CONTACT:
Steven Chlapecka – schlapecka@ppionline.org, T: 202.525.3931
WASHINGTON—The Progressive Policy Institute (PPI) today unveiled a new “Battleground Home Values Index” showing how home prices in 16 potentially key states have failed to recover since the last presidential election in 2008.
In these 16 states, home prices are down an average of 16 percent since October 2008—from a median of $160,596 to a median of $131,191 in December 2011.
“This most important thing to stop the fall in home prices and that seems to have happened,” said PPI Senior Fellow Jason Gold, who co-authored the index with colleague Anne Kim, PPI’s managing director for policy and strategy. According to Gold, battleground home values have stayed flat for the last three months, in contrast to a steady decline since 2008.
“Housing will be a pivotal election year issue,” said Kim. “If home values are rising, people feel wealthier and more confident in the direction of the economy. Home values are as important to voters as the jobless rate.
The states included in the PPI analysis are among those hardest-hit by the housing crisis: Nevada, New Mexico, Arizona, Virginia, Ohio, Wisconsin, Michigan, Iowa, New Hampshire, Indiana, Colorado, Florida, Missouri, North Carolina and Pennsylvania.
PPI’s analysis is based on data derived from Zillow and the U.S. Census Bureau. The overall median home value for the battleground states is a weighted average based on the proportion of housing units in that state.
In our policy brief, “Reviving Jobs and Innovation: A Progressive approach to Improving Regulation,” we describe how such a Commission could work. Neither Congress nor the executive branch currently has an efficient, streamlined process for eliminating outdated regulations that stifle innovation and growth. The Regulatory Improvement Commission could fill that void.
IDEA #2: Starting up start-ups–Improving access to credit and access to capital for smaller businesses
In “Underwater: Home Values in 2012 Battleground States,” we looked at home values in 16 potential battleground states from 2008 to 2011. We find both an enormous loss of middle-class wealth and a potentially potent political issue. We also offer up some practical first steps toward restoring home values.
In our memo, “It’s About (the) Time: Ending the Nonstop Campaign,” we propose changing congressional ethics rules to ban members from directly accepting campaign contributions except during election years. This proposal would free up members to spend more time making policy instead of raising money.
In our memo “Defense and Deficits: How to Trim the Pentagon’s Budget–Carefully,” we propose a floor of 3 percent of GDP beneath which defense spending should not be allowed to fall. Such a level would ensure that investments in R&D and procurement are sufficiently robust to maintain America’s superior industrial base and high-tech weaponry.
As the 2012 election approaches, the nation’s unemployment rate will continue to drive the political debate and, in turn, the fortunes of President Obama and his GOP rivals.
Despite the central focus on unemployment, however, another number deserves equal attention as a barometer of the nation’s overall economic health: housing values.
As catastrophic as it is to lose a job, the percentage of Americans who are unemployed is actually exceeded by the percentage of Americans who have either lost significant wealth from their homes or are currently “underwater”—owing more on their mortgages than their homes are worth. Since 2006, Americans have lost a total of $7 trillion in housing wealth—a figure that, according to the Federal Reserve, is more than half of the nation’s aggregate home equity.
In recent days, the Obama Administration has telegraphed its intention to devote more energy to housing—and with a focus on foreclosures and defaults. While this is laudable, the Administration should not neglect a second front: the tremendous loss of housing wealth.
In this report, we make our case by analyzing home values in the 16 battleground states that will serve as the proving ground for 2012. In 15 of these states, home values have fallen by an average of 16% since October 2008. We also offer up suggestions for tackling this issue.
No doubt, every contender for the White House will have a jobs plan. But no economic plan can be complete without an equally robust plan to rebuild housing—and in particular, to rebuild housing wealth. Policies that address this loss of wealth, even for those not at immediate risk of losing their homes, makes sense both politically and economically
Negative equity: A new crisis in middle-class wealth
In a reversal of the optimism that is typical of Americans, 41% of people in a January 2012 poll—including a majority of seniors—said they feel less financially secure than last year, while just 14% said they feel more secure.
The loss of wealth—and housing wealth in particular—might help explain why.
According to the Federal Reserve’s Survey of Consumer Finances, 62.5% of families suffered a loss of wealth from 2007 to 2009. Moreover, says the Fed, “declines in home equity were an important driver of decreases in wealth.”
Homes made up 47.6% of the total non-financial assets held by Americans in 2009. Between 2007 and 2009, American homeowners saw their equity drop by a median of 11.8% (or $18,700).
From its peak in 2006, the Case-Shiller housing index (the “Dow” of home values) has fallen 32.93%, including an 11.33% decline from October 2008. Median home prices have fallen from $196,600 to $164,100.
