When Bill Clinton first ran for president in 1991 and 1992, one of his key advisers, James Carville, aptly and succinctly captured the Clinton campaign's principal focus: "It's the economy, stupid!" Carville was correct: the U.S. economy had dipped into a modest recession in July 1990, and the Clinton campaign team was adept at driving home its message about incumbent president George H.W. Bush's economic management.
The Bush recession was technically over by March 1991, but the recovery was basically jobless: the American public did not perceive the turnaround until after Bill Clinton was sitting in the Oval Office. During the 1992 election campaign, two Pulitzer-Prize-winning Philadelphia Inquirer journalists, Donald Barlett and James Steele, parlayed a series of articles about the country's economic malaise into a bestselling book, America: What Went Wrong? George H.W. Bush never countered this message and was retired to Houston and Kennebunkport after appearing out of touch and uncaring.
While president Barack Obama's handling of foreign policy suggests that the 2016 election may see a sharper than usual focus on international issues, it is important to remember that most Americans vote on pocketbook issues in presidential elections. The state of the U.S. economy in the run-up to November 8, 2016, will determine the outcome of next year's presidential election, and right now, the state of our economy is uncertain.
Former Treasury Secretary Larry Summers wrote in The Washington Post on October 7, 2015, that "the global economy is in serious danger," and argued that we now face the most dangerous economic period since the 2008 Lehman Brothers bankruptcy. His views are neo-Keynesian and neo-Krugman. Monetary policy won't work, since interest rates are already at zero. More quantitative easing won't do the trick either. What's left is stimulating "aggregate demand" and, thereby, inflation, by more massive government deficit spending.
Critics of the Keynes-Krugman-Summers view, such as David Stockman, a former Blackstone partner and director of the Reagan administration's Office of Management and Budget, contend that we tried this approach starting in 2008. It exploded the national debt, deepened global trade imbalances, created a "Wall Street casino" that now underwrites the latest bubble, and didn't grow the mainstream economy.
The 2016 presidential candidates will have to address these issues, and this time, the mantra is not just the need to focus on the economy but, more specifically, on stimulating significant economic growth. Unemployment may be relatively low at 5 percent, but the August jobs growth figure of 142,000 was abysmal. September's figure of 271,000 new, nonfarm payroll jobs was far better, but future productivity and job creation remain uncertain. Moreover, the important labor force participation rate stands at the lowest number - 62.4 percent of the workforce - since October 1977. There may be wealth creation at the top, but there is deep middle-class insecurity coupled with wealth disparity that we haven't seen since the 1920s.
Henri de Castries, the chairman of French global insurance giant AXA, spoke recently at the Brookings Institution in Washington, DC. He talked about how to restore European economic leadership and noted, in the context of Europe, that in the current economic climate, "resentment is building" in ways that give rise to concerns about "political stability."
The resentment that Mr. de Castries finds in Europe is now growing in the United States. Because of the European Union's rules, members of the monetary union cannot solve their economic challenges by printing money (like the U.S.) or devaluing their currency (like the U.S.). A major -- but painful -- solution is "to adjust the cost of labor," and that outcome sparks the riots we've seen in Greece plus the rise of extremist and anti-austerity parties throughout Europe.
But here's the heart of the problem: members of the working class around the world now feel that they are being asked to bear the principal burden of economic adjustment. The world is currently experiencing deflation in various raw materials and commodities. The combination of technology, free trade, and globalization is also placing downward pressure on wages throughout developed-country economies. Commodity deflation is being accompanied by wage deflation and, of course, middle-class resentment at stagnating or declining incomes
We tell the same people that to remain employable in today's world, you need to think constantly about (re)training options, which are pricey and time-consuming. And then young people in the U.S. have difficulty finding a job to help pay down their student loans. With this global downward pressure on wages, the populists now come along and say that the answer is to stop exporting "our" jobs overseas (Donald Trump in the U.S.), to stop immigrants from taking "our" citizens' jobs (Marine Le Pen in France), and to oppose further free trade expansion (Hillary Clinton and Bernie Sanders in the U.S., and populists from the Left and Right everywhere).
Bill Clinton's 1992 economic message was directed at helping average Americans who, as he put it back then "work hard and play by the rules." Little has changed -- except for the urgent need to promote economic growth and reverse declining wages. The presidential candidate who is able to develop a clear and persuasive approach to restoring solid, sustained economic growth will be the next Oval Office occupant.
Charles Kolb served as Deputy Assistant to the President for Domestic Policy from 1990-1992 in the George H.W. Bush White House. He was president of the French-American Foundation - United States from 2012-2014 and president of the Committee for Economic Development from 1997-2012.