Lingering ripples from the financial collapse.

Last week, determined to defend her father-in-law against the anti-Trump tenor of the Women's March, Lara Trump berated those who participated for ignoring his achievements. "This president has done so much for women," she complained. "Women’s unemployment is at a 17-year low right now. And, yet, these women out there are so anti-Trump." 

Unemployment Rates by Gender
Source: www.macrotrends.net/2511/unemployment-rate-men-women

Both of Lara Trump's statements are true. First, that the gathering for this Women's March, as with the first one held the weekend of Trump's inauguration, was expressly anti-Trump; and, second, that women's unemployment is at historically low levels. As the first graph here illustrates, the unemployment rate among women peaked at 9% in November of 2010, more than two years after the financial crash in September of 2008, and has steadily declined since, to just 4% today.

While many Democrats immediately protested that the downward trend in the unemployment well preceded Donald Trump's arrival on the scene, it is totally natural that those within TrumpWorld should claim credit for the new lows in unemployment rates. Every politician seeks to claim credit for good news that transpires on their watch, it is the nature of the beast. This President, of course, as is his wont, is claiming credit for more than just good news on the unemployment front, he claims to have achieved nothing less than a complete transformation of the U.S. economy. One year ago, he described the U.S. economy in terms of "American carnage," where the real unemployment rate was "28, 29, as high as 35 [or] 42 percent." Today, "our economy is better than it has been in many decades." What a difference a year makes.

Unemployment Rates by Race
Source: http://www.macrotrends.net/2508/unemployment-rate-by-race

This is the new administration talking point, and it has crept into any number of unrelated discussions. Don't like Trump's stance on immigration? Well, look at what he has done for Latino unemployment. Think the White House is in chaos? Yeah, but you gotta love that the rate of Black unemployment is at historic lows. As illustrated in the second graph here, the unemployment rate for Black workers peaked at 16.8% in March of 2010, and since then the unemployment rates for both Black and Latinx workers – which continue to lag White workers – has declined steadily, to current historically low levels. In December, Black unemployment hit 6.8% and Latinx unemployment hit 4.9%, compared to 3.7% among Whites.

However effective Donald Trump's agenda of deregulation and tax cuts may prove to be in promoting business and investor confidence, one would hope that honest observers would recognize the long, downward trend in unemployment rates illustrated in these charts, and acknowledge the historical context. It was ten years ago that the U.S. and world economies were shaken by the most severe financial crisis since the Great Depression. To a certain extent, the financial collapse and the significant events that led up to it have faded into memory. However, the financial insecurities that the 2008 collapse unleashed in people's lives continue to reverberate through our politics.

In October of 2009, when the nation was reeling – politically and economically – from the impact of the collapse of the banks and housing markets, Harvard economists Carmen Reinhart and Ken Rogoff published This Time Is Different: Eight Centuries of Financial Folly. Their book provided extensive data on the economic impacts of financial crises over the centuries, including those that were characterized by bank failures and financial system illiquidity, similar to the 2008 collapse.

The book provided a foreshadowing of what lay ahead for the U.S. economy. The Reinhart/Rogoff analysis suggested that in the wake of comparable financial crises, unemployment rates continued to rise, on average, for five years; housing values declined by a third or more; and national debt nearly doubled in the first three years following the point of collapse. Perhaps most significant, in terms of the interplay between the devastating economic fallout of a systemic financial collapse and democratic politics, the data suggested that restoration of employment and economic growth to pre-crisis levels could take seven to ten years.

This Time is Different garnered significant attention at the time it was published. But while it presented a trove of data that suggested that the fallout from the 2008 financial collapse was going to be with us for a long time, little heed was paid to the suggestion that a full recovery could take up to a decade to play out. Ideally, one might have imagined that an understanding of the duration of comparable crises over the course of history might have led the political parties to pull together. But seven to ten years is an eternity in our politics, and the notion that politicians – much less their constituents – could accept a seven to ten year time horizon before normalcy might return, without massive social and political upheaval, was unimaginable.

