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Magazine / POLITICAL CONNECTIONS

A Lost And Volatile Decade

Americans feel the ground beneath them cracking as the economy convulses.

September 25, 2010

During the transition from the agricultural era to the Industrial Age in the late 19th century, America suffered through a generation of political instability and volatility.

The political hallmarks were narrow congressional majorities and rapid shifts in control; repeated one-term presidents; and divided government, with the parties routinely splitting the White House and Congress. This turmoil (which lasted from about 1876 to 1896) was rooted in the widespread sense among Americans that neither party had convincing answers to the enormous challenges created by the shift from farm to factory.

Based on last week's release of the annual Census Bureau report on income and poverty, it appears that the U.S. is experiencing something similar again, as Americans uneasily navigate a globalized, information-based economy. Across a wide range of economic measures, the bureau report demonstrated, the past 10 years have been an utterly lost decade for many, if not most, Americans. And that helps explain why the U.S. continues to careen through so many sharp political reversals.

 

From 2000 through 2009, the Census Bureau found, the median income (measured in inflation-adjusted dollars) declined by 5 percent for white families, 8 percent for Hispanic families, and more than 11 percent for African-American families. That's almost unimaginable over an entire decade. From 1991 through 2000 (again in inflation-adjusted dollars) it had risen by 13 percent for whites, 19 percent for Hispanics, and 28 percent for African-Americans.

A globalized, information-based economy is proving difficult to navigate.

Similarly, the total number of Americans in poverty increased by nearly 12 million in the last decade, more than obliterating the 4.1 million reduction during the 1990s. Especially troubling is that the number of poor children jumped by 3.9 million -- again, more than erasing the 2.8 million decline during the 1990s.

The findings on access to health insurance tell the same story. During the 1990s, the share of Americans without health insurance fell slightly from 14.1 percent to 13.7 percent; in the following decade, it has spiked to 16.7 percent. More than one-fifth of the working-age population (people ages 18 to 64) are now uninsured, also up steadily since 2000. The number of Americans obtaining health insurance at work during the 1990s increased by nearly 30 million; in the last decade, that number fell by nearly 10 million. (The share of Americans receiving coverage through work declined every year of George W. Bush's presidency.)

The Great Recession has vastly compounded these problems. But they were all worsening before the economy collapsed: The median income was lower, and the poverty rate and the number of uninsured were already higher in 2007 than in 2000.

That means when the financial system imploded in 2008, many families still had not regained the ground they lost during the previous downturn in 2000. Even in the growth years from 2002 through 2007, the economy created only about 7 million new jobs, compared with about 20 million during the similar period of recovery during the 1990s. That helps explain the incredible statistic that slightly fewer Americans are employed now than had jobs in January 2000, even though the population has grown by about 25 million since then. "We were ill-equipped to handle the downturn because this was the weakest recovery on record," says Heather Boushey, a senior economist at the liberal Center for American Progress.

It's worth noting that this dismal performance occurred almost entirely after the Bush 2001 and 2003 tax cuts were in place. That record offers little reason for confidence that extending the tax cuts will ignite recovery, as their advocates argue. The economy produced more vibrant and broadly shared growth in the 1990s after Bill Clinton raised taxes than it did after Bush cut them. That doesn't mean that tax hikes are a panacea; but it certainly suggests that tax cuts are not.

The larger point is that, as in the late 19th century, millions of Americans feel that the ground beneath them is cracking as the economy convulses in destabilizing structural change. They are losing faith in all institutions, and many have grown dubious that either political party has answers for their distress. Since the mid-1990s, Americans have flipped from divided government in Washington, to unified Republican control, to unified Democratic control. Voters now appear poised to divide power between the parties again. That's not likely to be the final spin of the wheel. Until more Americans obtain greater security in their financial lives, don't expect either party to enjoy much of it in Washington, either.

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