The Fall Election Part Two: The Economy

This is the second in a series of articles on issues which will affect the November election. Today we look at the impact the economy will have on the election results.

As former President Bill Clinton said during the presidential campaign in 1992, "It's the economy, stupid." The economy is the only constant issue which can dramatically impact elections. In 1992, then President George Herbert Walker Bush had very high approval ratings (above 90 percent following Desert Storm). Clinton was able to use dissatisfaction with the economy as a tool to focus voter attention, and he upset the incumbent.

A grassroots movement occurred in the 1994 mid-term election and former Speaker of the House Newt Gingrich's "Contract with America" became the rallying point for Republicans. Republicans gained control of both houses of Congress that year. It was the first time they had control of the House in over 30 years.

In the 2008 election, it was the Democrats who had the theme. Then Senator Barack Obama ran on "change." He parlayed voter dissatisfaction with the state of the economy and a ballooning deficit into a historic victory becoming the first African-American to be elected president in the United States.

He inherited a bad economy and a huge deficit. In just over a year's time, he shepherded a stimulus package initiated by his predecessor, George W. Bush, signed into law health care reform, and is pursuing other key agenda items he feels are important to the country.

However, in spite of the administration’s efforts, the economy does not show signs of immediate recovery and voters are upset. The immediate concern is to return the unemployed to work. In testimony delivered before the Joint Economic Committee, Ben S. Bernanke, Chairman of the Federal Reserve, said restoring the two million jobs lost during this tough economic period will take time.

While the administration has touted the most recent employment figures which indicated 162,000 new jobs were created in March. Republicans say those figures are misleading because they include temporary positions filled by the Bureau of the Census and employment due to the recovery from the February snowstorms. Unemployment still hovers near 10 percent and benefit claims are steady at approximately 450,000 weekly. This is causing some financial experts to be skeptical a full recovery is near.

Concerns about the economy and the Obama “agenda” have given rise to a grassroots movement, the Tea Party, which has energized opposition to incumbents in general, but more specifically, Democrats. Nervous Congressional Democrats, however, haven't forgotten the lessons from 1992 and '94. It is the status of the economy that determines the outcome of elections; and a grassroots movement and voter anger can affect the type of "change" that House and Senate incumbents fear in the mid-term elections.

Historically, the party of a new president loses seats in the subsequent mid-term election. The Democratic Party will not buck historical trends and win big this November. The only question facing Democrats is: how big will the losses be? Most experts expect Republicans to gain eight seats in the Senate and as many as 30 to 40 seats in the House. It is unlikely, but not improbable, for Republicans to regain control of the House, Senate or both. However, you can expect a surprise or two this fall

Whether Democrats lose big, small, or maintain the status quo, the appetite for big idea initiatives will be significantly diminished in 2011. One issue which is certainly going to be front and center leading into the fall and beyond is deficit reduction. President Obama has proposed a deficit reduction commission to explore short and long term solutions to this issue. Any proposed recommendations will be non-binding. However, it will be interesting to see what is proposed, but more importantly, what recommendations the White House and Congress will seek to implement. In his congressional testimony, Bernanke urged Congress to do more to control the Federal deficit. He has said the US economy can not sustain the deficits long term. His testimony will add pressure to Congress and the president to act.

Congress has held discussions in the past to devise strategies to control the deficit but these talks grind to a halt beyond a verbal agreement that controlling entitlement spending, specifically Medicare and Social Security, is critical to deficit reduction. No politician wants to face the wrath of citizens potentially facing cuts in benefits in the name of fiscal prudence. Any politician offering such a plan faces the real possibility of losing his or her next election.

As a result, expect gridlock in a number of arenas, particularly in the appropriations process. One of the most memorable examples of gridlock occurred in 1995 when the federal government was shut down. It could happen again in 2011. Even if it doesn't, there won't be money for housing issues unless advocates grow in effectiveness.

National Decisions, Local Impact

This raises legitimate concerns for housing and community development advocates and program providers. They are the first responders to the needs of the poor. When the economy is strong or weak, these individuals struggle to secure the resources and policies to help poor families. For example, very little has been done to help poor renters who were evicted from foreclosed properties not for failure to pay rent but due to the owners’ failure pay the mortgage.

