The Democrats' Demographic Edge

By Charlie Cook, The Atlantic

12 July 15

 

Longterm trends may favor the party, but offer no guarantee of success in 2016.

art of what makes the 2016 presidential race so much fun is that two very astute observers looking at it through two different lenses can come up with two totally different predictions about which party is likely to prevail.

Looking at the race through a historical lens, the odds would seem stacked against Hillary Clinton (assuming that she is the Democratic nominee). In the post-World War II era, only six times has one party held the presidency for two consecutive terms, and only once has that party kept the White House for a third—a pattern that reflects what I call the “time for a change” voter dynamic. In fact, the last Democratic president directly elected to succeed another was James Buchanan, in 1856; he followed Franklin Pierce.

But looking through a demographic lens, the modern GOP's increasing reliance on a shrinking pool of older, white, and working-class voters—and its failure to attract nonwhite voters—would seem to present an enormous obstacle to the eventual Republican nominee. In 1980, when nonwhite voters were just 12 percent of the electorate, Ronald Reagan won 56 percent of white voters and was elected in a landslide. But in 2012, when nonwhite voters accounted for 28 percent of the electorate, Mitt Romney took 59 percent of white voters—and lost the presidential race by 4 percentage points. Without a total brand makeover, how can Republicans expect to prevail with an even more diverse electorate in 2016?

Although we don't yet know the identity of the future GOP nominee, we can begin to surmise what the electorate will look like next November. Cook Political Report House Editor David Wasserman recently crunched census and exit-poll data to build a statistical model of the likely electorate in each state, breaking down voters into five distinct groups: 1) whites with college degrees, 2) whites without college degrees, 3) African-Americans, 4) Latinos, and 5) Asians/others.

First, the good news for Democrats: If the electorate evolves in sync with the Census Bureau's estimates of the adult citizen population (admittedly, a big if), the white share of the electorate would drop from 72 percent in 2012 to 70 percent in 2016; the African American share would remain stable at 13 percent; the Latino portion would grow from 10 percent to 11 percent; and the Asian/other segment would increase from 5 percent to 6 percent. If the 2012 election had been held with that breakdown (keeping all other variables stable), President Obama would have won by 5.4 percentage points rather than by his actual 3.85-point margin.

In addition, the group with which the GOP does best—whites without college degrees—is the only one poised to shrink in 2016. President Obama won just 36 percent of these voters in 2012, while 42 percent of white voters with college degrees pulled the lever for him. But if the electorate changes in line with census estimates, the slice of college-educated whites will grow by 1 point, to 37 percent of all voters, while the portion of whites without degrees will shrink 3 points, to just 33 percent of the total. In other words, the GOP doesn't just have a growing problem with nonwhites; it has a shrinkage problem as well, as conservative white seniors are supplanted by college-educated millennials with different cultural attitudes.

All that said, none of these data points proves that Republicans are doomed in 2016; in fact, the GOP has some reason for optimism. First, hard math makes talk of Democrats “expanding the map” by capitalizing on favorable demographic trends in Arizona and Georgia sound premature at best. For example, Romney beat Obama by 7.8 percentage points in Georgia in 2012. Wasserman estimates that the white share of the electorate there could decline from 64 percent to 62 percent—but that change by itself wouldn't erase even a third of Romney's margin of victory in the state.

Furthermore, the shifts a Republican would need to win the Electoral College vote might be less dramatic than commonly thought. If you're searching for the “magic number” of Latinos that Republicans would need to capture the White House, you may not find one. Even if Romney had done 10 points better with Latinos in every state in 2012—winning 37 percent instead of 27 percent nationally—he would have won only one additional state: Florida. That's primarily because Latino voters tend to be concentrated in states such as California, New York, and Texas, which aren't Electoral College battlegrounds. However, if the Republican nominee were to do just 3 points better across all five segments of the electorate in 2016—a goal many GOP candidates easily surpassed in 2014—he or she would win seven more states, and 305 electoral votes.

