia is stable. The Kremlin’s $200 billion stimulus package and the recovery in oil prices led to an improved economic situation, and the country has seen increased political stability.

Although there is a positive growth outlook for Nigeria, corruption and undisciplined fiscal policy prove problematic for the country and could threaten political stability. Elections are set for 2011, and the incumbent government is increasing spending and holding the interest rate at 6%, producing possible inflation problems.

Though Turkey was somewhat affected by the global recession in 2009, its economic prospects are largely positive moving forward. According to Goldman Sachs, Turkey has the 17th top economy in the world and political stability is on the rise.

Political stability is a huge problem in Kenya, though political stability threatens the economy more than the other way around. The perceived instability largely results from deep divisions in government, which have kept the Cabinet from meeting for a long time.

The current economic climate is having a significant impact on German politics. Two recent polls found that a majority of Germans believe the government won’t serve out its four-year term. Current events in Europe have created an overriding emphasis on fiscal austerity, which Chancellor Merkel has taken to heart with her own $97 billion austerity package, but this threatens to alienate some in her governing coalition.

Indonesia, the largest economy in Southeast Asia, is enjoying a period of relative economic and political stability. On June 21, 2010, Moody’s raised the outlook on Indonesia’s local and foreign debt to positive from stable, underlining the country’s ability to sustain strong economic growth and praising the stability and effectiveness of its fiscal and monetary policies.

Poland: Following a steep depreciation due to the global recession, the zloty stabilized in early 2009 and has recovered since, contributing to Poland's role as an anchor of stability in the region despite the dismal economic climate. Poland’s economic and political stability remain strong despite the plane crash killing a large swath of Poland’s top government officials.

Indian GDP has increased 7.9% over the last four quarters, and there is high political stability. The Reserve Bank of India has increased interest rates in an attempt to tighten monetary policy, though there is fear that this may squeeze credit.

Since curbing inflation and instituting market reforms in the 1990s, Brazil has shown an impressive rate of economic growth in the range of five per cent. Also, unlike most other BRICs, Brazil is a democracy, allowing it to enjoy political stability and economic growth.

China is experiencing massive economic growth, and despite recent labor protests, China’s government remains very stable.

Immigration Reform Still in the Pipeline?

While some lawmakers formerly suggested that CIR would make it to the agenda in 2010, skepticism among the media increases.  In the meantime, supporters continue to advocate the need for reform by quietly organizing today in a prayer vigil to urge lawmakers to not only seek Comprehensive Immigration Reform, but to also seek "compassionate" immigration reform.


An ecumenical prayer vigil for immigration reform will be held at 6 p.m. today at Las Americas Faith Community/Trinity United Methodist Church, 1548 Eighth St.

The vigil follows a National Day of Prayer coordinated by Interfaith Immigration. Similar prayer vigils are to take place nationwide.

The vigil will have prayers, songs and presentations, and those who attend will write postcards to legislators and call them during the service.

- Des Moines Register

Lost Decade Narrative Picks Up Steam, NYT Worries About Another

In December, NDN made the decision that the most appropriate term to describe the last decade was as a lost decade for everyday Americans. I blogged on this topic on December 3 and published a white paper on December 17 entitled, A Lost Decade for Everyday Americans.

Since that time, the lost decade narrative has been discussed in a variety of other sources. On Saturday, Neil Irwin in the Washington Post covered the lack of job growth over the last decade:

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism -- there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

Paul Krugman called the decade a “Big Zero,” and yesterday, the New York Times editorialized on the need for the next decade to avoid looking like Japan’s Lost Decade and worried that not enough is being done to avert such a scenario. 

Thankfully, 2009 ended better than it began. Economists talk about green shoots of recovery taking hold. Consumer confidence has improved. Equity markets have soared. But for all the progress, the American economy remains extremely vulnerable.

To understand those economic risks, it is worth considering Japan’s experience in the 1990s. A bursting housing bubble there sparked a banking crisis that was followed by a decade of economic stagnation.

The Japanese government lacked the resolve to do what was necessary. It failed to fix its banks and stopped its early fiscal stimulus before recovery had taken hold, leaving the economy all too vulnerable to outside shocks, including the Asian currency crisis and the dot-com collapse in 2001. Japan’s annual growth rate — which had averaged 4 percent since 1973 — slowed to less than 1 percent, on average, from 1992 to 2003.

While obvious, it bears repeating that American economic policy must, first, account for fact that the last decade was already lost for everyday Americans, and, second, do everything to avoid another one. The economic, social, and political consequences of back-to-back lost decades would be catastrophic, and such a scenario is a legitimate possibility. 