The Congressional Black Caucus has expressed its concern to the president that poor communities, specifically the black community, have not benefited from the influx of stimulus dollars to local communities hardest hit by the economic downturn.

National decisions will have local consequences. Advocates need to keep certain points in perspective:

1. The current political and economic dynamics are not working in their favor; however, the ability to effectively manage current resources can help you leverage additional resources and different policies.

2. The health care legislation is going to increase administrative costs for all employers; therefore, plan for this increase now and factor it into the current budget as much as possible so as not to be blindsided when those costs go into effect.

3. It is unrealistic to expect significant increases in funding from the Federal government so there is a need to look outside the box for resources.

4. It is important to study and understand the impact the internet is having on business development, expansion, contractors, suppliers and the workforce. Understanding its impact is important in creating future economic development and job training initiatives.

5. Monitor local demographic changes and the analyses and assessment of their impact on your community’s economy. These demographic changes will help determine the type of economic development and job training initiatives you community and citizens will need in the future.

In order to navigate these murky economic times, it is advisable for local advocates to consider these ideas in the planning process;

1. It is important for local agencies and advocates to convey their work and contributions to the community in a concise and easy to understand language and images. Keep the message simple and easy for the listener to digest the salient points. Talk in terms of how your work is providing jobs to your community, increasing the local tax base, reducing dependency, serving kids, etc. Most people don’t care about the challenges you face or the details of your programs. They want to know their tax dollars are not being wasted.

2. Determine when it is best to play defense and when it is best to play offense when seeking Federal resources and regulatory changes. Don’t be afraid to use the current anti-Washington sentiment to advocate for greater local control.

3. Local agencies, such as public housing authorities, should explore hiring a rating agency like Standard and Poors, Fitch or Moody’s to assess your operations. These assessments can be expensive but they offer credibility and confirmation of your work.

4. Reevaluate your staff needs when an opening appears. Seek to hire individuals who do not require a lot of supervision, have great communication skills and are confident to express a fresh set of ideas.

5. Work with your professional associations to create career fairs in colleges and universities to encourage students to pursue a career with public agencies.

6. Pursue activities which can benefit both the agency and residents. For example, starting a business incubator or establishing a credit union might create opportunities to provide education, training, resources and opportunities in a non-traditional way that can be “sold” to a diverse group of policy makers and funders.

Economic downturns are platforms for innovation and growth. It is during these challenging times which offer great opportunities for local communities to challenge existing assumptions, pursue new ideas, tweak current initiatives and embrace the future. With some thought, an open mind and a willingness to make adjustments, advocates can become stronger, more efficient and more successful in meeting the needs of local communities.


Interesting Read


Housing and Community Development

Dorothy I. Height, founding matriarch of U.S. civil rights movement, dies at 98
By Bart Barnes
Special to The Washington Post

Inspector general says changes to Making Home Affordable may impede help
By Dina ElBoghdady
The Washington Post

Maryland changes how prisoners are counted in census
By Carol Morello
The Washington Post

Big businesses winning contracts meant for small ones, groups charge
By V. Dion Haynes
The Washington Post

Treasury seeks public comments on reform plans for housing-finance system
By Zachary A. Goldfarb
The Washington Post

Federal aid is forestalling only a fraction of foreclosures, report says
By Renae Merle
The Washington Post

Big Banks Draw Big Profits From Microloans to Poor
By Neil MacFarquhar
The New York Times


Politics

1994 Republican Rout Is Casting Shadow in 2010
By Adam Nagourney and Marjorie Connelly
The New York Times

Both national party committees spend big chunks on fancy meals, hotels, travel
By R. Jeffrey Smith
The Washington Post

North Carolina Democrats' votes against health care push labor to form party
By Philip Rucker
The Washington Post

A census sign that the Tea Party is less than it seems
By Dana Milbank
The Washington Post

Big cities, rural areas both trail on census returns
By Carol Morello
The Washington Post

Behind the Curtain, Cuomo Runs His Own P.R. Machine
By Jeremy W. Peters
The New York Times

G.O.P. Confidence Tested by Fears of Searing Divisions
By Jeff Zeleny
The New York Times