The US economy has been expanding since June 2009, in the longest period of unbroken, if slow, economic growth in US history. But when the Trump bubble inevitably bursts, will Democrats get caught holding the bag? And what will that mean for US politics? Economic expansions in capitalist countries cannot last forever. And the front-loaded tax cuts sustaining this one, passed by the Republican Congress in 2017, will start to expire right after the 2020 election.
Much of the growth has been in the financial sector. Since 2008, dependence on loans from the Federal Reserve and regulations imposed during the Obama years have limited the ability of banks and other financial firms to engage in dangerous speculation. Now, thanks to the array of Federal subsidies they’ve received since the Great Recession began, banks are flush with cash. As the Trump Administration relaxes regulations and makes enforcement of those that remain a joke, financiers are rushing to revive old methods of speculation and inventing new ways to leverage our money for their own gain.
We don’t know when another recession or financial crisis will hit, nor how severe it will be. But we can be certain one will come during the 2021-25 presidential term. If Trump is reelected, he and the Republicans will fairly be assigned the blame, especially since they will have neither the vision nor the desire to take serious steps to alleviate the resulting suffering. A prolonged slump would widen the space for radical critiques and mass mobilization. It could be a return to the politics of 1929-32 when millions of people joined unions and went on strike and mass demonstrations by farmers, veterans and the unemployed pressured Congress and state legislatures to enact social programs.
If a Democrat wins in 2020, we can be sure that Republicans will try to blame the new president for a crisis the GOP created. The next crisis will set off a race to force through reforms and revive the economy before public anger can be misdirected at the new Democratic incumbent. The outcome will be determined by whether a Democratic president can spur mass action aimed at capitalists rather than at the US government. Americans will mobilize only if they are offered a clear alternative to business as usual.
That is why Democratic voters need to start thinking now about which candidate, Biden or Sanders, and which platform, would be best suited to meet the double challenge of responding to the inevitable economic emergency and developing progressive solutions to our nation’s problems.
Biden would almost certainly respond to the next crisis the same way Obama did to the last one. He would bail out the banks to prevent what he believes would be a financial collapse. He would worry about ‘business confidence,’’ which he would be certain would be undermined if any of the outright crooks were prosecuted. His stimulus would parallel Obama’s. He would keep it too small to quickly reverse the collapse in a vain effort to win Republican support and to appear devoted to reducing deficits. Much of the stimulus would be frittered away on tax cuts that would do nothing to rebuild infrastructure or push forward a Green New Deal. Reregulation would take us at best only part way back to the inadequate controls in place before Trump became president. Biden’s probable plans, like the ones Clinton and Obama adopted, would have doleful long-term consequences and leave voters feeling betrayed and ever more distrustful of government and the Democratic Party.
Obama’s response to the 2008 crisis was politically disastrous. Regions with high levels of foreclosures that Obama’s stimulus failed to prevent voted disproportionately for Trump. Rage at bankers’ ability to get away with fraud and benefit from government bailouts remains raw and intense a decade after the crash. As we learned in 2016, when voters are given a choice between a racist huckster who gives voice to their anger and a politician who promises and delivers more of the same, we can be confident that the former will win.
Fortunately, Bernie Sanders promises a sharp break with Clinton and Obama’s approaches to the economy. He is clear in his denunciations of crooked bankers, and we can be confident he would continue that line as president. Sanders would hold bankers accountable morally and criminally. Financiers could, however, respond to a President Sanders’ denunciations and prosecutions by shifting money out of the US and cutting way back on loans. Bankers’ efforts to compound a crisis with such a capital strike would need a powerful response and would get one from Sanders who is ready to contemplate a much larger role for government in making the investments needed to generate jobs and produce the goods and services that can create a decent life for all Americans.
If Sanders becomes president, the next recession could provide an opening for shifting a significant part of the economy into the public sector, with resources and work focused on building infrastructure, repairing the environment, converting to a non-carbon economy, and providing health care and education outside of the corporate sector. A president Sanders would have to move fast. He would need to deliver results before the next midterm elections in 2022 or he would lose control of Congress and find himself limited to executive orders. Sanders’ recognizes the likely depth of opposition he would face as president and he would be willing to take the radical steps needed to meet the political as well as economic crises he would face.
Trump poses such a threat to democracy and decent society, not to mention the future of the planet, that it is tempting to focus only on who would be most likely to win against him this November. However, we need to broaden our sights to consider what a Democratic president would do after winning the election. We know there would be real policy differences between Sanders and Biden. We need to recognize there also would be political consequences to the election of a centrist that could lead to the election of another equally vicious Republican in 2024--just as Obama’s lukewarm policies and inability to blame the perpetrators of the 2008 crisis led to Trump’s election.