New NDN White Paper: A Lost Decade for Everyday Americans

NDN President Simon Rosenberg just sent out this note alerting people to the release of a new paper from NDN:

In recent weeks, policymakers in Washington have begun to take a new look at the American economy and the increasing struggle of everyday people in this new era of globalization. 

To help inform this conversation, NDN will be releasing a series of targeted "white papers" over the next few months designed to highlight particularly significant aspects of this important debate.  

We proudly release the first in this series, A Lost Decade for Everyday Americans.  This new paper, written by Jake Berliner, Deputy Policy Director of NDN’s Globalization Initiative, makes the point that over the last ten years the typical American family has seen their incomes decline; and, that for many, economic hardship had come long before the recent recession began. 

Read the paper here on the NDN website.

Best regards,
Simon Rosenberg
President, NDN

From the introduction:

To ensure the success of the economic strategy the government adopts next year, it is imperative that the plan accounts for and explains the underlying economic weakness that affected everyday Americans in the years prior to the Great Recession. As this paper illustrates, this past decade in America has been a lost decade for ordinary Americans.

Marked by stagnating wages, declining median household income, rising living costs, abnormally slow job creation, and then capped by the destruction of many trillions of dollars in personal wealth held in housing and stocks, the decade has left most everyday Americans worse off than they were ten years ago. Too little of our national dialogue has focused on the intense struggle of everyday people prior to the Recession, yet understanding that struggle is critical to formulating an adequate response to this great economic challenge.

Read on.

Where is Employment Headed?

Friday’s unemployment report of fewer jobs lost than expected surely beats the alternative, but that does not mean that the employment situation will improve significantly anytime soon. What it hopefully means is that things won’t get dramatically worse, although that certainly can’t be ruled out.

Calculated Risk, perhaps the most prolific chart maker and data analyst of all economics blogs, presents an analysis on the potential speed of the employment recovery. These estimates are based on Okun’s Law (an established relationship between GDP growth and job creation):

unemployment and GDP

In the 2010 budget, OMB projects real GDP growth of 3.5 percent from the fourth quarter of this year to next, meaning that, if Okun’s law were still operable, we’d be somewhere in the mid to high 9 percent unemployment range at the end of next year. (The Federal Reserve sees similar numbers.)

Having said that, many leading economists, including NDN’s Rob Shapiro and the Director of the National Economic Council Larry Summers, have argued that Okun’s law has broken down, making the relationship between GDP growth and employment weaker, which means these projections may be - sadly - optimistic. 

Health Care’s Raw Deal for Middle-Class Families

Health care reform advocates often point out that the costs of reform should be weighed against the costs of doing nothing.  Unfortunately, that’s very hard to do, since our health care and tax arrangements mask those costs so well.  I suspect that if middle-class Americans had a better grasp of what health care really costs them, and how those costs are shaping their economic futures, the public response might well recall the tax revolt of the 1970s.

These are my thoughts, at least, reading a new piece from Eugene Steuerle, a tax economist at the Urban Institute with a knack for collecting data that can help us see the world in fresh ways.  From the data Steuerle presents, we can calculate that within just five or six years, the average middle-class family will have to devote nearly one-third of its income to health care costs.  That’s right: one-third.  According to the CBO, the average family will earn $54,000 a year in 2016, when a moderate-priced family policy will cost $14,700.  Employers will pay much of that insurance bill for most middle-class families; but that’s just a mask, since those employer payments come out of people’s wages, not a company’s profits.   In real effect, a middle class family’s earnings in 2016 will come to $68,700 ($54,000 + $14,700), of which $14,700 or 21.4 percent will go for health insurance.  And that won’t be their only health-related costs.  Their co-payments and other uninsured expenses, on average, will come to another $5,100.  They’ll also be paying taxes to help cover other people’s health care – 2.9 percent of their cash wages for Medicare ($1,566), plus perhaps $750 more in federal and state income taxes for Medicaid and for Medicare costs not covered by the 2.9 percent payroll tax.  Add up all of that, and it comes to $22,116, or 32.2 percent of the middle-class family’s adjusted income of $68,700.

While Steuerle is concerned – rightly so – about provisions in health care reform that will treat people with the same incomes differently, depending on the rules the legislation applies to employers, I’m more incensed about the current, raw deal for middle-class Americans.  Why should an average family expect to pay one-third of its income in 2016 on a health care system which, in that same year, should claim only 16 percent of our GDP?   The biggest part of this puzzle lies in the fact that most of the costs are roughly the same for most people, regardless of their income.  The worker earning $68,700, a manager who makes $100,000, and the company’s CEO who earns $1 million all will pay the same $14,700 for their families’ health coverage. Their out-of-pocket expenses do rise with income but not by very much; and while the manager and CEO pay more Medicare taxes than our average worker, they all pay at the same 2.9 percent rate.  There also are other factors which reduce the burden on other groups – and so tacitly increase it for those middle-class families.  For example, people on Medicare and Medicaid bear much lower insurance costs, although they also pay relatively more for their out-of-pocket expenses; and families without children pay relatively less for both insurance and out-of-pocket expenses.