There was, of course, no coming together to brace the public for the long and difficult ride that lay ahead. Instead, the 2008 crisis only galvanized our politics further. Democrats blamed capitalism and Wall Street and the banks; Republicans blamed Keynesian socialism and over-regulation; and each party blamed the other. Twelve months after the publication of the book came the anti-debt, Tea Party wave election of 2010, rife as it was with conspiratorial calls to disband the Federal Reserve Bank, which, ironically, probably deserved the greatest share of the credit for pulling the nation – and much of the world – through the crisis.

This Time is Different turned out to provide a fairly accurate forecast of how things would play out. As illustrated in the graphs above, unemployment rates peaked two years after the September 2008 collapse, a less prolonged rise than in other crises. On the other hand, as illustrated in the Case-Shiller housing data presented here, median home prices fell 50% from their peak in April of 2006. They did not begin to recover until six years later, and are only now reaching pre-collapse levels. National debt, finally, grew less in percentage terms than in other comparable crises. National debt grew 51% over the course of Barack Obama's first four years in office, and 78% over his eight year presidency – a rate of growth that turned out to be comparable to other recent two-term presidencies – slightly below George W. Bush (93%), higher than Clinton (37%), and lower than Reagan (184%).

But the prediction suggested by the historical data that is worth noting was the suggestion back in late 2009, when unemployment was continuing to rise and home prices were continuing to fall, that a reasonably full recovery from the 2008 global financial collapse would not take hold until some time between 2015 and 2018. And that is exactly how things transpired. While Lara Trump and others – including Donald Trump in his own tweet shown here – credit the President for the historic decline in unemployment rates, his greatest accomplishment may have been timing. In Donald Trump's election one year ago, we saw the lingering ripples of the 2008 financial crisis in the form of the anger arising out of continuing individual and family economic insecurity that animated his base. And we can see it again in the final recovery of unemployment rates and home prices to pre-collapse levels: Ten years after the collapse, and right on schedule.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at www.jayduret.com. Follow him on Twitter @jayduret or Instagram at @joefaces.

Democrat myopia.

During the Republican National Convention last summer, House Speaker Paul Ryan and Deputy Majority Whip Tom Cole spoke confidently about their ability to work with Donald Trump as President. Despite all Trump's rhetoric, they insisted that at the end of the day, they would drive the legislative agenda, and he would sign whatever they put in front of him.

And so he has. If you strip away all the turmoil and rhetoric, Donald Trump has been everything Republican leaders could have hoped for. He has delivered not only Neil Gorsuch, but a consistent slate of conservative judges. He is implementing a deregulation agenda for the ages on behalf of GOP business constituencies. And then there are the tax cuts. Anyone who scoffs at Trump's performance in his first year in office is scoring by a different set of metrics than Republican leaders in Congress.

Democrats, on the other hand, see the world differently, and are drooling at the prospect of a wave election in 2018, and sending Trump home in 2020. For many Democrats – and no small subset of moderate Republicans – the turmoil and rhetoric matter. However, counting on Donald Trump's negatives to drive independent voters and a share of Republicans to her corner did not turn out to be quite enough for Hillary Clinton, and it may not be enough in 2018 – to say nothing of 2020. When Nancy Pelosi railed against Republican tax cuts the other day, and derided the $1,000 tax cut bonuses that corporate America is throwing around to their workers, she betrayed the Achilles Heal of Democratic Party strategy looking forward.

Pelosi's comment was not unreasonable from a certain vantage point. If five million U.S. workers receive $1,000 bonuses – the announced number is in the range of two to three million so far – that represents $5 billion into the pockets of working men and women. In contrast, in the wake of the tax cuts, Bank of America economists project that $450 billion of repatriated corporate profits – roughly half of the trillion dollars, after tax, that companies are expected to bring home – will be used to buy back stock.

