The fate of an incumbent president is exquisitely sensitive to economic conditions. Incumbents tend to lose elections when the economy is weak (e.g., George H. W. Bush’s defeat in 1992) and win when it’s strong (e.g., Bill Clinton’s romp four years later).
The 2020 economy is worse than weak; it is, for many, an outright catastrophe. Look beyond the healthy housing market and the stock market, and you will see a depressed leisure-and-hospitality sector, 8 percent unemployment, and tens of thousands of small businesses on the brink of collapse.
The implication seems obvious. President Donald Trump faces an array of obstacles on his path to reelection. But he could do one thing, right away, that would, in all likelihood, immediately improve his odds with almost no downside risk: Call for Congress to open the cash spigot and buoy the lackluster economy on a wave of stimulus.
All he has to do is announce his intention to sign a second major economic relief bill—a CARES Act II, essentially—and count on Senate Majority Leader Mitch McConnell to muddle through. Such a law would almost certainly improve the financial state of countless families at a time of mass desperation, and just weeks before the election.
But, oddly, the White House has expressed practically no interest in supercharging the economic engine that could drive the president to victory. With no pressure from the top, Senate Republicans rejected the HEROES Act, the multitrillion-dollar stimulus package that Democrats passed in the House, and countered with a stingy—or “skinny”—stimulus that did not include another round of checks for taxpayers or state and local government aid.
What in the world is Trump thinking? I don’t ask the question rhetorically. I desperately want to know, as I cannot imagine why an incumbent president, without any ideological commitment to government restraint, facing imminent judgment over the struggling economy, would lose interest in stimulating it.
According to several conversations with Republicans, the answer is that the president is stuck in a Pollyannaish fantasy of his own making.
On the campaign trail and in his television ads, Trump proclaims that a great and historic economic recovery is afoot. The notion that the economy is sick enough to require a trillion-dollar booster shot is in direct tension with the claim that it’s thriving. So, the theory goes, Trump is unwilling to advocate for stimulus, because he doesn’t want to acknowledge that the economy is broken in the first place.
Trump’s approach to the enfeebled pandemic economy resembles that of a certain cartoon dog sipping coffee in a burning room. It’s the “This Is Fine” style of American politics. Surrounded by evidence of a crisis, Trump seems content to make up promises about a fictionalized economy rather than take action to fix the real thing.
Meanwhile, the people around Trump aren’t urging him to reject this faulty logic. Some of them are simply afraid of objecting to a leader with a taste for punishing his intraparty rivals. But the GOP, as a group, has also convinced itself that more stimulus is unnecessary. Republicans are more dubious about Keynesianism than Democrats, even though they stood by quietly as deficits mounted under Trump before the plague hit. The GOP largely prefers targeted social insurance over the broad-based stimulus of mailing checks to hundreds of millions of American households. They don’t believe that states and local governments need a huge bailout. They’re reluctant to top off unemployment-insurance checks with hundreds of dollars in pandemic bonuses.
The generous interpretation is that Republicans believe the economy will rebound without federal assistance; the critical one is that, just as Trump is delusional about economic realities, the GOP is delusional about economic policy. The Great Recession demonstrated clearly that without emergency support after sharp recessions, state and local governments lay off workers, whose unemployment delays the overall recovery. But the GOP, refusing to learn from the experience of past economic conflagrations, is clasping anachronistic ideas about economics with both hands. In other words: “This Is Fine.”
It would be one thing if the tendency to ignore reality were limited to Washington. But the inability to see reality through the smudge of one’s own ideology is a national affliction. As a general rule, Americans pick sides first; the thinking comes second.
Overall, Americans’ evaluation of the economy these days has very little to do with reality. An analysis by the University of Michigan’s Richard Curtin found that partisan differences in how people perceive the state of the economy has never been higher. In other words, at any given moment, Democrats and Republicans claim to be seeing almost completely opposite countries. Take, for example, a Fox News poll from last week. Two-thirds of Republicans said the economy is “excellent” or “good,” almost the exact same share who approved of Trump’s job performance. Meanwhile, just 16 percent of Democrats said the economy was “excellent” or “good,” also close to the same share who approved of Trump’s job performance.
Meanwhile, a pandemic followed by an unprecedented fast freeze of the face-to-face economy has scarcely updated Americans’—and, particularly, Republicans’—views of the world. National approval for Trump’s handling of the economy is not meaningfully different than it was in the summer of 2018 or 2017, even though the economy has gone from extremely strong to severely distressed.
In the past 100 years, economic conditions have determined voters’ political preferences. But today, especially on the right, political preferences shape most voters’ attitudes about the economy. For many, it doesn’t matter if the world is freezing, on fire, or just right. “This is fine,” and it will always be fine, just as long as your team is in power.
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