Welcome to the Winning Middle-Out Era

The lesson from the midterm elections is to keep doing popular things that help working people.

By Nick Hanauer

Tagged EconomicsMiddle Out EconomicsMidtermspolitics

Pundits predicted doom for Democrats in the midterm elections. To say the least, they were wrong. Democrats held the Senate, and even populist candidates who lost, like Senate candidate Tim Ryan in Ohio, still elevated progressive candidates in down-ticket races around the nation. Democrats hugely overperformed, and the Red Wave evaporated into a fine mist.

But the Democratic victory was about more than just counting races. Voters around the country overwhelmingly approved progressive values, from minimum-wage increases easily passing in Nebraska, the city of Tukwila in my home state of Washington, and for tipped workers in Washington, D.C., to Medicaid expansion in South Dakota, to a significant gun safety package in Oregon, to medical debt reform in Arizona, to protections for workers and unions in Illinois, to abortion access protections soundly passing around the nation.

This was no “thumping” refutation of President Biden’s agenda. In fact, to find the most obvious parallel for Biden’s midterm performance we have to dig all the way back to 1982, when even amid high inflation and choppy economic conditions, Ronald Reagan managed to defend his party and hold the opposition party’s gains to a modest collection of wins.

The midterm election of 1982 was the dawning of a neoliberal trickle-down economic paradigm that reigned, uncontested by either party, for 40 years. Last week’s midterm elections—in which voters in red and blue states across the country embraced higher wages, raised taxes on the wealthy, and prioritized the prosperity of the middle class—represent a similar moment, a new American reckoning of economic cause and effect. This is the dawning of a Middle-Out Era.

The politics behind the Democratic midterm victory are pretty simple: Popular things are popular and unpopular things are not. Democrats defied political gravity by advocating for and also passing popular policies that directly improve the lives of the vast majority of Americans. And so my message to Dems is to keep pushing for popular things like student debt forgiveness, a $15 federal minimum wage, stronger overtime protections, and reproductive rights—whether you can pass them or not—turning the 2024 election into a referendum between popular middle-out policies that benefit the majority of Americans and the imposition of exclusionary, extractive policies that penalize the many for the profit of the few.

It is fair to argue that in his first two years, President Biden has already presided over the most consequential administration in decades, his accomplishments so numerous that the news media have grown to casually expect them in much the same way that they grew numb to the previous President’s daily cascade of lies. Taking office in the midst of the COVID-19 pandemic and the economic devastation it wrought, Biden and the Democrats quickly passed the $1.9 trillion American Rescue Plan, which proved a literal and figurative shot in the arm, vaccinating over two-thirds of Americans while generating the largest one-year job growth and sharpest drop in unemployment under any President in history. Biden signed the landmark CHIPS and Science Act, which invests in making America more resilient and competitive by bringing semiconductor and other manufacturing jobs back home, and the historic Inflation Reduction Act, which will finally allow Medicare to negotiate lower prescription drug prices, reduces health-care costs for seniors and millions of other Americans, and makes by far the most substantial investments in combating climate change of any administration ever. And while they were doing all this, Democrats also expanded the Child Tax Credit, reauthorized the Violence Against Women Act, made historic investments in roads, bridges, public transit, and other infrastructure, improved health care for veterans, ended the war in Afghanistan, provided up to $20,000 of targeted student debt relief to 43 million borrowers, pardoned thousands of Americans convicted of simple possession of marijuana, and broke a 30-year streak of congressional inaction on gun violence by passing enhanced background checks for gun buyers aged 18 to 21 and closing the “boyfriend loophole.”

But most remarkably, Democrats managed to accomplish all this and more despite relentless filibustering from Republicans in the 50-50 Senate, not to mention obstruction within their own party from a pair of senators clinging to an outdated belief in corporatist “centrism.”

How did they do it? As I write this, the chattering class is hard at work dissecting exit polls to try to tease out which issue inspired the Democratic midterm win: Did the Dobbs decision turn the tide? Were voters inspired to stand up and defend democracy from openly authoritarian Republican candidates? Did young voters who came of age in a school shooting epidemic turn the tide for candidates who supported gun responsibility? Or were Americans voting with their pocketbooks on economic issues?

The answer is yes. Democrats won big last week because they ran on all of those issues. They strongly and unapologetically supported abortion rights. President Biden’s closing argument about protecting our fragile democracy helped crush election denialists around the country. Candidates who proudly advocate for commonsense gun safety laws trounced opponents who lovingly stroked their guns in creepy videos. And this year’s Democrats did a better job of consistently and clearly talking about economics than any slate of candidates I’ve ever seen: An analysis of congressional candidates’ ads found that “Democrats aired 200,000 more spots (defined as one airing of one ad) than Republicans” on nine pocketbook issues, including health care, jobs, Social Security, trade, and manufacturing.

To some, this catalog of accomplishments may look like a jumble of unrelated policies and programs, but in fact they all have several things in common.