That may be easier said than done. But the bottom line is that demographic trends, while helpful to Democrats, are no guarantee that the party will hold the White House beyond 2017.

Greece, US Student Loans, and the Shifting Ethos of Debt Forgiveness

By Mark Trumbull, The Christian Science Monitor

12 July 15

 

In the political battle under way between advocates of fiscal rectitude and forces of fiscal populism, there are signs that the populists are winning.

n Europe, cash-strapped Greece is at a crossroads between cutting a deal with foreign creditors or cutting out of the euro zone. In America, the burden of student loans has become a major issue for the budding 2016 presidential race – with one candidate announcing this week a plan for “immediate relief” for college-loan borrowers.

These two news headlines, although distinct from each other in many ways, point to a common theme: Across at least part of the developed world, a political battle is under way between advocates of fiscal rectitude and forces of fiscal populism.

And by some indications, the populists may be gaining ground.

“The world has moved to the point of agreeing that inequality per se is a problem that needs to be dealt with,” says Angel Ubide, an economist and senior fellow at the Peterson Institute for International Economics in Washington.

One prominent sign is that the concept of outright debt forgiveness is being discussed as a part of the hoped-for solution in Greece and for some Americans struggling with big debts left over from college. And some economists say America’s disappointingly slow recovery from the recession would have been stronger if greater emphasis had been placed on debt relief for “underwater” mortgage borrowers – many of whom still have loan balances higher than the current value of their homes.

Beyond that, in the campaign for the Democratic presidential nomination in 2016, the popularity of left-wing candidate Sen. Bernie Sanders of Vermont has surprised many (including rival candidate Hillary Clinton), as he pairs a call for high taxes on the rich and on Wall Street with the goal of free college for all.

Outside the US, Europe has edged away from an emphasis on fiscal “austerity,” or the focus on containing public-debt levels in a bid to ensure strong economic prospects for the future. And on a global level, the International Monetary Fund (IMF) also has been evolving from an austerity focus toward a more nuanced approach, encompassing concerns about inequality and the notion that fiscal stimulus packages can be in the toolkit for helping troubled nations.

All this doesn’t mean the policies of advanced nations will be swinging wildly to the left.

For one, Greece may end up capitulating to creditors, to avoid the severe shock to its banking system that would come with a repudiation of its membership in the European Union.

And Senator Sanders is unlikely to become the next US president. He and former Maryland Gov. Martin O’Malley (the one with a new student debt plan this week) may pull Mrs. Clinton toward the left during the primary campaign, but they remain long shots to beat her for the nomination.

It’s also notable that in recent elections, Britain and America affirmed support for conservative legislators.

Still, the broader story appears to be that in this post-recession era, income inequality is demanding political attention alongside questions of economic growth, and debt relief is on the agenda alongside the traditional concerns of creditors and fiscal watchdogs.

Against this backdrop, Greece has become a symbolic focal point – for now at least – of this policy battle.

“The conflict [between Greece and its creditors] is a proxy” for this larger global tussle, Mr. Ubide wrote on the Peterson Institute’s website. “The political war is over populist and nationalistic policies aimed at addressing the economic cost of the long and severe recession.”

Two changes explain why this conflict is coming to the fore, Ubide says in a phone interview. First, evidence of widening inequality within advanced nations has increased in recent years. Second, more economists have begun leaning toward the view that these high levels of inequality are harming economic growth.

Those currents of thought are paralleled by the visceral evidence voters see in their own bank accounts and family lives.

• Even with their diplomas and swelling college debts, Americans age 18 to 29 face an unemployment rate of 9.6 percent as of July, close to twice the national average. Youth unemployment is even higher in Europe, at 23 percent as of the final quarter of 2014. In Greece, fully half of all young people are unemployed.


• The people hit hardest by the Great Recession, in terms of lasting declines in family net worth, have been low-income households, according to US data tracked by the Federal Reserve. The housing bust also hit African-Americans particularly hard.