Whatever the causes, the data show clearly that health care costs have become a core economic issue for middle-class Americans.  Unless we can contain them, and over time even reduce them, realistic prospects of upward mobility for most middle-class families will simply slip away.   Health care, in short, has to be an essential part of a new economic strategy.

The last political upheaval over the economic prospects of the middle class began with Proposition 13 in California and went on to fuel a conservative realignment that held sway for a quarter century.   The next one may well have begun already with these unsustainable health care costs.  President Obama, whose talent for reading the American mood equals Ronald Reagan’s, has tried to respond quickly with several reasonable ideas for cost containment.  His proposals went nowhere when healthcare providers and insurers countered by, in effect, threatening to withhold people’s care.  The next time, this issue will be recast in terms that everyone understands – people’s real incomes – and the results could be very different.

Conservative Economics Not Making a Comeback

Simon and Rob have weighed in quite a bit this morning on what the elections mean for the country and the Obama agenda. As they both stress, the biggest thing this election means is that focusing on an economic plan for the country must be the top priority. What's important to note is that this is nothing new. NDN has been arguing since 2006 that the volatility in the electorate was due to economic conditions. Exit polls from that year bear the argument out, even though most pundits at the time thought Iraq was the key issue. Here's NDN's analysis of 2006 exit polls:

-  The economy was the most important issue.  The exit poll asked voters if they considered various issue important in deciding their vote.  If you add up those  who responded - where issues were extremely, very, or somewhat important - the economy comes out number one.

Table 1: Which issue was most important?


Extremely Important

Very Important

Somewhat Important






















Moral Values 





-  Economy Crucial in Battleground States.  The economy played a critical role in the key battleground states that decided the election.  In these areas the results could not be clearer: the economy was the number one issue.  The exit poll asked voters in key swing states about Iraq and the Economy.  In each swing state more voters thought the economy was either "extremely important" or "very important" in their decision over who to vote for their senator.

Table 2: Economy vs Iraq in Key Senate Races



















All this in much better economic times, so it comes as no surprise that exit polls from yesterday show that the economy was the dominant issue. Barack Obama continues poll much better on economic issues than do Republicans (according to a recent Pew poll, 57 percent of Americans are optimistic Obama's policies will improve the economy) and, as Simon pointed out, Republican solutions such as tax caps were voted down in two states last night. So there's little to make me believe that conservative economics is making a comeback and little to make me believe that the cheap populism of Glenn Beck (and his mentee Hoffman in NY-23) works either.

What is clear to me is that the most catastrophic thing for nervous Democrats could do before 2010 is believe that either are paths to success. The fact is that Democrats have a phenomenal historic record on the economy, and Republicans delivered eight years of wage stagnation, median income decline, and exploding health care and energy costs. Focusing on policies that address this issues, which are at the heart of the struggle of everyday Americans, is the key to victory when the polls really matter. 

Crafting Economic Policy and Rhetoric Responsive to the Struggle of Everyday Americans

This week, EPI released some polling getting at the very core of the political problem around the economy - Americans feel as though the government has been responsive to the needs of banks and Wall Street, not them. Tom Edsall covers the poll in the Huffington Post and includes this slide from the poll results:

EPI poll

The article goes on to argue that the American people have gotten it about right - quoting James Galbraith who says:

"In relative terms, the perceptions are dead-on: the big winners so far are the bailed-out bankers. Meanwhile on the jobs and housing front, things get worse," says University of Texas economist James Galbraith. "You can make an argument that everyone has been helped by the fact that the economy hasn't collapsed even more completely," Galbraith added, but that does not "cut any ice with the population at the moment. What they see is that a top-down bailout works on the top and doesn't go very far down. And they are right."

This sense, true or not, is a massive political challenge that must be addressed over the next year. We've written a lot about the need to adjust rhetoric to be responsive to the struggles of everyday people. This, by the way, doesn't mean some sort of populism, it means having a big conversation about a 21st century economic strategy for America that focuses on broad-based prosperity.

The American people have a better understanding for the global economy than most in Washington give them credit for - as evidence, take a look at this NDN poll released in November of 2007, just before the recession began. Not only did Americans know that the economy was in very bad shape, they understood the shape of the global economy and America's advantages therein.

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