First, you guessed it, they are popular! There is no question that each and every item of this Democratic agenda enjoys widespread support, and Democrats drained the Red Wave thanks to young voters who were moved to defend an Administration that has worked for them. And at the same time that Democrats were embracing popular policies, their opponents were lashing themselves to unpopular policies. Poll after poll for the last half-century has demonstrated that voters value reproductive rights and free access to safe and legal abortion, but Republicans seemed shocked when voters overwhelmingly came out in the wake of the Dobbs decision to affirm freedom of choice and vote down abortion bans, rejecting many anti-choice candidates up and down the ballot. It should have been obvious: Unpopular things are unpopular.

Second, these policies are effective, and based on sound economic principles. This isn’t the empty ideological virtue signaling of Trump and the Republicans. Sure, Trump talked endlessly about “infrastructure week.” But Biden actually delivered. And finally, and most consequentially, Biden has consistently and coherently wrapped this popular Democratic agenda in a narrative that is decidedly middle-out.

“I ran for office,” Biden explained in his 2022 State of the Union address, “with a new economic vision for America: invest in America; educate Americans; grow the workforce; build the economy from the bottom up and the middle out, not from the top down. Because we know when the middle class grows…the poor go way up and the wealthy do very well.” This is not just talk. But talk is as important as action, and this kind of talk finally equips Democrats to tell a compelling story about why their policies are pro-growth.

Democrats have always been better stewards of the economy by nearly every economic metric. Job growth, wage growth, productivity growth, GDP growth, even the S&P 500—they all tend to do better under Democratic administrations than under Republicans. And yet the majority of voters have long trusted Republicans over Democrats to manage the economy? Why? Because Republicans have told a false, but nevertheless coherent, story about where growth comes from (spoiler alert: it trickles down) whereas Democrats have not. Rather, Democrats have long focused on arguing that their policies are more fair.

Trickle-down falsely argues that there’s always a “Big Tradeoff” between fairness and growth—for instance, the common (and roundly disproven) threat that raising the minimum wage is bad for everyone and results in job losses across the economic spectrum. They repeat with such confidence the lie that economic growth trickles down from the super-rich that they inspire people to vote against their own self-interest. For generations, Americans waited for that wealth to trickle down, but instead it just accrued at the top of the income ladder, to the tune of more than $50 trillion siphoned out of low- and middle-income paychecks over the last four decades.

But Biden has been telling a very different story. He’s been confidently telling voters that there is no tradeoff between fairness and growth, that in fact the economy grows “from the bottom up and the middle out, not from the top down.” It is a story that puts the American people—not capital or capitalists—back at the center of the American economy. It is a story that argues that what’s good for the American middle class is always what’s good for the economy, an inherently pro-growth argument that is morally correct, easy to understand, and—above all else—demonstrably true.

Democrats should never again heed the advice of debunked economists like Larry Summers who insist that if they want to be the adults in the room, Dems need to courageously enact a regime of budget austerity. Here’s the thing about austerity: It’s not just bad economics. It is very, very unpopular at the ballot box. And the first rule of electoral politics is that you can’t be the adult in the room if you get voted out of the room.

If the two previous Democratic Administrations taught us anything, it’s that there’s no surer path to slowing economic growth for the majority of Americans and losing elections than enacting an austerity agenda. Clinton and Obama both courageously cleaned up the fiscal messes of their Republican predecessors, and what were they rewarded with? Republican successors who drove deficits back up to record levels. To ask the American people to once again sacrifice their jobs, incomes, and economic security for the sake of an economist’s idea of a “responsible” budget is to once again play right into the Republicans’ hands.

The 1982 midterm elections were significant because they set the stage for Ronald Reagan’s overwhelming 1984 reelection campaign, and for the establishment of counterproductive and exploitive neoliberal thinking as the dominant economic theory in both political parties for the next 40 years. With this progressive mandate from voters around the nation, Biden is laying the groundwork for a national shift away from neoliberal trickle-down policies that enrich the wealthy few, and toward a middle-out economic worldview that understands that investments in the broad majority of Americans result in shared prosperity and a stronger economy for all.

Biden is reminding us that a thriving middle class isn’t the consequence of economic growth, it is the cause of economic growth. As such, he’s the first post-Reagan President, advancing a new understanding of the economy that breaks from the trickle-down worldview that has captured our politics for decades.

So enjoy your victories, Democrats. The midterms demonstrated unqualified voter support for your actions over the past two years, and an encouragement to do even more. Keep pushing popular things and you’ll enjoy even better results on election night, 2024. Keep rebuilding a large, prosperous, and inclusive middle class, and keep explaining exactly why and how you’re doing it. Follow this simple roadmap, and we will all reap the rewards for generations to come.

Read more about EconomicsMiddle Out EconomicsMidtermspolitics

Nick Hanauer is an entrepreneur, a venture capitalist, the founder of the public-policy incubator Civic Ventures, and (with Joan Walsh and Donald Cohen) an author of the new book Corporate Bullsh*t: Exposing the Lies and Half-Truths That Protect Profit, Power, and Wealth in America.

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