From the standpoint of the politics of envy – which has now morphed into the politics of rage – Pelosi has a reasonable case to make. While the President referred to the tax cut bonuses as a “a big, beautiful waterfall,” allocating a half a trillion dollars to investors vs. five billion to workers would seem to confirm that the benefits of the tax cuts are tilted somewhat to the wealthy, just as GOP donors intended. On the other hand, for families earning $35,000 or 50,000 a year, $1,000 is real money, to say nothing of the doubling of the standard deduction. More to the point, Democratic Party leaders, like Nancy Pelosi, who begrudge that reality only highlight how long it has been since they lived paycheck to paycheck.

Railing away about how the Republican tax cuts will go away in 2027, or the trillion dollars of new deficits, will be hollow argument for Democrats in 2018. A trillion dollars over ten years is a hundred billion a year, which remains barely significant in a four trillion dollar budget. To paraphrase Illinois Senator Everett Dirksen from many years ago, a hundred billion here, a hundred billion there, no one really pays attention anymore. Sure, there will be a reckoning some day. If interest rates ever return to historical norms prior to the 2008 collapse, the annual interest cost of the federal debt will rise from $200 million a year towards one trillion. But no one (except for me, of course) seems worried that it will happen in their lifetime.

But there is more to it than that. Much has been made by Trump and his advocates of the fact that unemployment rates have hit historically low levels across the economy in recent months. And it's true. The recovery from the 2008 collapse has been a long slog, but unemployment rates across demographic groups – notably Women, Blacks and Hispanics – have finally declined to pre-collapse levels. Democrats can argue that Trump's policies had little to do with finally reaching that milestone; and by and large that is true, the downward trend was part of a long, cyclical recovery and ten years of massive monetary stimulus. But the fact remains that business and investor anticipation of tax cuts and regulatory relief that Donald Trump promised did have an impact – business confidence is up, along with the stock market – and now that they have been passed into law, the tax cuts are going to add significant new fiscal stimulus to an economy that was already picking up steam. By the time election day rolls around in 2018, and certainly by 2020, it is likely that the U.S. economy will be in high gear.

As much as the turmoil and rhetoric that flows from TrumpWorld on a daily basis has become all-consuming, it is steadily becoming normalized as background noise. If that continues to be the case, a booming economy may well loom as a major obstacle to Democrat chances to realize the wave of their dreams, and a strong counter-narrative that will make the election about more than Donald Trump is an dangerous sociopath who is undermining American democracy.

Of course, Donald Trump is a sociopath who is undermining American democracy. That is not a partisan assertion, rather, it is the stance that Ted Cruz articulately put forth during the Republican primaries, and it provided the backdrop against which Paul Ryan and Tom Cole felt the need to assure other Republicans that having Trump lead their party could be managed.

Republicans, of course, have come to terms with their sociopathic leader, in large measure because Donald Trump has delivered on the Republican agenda far more effectively than Democrats want to acknowledge. The other factor that Democrats are loath to acknowledge is that even as the turmoil and rhetoric have damaged the Republican brand, Democrats have suffered as well. George Bernard Shaw summed it up well: the problem with wrestling with a pig is that you get dirty, while the pig likes it.

After a year of unrelenting political warfare, neither party is faring particularly well with the electorate. Based on Gallup tracking data, the share of the electorate that identifies with the two major political parties has continued to decline. Since Election Day 2016, the share of the electorate identifying as Republican has declined by 2%, while the share identifying as Democrat has declined 4%. Meanwhile, the share identifying as independent has jumped 10%. As of last month, only 27% of Americans identify as Democrats and 25% as Republicans, while 46% now identify as independents.

When the upcoming elections roll around, as much as Democrats are enamored of their message of Trump narcissism and Republican greed, that may not be enough to win over independent voters and anti-Trump Republicans. Democrats need to understand that they exist in a bubble – as Nancy Pelosi's comments confirmed – and if they are to build a winning coalition, they need a message that goes beyond pointing out how bad the other side is. Failing that, they may wake up after election day to find that in the midst of an economy that is steaming along, independents had become weary of the yelling and screaming, and just decided to vote their pocketbooks.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at www.jayduret.com. Follow him on Twitter @jayduret or Instagram at @joefaces.