John Kasich
I really don’t have much good to say about Ohio’s former Governor, John Kasich. He wanted to “bust unions”, and tried to break the public employees organizations with his failed “Issue 5”. He brought his experience making a fortune working for the now bankrupt Lehman Brothers investment firm to government, encouraging state retirement services to hire private investors rather than using more transparent public investments. As it turned out, state-sponsored studies show that the teacher retirement system lost $60 Billion in potential gains, and paid many millions of dollars to private firms for the loss. As a retired teacher, that’s a big deal to me.
Kasich was, is, and always will be a business Republican in the “old school” model. In all fairness, he did do at least two things right. When the Obama Administration offered Medicaid expansion, Kasich immediately signed Ohio up, adding 1.2 million citizens to the insurance plan who weren’t covered before. And, when Trump ran for President in 2020, Kasich did his duty as an American. He supported Joe Biden.
Kasich is out of politics right now (he’s seventy-two), but he does serve as a commentator for MSNBC. When I see him broadcasting from the halls of Otterbein College, just up the road in Westerville, I still remember marching on the Ohio Capitol against Issue 5. But he occasionally brings up a valid point, and this week was no different.
Economics
The Governor commented on the momentum of the Democratic Convention. He’s skeptical that the high spirits and imaging from Chicago will make a dent in the incredibly narrow polling difference between Harris and Trump. Kasich kept coming back to one point: voters vote their “pocketbook” ahead of all other issues. Democratic Campaign operative James Carville makes the same point in his usual, blunt, Louisiana bayou way: “It’s the economy, stupid”.
I disagree to some extent. Abortion, the future of American Democracy, foreign policy, and justice and equal rights for all Americans will make a difference too. But, for the moment, let’s assume that Kasich and Carville, opposite sides of the coin, are right. So what is the state of the American economy today – and how will it impact the election?
Investments
When Donald Trump was President, he continually measured his success against the stock markets. (Measuring is a big thing to Trump, from crowd size to hand size to…never mind). So on Trump’s scale, where is the American economy today? Last week the Dow Jones Industrial Average ended within 200 points of a record high, over 41,0000 (at Trump’s best, the Dow was close to 31,000). Other indexes, Standard and Poor’s and NASDAQ, are also in record territory.
That impacts more than just high-priced investment guys like Kasich. Most major retirement programs in the United States (even Ohio teachers, though not enough) are based on market investments, as are personal Individual Retirement Accounts (IRA’s). So when investments are up, so are folks retirement “nest eggs”, always a good thing.
Covid Depression
When Trump says that our economy is “the worst ever” in American history – what is he talking about? It’s all about the inflationary period we just went through, when prices went up 20% over the last four years. It happened since Trump left office and Biden came in. But more importantly, it all happened after Covid.
When Joe Biden became President, he had to deal with the economic impacts of the Covid pandemic. Trump already did some of the right things. He pumped money into the economy to keep the US from a Covid economic depression. (Remember those checks with the huge – size again – Trump signature on them?). While many of us have a memory “gap” from the Covid year, prices dropped (especially gas) because people couldn’t do a lot. We were stuck in our homes, trying to dodge the virus.
Products that jumped in price were construction supplies, some food (like meats), and, of course, toilet paper. That was caused by problems getting the supply to retail market, and in part, because we had nothing better to do than build on our homes (while we were stuck there). Buying deck boards and outdoor furniture in 2020 was difficult and expensive.
So Trump, and then Biden, pumped money into the economy to keep people spending . And that money kept America going. Other countries suffered deep economic problems. But even though US unemployment rate briefly shot to over 13% and there were lots of product shortages, most Americans managed to stay afloat.
Inflation and Wages
The United States avoided an actual depression, but the “payback” for adding so much money into the supply was inflation. It’s simple supply and demand economics: if there’s more money in the economy, the money will be valued less. That means it takes more money to purchase something – inflation.
Once the American economy got going after Covid, Biden’s biggest goal was to increase employment and wages, and get control of inflation. Price increases were as high as 9% for a while, and Biden and the Federal Reserve Board worked to tighten credit, so that the “supply” of money was smaller and inflation was controlled. Biden called it the “soft landing” of the US Economy.
Wages increased too (same supply and demand principle). From April of 2021 to January 2023 inflation was ahead of wages, but since then, wage growth has been way ahead of the inflation rate. Today, inflation is under control (less than 3%), jobs are plentiful (unemployment rate 4.3%) and wages are going up (annual wages up 4.72%). The Federal Reserve will reduce their interest rates next month, signaling that the inflation crisis is over.
Today
The inflation “bump” was, and still is, a shock. The Trump campaign is making “hay” on the four year gas price trend, from $1.50 during the depths of Covid, to $3.30 today. But in 2020 and part of 2021, we couldn’t go anywhere because of Covid, so the supply of gas was high and the demand was low. Dig deep in that Covid memory hole; gas didn’t do much good, restaurants and hotels weren’t open. And gas was close to $2.70 in the summer before Covid, not so far from what it costs today.
Where’s the economy today? There’s still that consumer “sticker shock”. But investments are up, prices are stabilized, unemployment is low and wages are increasing. Biden earned his “soft landing”, and prevented a Covid depression in the process.
So in real economic terms, Biden fixed most of the problems (Thank You, Joe Biden!!!). Voters will recognize the alternative the US avoided; an actual Covid Depression. Now it’s up to the Harris Campaign to explain that to America, and take advantage and credit for Biden’s great work.