• Two-thirds of adults in 10 advanced nations, from the US and Japan to Germany and other European nations, say they expect today’s children to be worse off financially than their parents, according to global polling by the Pew Research Center released last fall.


• Some of the very countries with high levels of debt – Greece, Spain, Italy, France – also show large majorities saying that inequality is a “very big problem,” according to the Pew polling.

This suggests that any new policies aimed at reducing inequality may involve difficult political trade-offs, or the financial risk that comes with still higher debt. (Concern about inequality is also high in the US, with 46 percent saying it’s a very big problem.)

Even Republican candidates finding the issue hard to ignore, although they aren’t necessarily embracing income redistribution as an overt goal.

“Many young people are graduating with mountains of debt for degrees that will not lead to jobs,” Sen. Marco Rubio of Florida said in a speech this week. “And many who need higher education the most – such as single parents and working adults – are left with few options that fit their schedules and budgets.”

Meanwhile, backers of Senator Rubio's rival Jeb Bush have adopted the organizational name “Right to Rise,” a nod to the stalling of upward mobility that many Americans perceive as a social problem.

Republicans say the answer to this problem hinges, first and foremost, on reviving economic growth, albeit with some new attention to ensuring that the fruits of growth are widely shared. And empathy for Americans struggling with high debt loads, for them, is matched by calls to bring down the overall level of government debt.

Rubio, for example, alleged on Wednesday that Obama administration policies on student debt offer some “generous forgiveness that may be fiscally unsustainable in years ahead.” In the same breath, though, he pitched his own way of addressing student-debt burdens, a bipartisan bill to promote income-based repayment programs for debtors. And he says that unleashing more competition in higher education put a cap on the trend of skyrocketing tuition costs.

Democratic candidates are appealing to many millennials with proposals to make higher education – viewed by many Americans as the best ticket to jobs with decent wages – accessible to all comers. In announcing his proposal for free public-university tuition for those who meet enrollment standards, Sanders said the overall economy won’t be ready to prosper “if, every year, hundreds of thousands of bright young people cannot afford to go to college, and if millions more leave school deeply in debt."

Governor O’Malley sought to outmaneuver Sanders with his own proposal for “debt-free” college for all, plus generous refinancing terms for existing student loans that, next to mortgages, are the biggest source of consumer debt.

Yet on the left, too, policies aimed at helping people of low and moderate incomes are balanced by the recognition that prosperity hinges on overall economic growth.

“Nations need to ensure both that economic growth takes place and that it is broadly shared,” says a major report, co-written by former Treasury Secretary Lawrence Summers. Don’t be surprised to hear the Clinton campaign echoing that report from the Center for American Progress.

In Europe, similar themes are on display. Populist parties have gained new prominence since the recession. In Britain, conservatives have embraced a “living wage” policy – though one that falls short of what their opponents would like to see.

Germany is the bastion of fiscal discipline, donning the role of tough cop on the continent since worries about the finances of Greece and some other nations began to surface in 2009. But concern about a possible debt crisis spreading beyond Greece have eased in part as institutions like the IMF and European Central Bank have gone beyond a focus on simple austerity. Those institutions have become focused on stimulating economic growth and fighting the risk of deflation in the euro zone – not just on demanding spending cuts or tax hikes in high-debt nations.

It’s helpful to remember that this kind of wrangling over debt and inequality is nothing new.

How and whether to pay debts from the Revolutionary War was a major issue in the founding of the American republic, for instance. (The Founding Fathers ultimately chose to pay up.) And Europe has seen massive swings between socialism and free-market economics since the 1800s. Greece – not to mention Germany after World War I – has defaulted before.

This time, again, old realities hold true. Not all debts get repaid in full, but deep troubles can come to nations that completely lose face with creditors. For Greece, now is a moment of reckoning that’s being watched around the world.