As many as 12 million Americans are now “underwater” with mortgages that are more than their homes are worth.
The loss of home equity has broad implications for the nation’s economy beyond mere sentiments of economic confidence. For example, underwater homeowners can’t qualify to refinance their homes, which means they can’t take advantage of one of the Administration’s most successful monetary policies: low interest rates. A 1% lower interest rate on a $200,000 mortgage can mean $168 less in interest payments per month—money that could be spent in the broader economy on other things.
Underwater borrowers are also stuck in their homes, unable to trade up or move out (a problem that also limits job mobility). Negative equity also means no nest egg for homeowners nearing retirement, and fewer resources to draw on for households seeking to finance a new business, help a child through college or weather out a spell of unemployment or ill health.
In the immediate aftermath of the financial crisis in 2008, housing was at the top of policymakers’ priorities. Congress saw a flurry of proposals to deal with the mounting wave of defaults and foreclosures, and the collapse of Fannie and Freddie led first to intensive federal intervention and then to one round of full-fledged debate on what the future of these agencies should be.
Today, with housing in at least as bad a shape as it was in 2008, housing is now the forgotten debate. The conversation over Fannie and Freddie has stalled, if not died altogether; the government’s efforts to stem foreclosures have been largely unsuccessful; and with a handful of bold exceptions, few policymakers are putting forward ideas to restore homeowner equity, cope with burgeoning inventory and spark new demand in the market.
But with the economy continuing to sputter, housing is a problem that policymakers can’t afford to ignore any longer.
While some may debate the chicken-and-egg issue of whether housing can lead the recovery or whether a recovery can stabilize housing, there’s no dispute that the health of the housing market and the broader economy are inextricably intertwined. Housing and its related industries account for roughly 19 percent of the American economy.1 Since the housing crash, housing—especially construction—has shed 2.9 million jobs2 since the start of the recession. Not coincidentally, the states with the highest unemployment rates—California, Nevada, Rhode Island, Michigan3—are among the states that have been hit hardest by the housing crisis. Moreover, Americans
have lost $7 trillion in equity,4 which is dampening consumer confidence as well as forcing many families to rethink their future plans and expectations of financial security.
Two years after the meltdown in the nation’s housing market, housing re- mains weak. Home prices fell to a new low in the first quarter of this year— confirming a feared “double-dip” in the market. Prices are now down nearly 33 percent from their high five years ago.
With housing and its related industries—construction, home retail, etc.— constituting almost 19 percent of the nation’s economy over the last 40 years,2 restoring the housing market will be essential to a sustained eco- nomic recovery. And key to this will be ensuring a robust market for first- time home sales.
Yet, even with home prices as low as they currently are, many potential homebuyers may face more—not fewer—obstacles in their path to home- ownership. In the aftermath of the crisis, credit is tighter, as are down pay- ment requirements. At the same time, the stresses of the economy have meant that potential homebuyers are in worse shape financially than they once were.
The creation of a new, tax-preferred mechanism for down payment sav- ings—a “HomeK”—could help first-time homebuyers navigate these new hurdles while also promoting more savings. And if structured as a carve-out from existing retirement planning mechanisms, not as a new type of ac- count, the HomeK would have the added benefit of promoting retirement savings and will not contribute to further tax code complexity.
Agenda Welcome and Keynote Address 8:30 a.m. – 9:00 a.m.
Will Marshall, President, PPI
Sen. Jeff Merkley (D-Ore.)
Panel I: Housing and the Recovery: Current Challenges 9:00 a.m. – 10:15 a.m.
This panel will provide an overview of the current state of the housing market and its impact and importance to the overall economy. Experts will also discuss specific problems within the housing market including: (1) “underwater” mortgages and loss of equity; (2) weak housing demand despite low prices; (3) foreclosures, mortgage modifications and servicer concerns; (4) the role of government in the housing market and GSE reform; (5) “shadow” inventory and REO properties; and (6) impacts on consumer confidence and middle-class wealth.
Rep. Dennis Cardoza (D-Cal.)
Stan Humphries, Chief Economist, Zillow
Ron Phipps, President, National Association of Realtors
Phillip L. Swagel, Professor of International Economic Policy, University of Maryland
Moderator: Don Lee, Los Angeles Times
Panel II: Jumpstarting the Housing Market: Innovative Solutions 10:30 a.m. – 11:45 a.m.
Leading academics, industry representatives and advocates will describe and debate their unique solutions to stabilize and restart the housing market in the near- and medium-term. Among the proposals to be presented: (1) help for underwater borrowers; (2) solutions to the foreclosure crisis and mortgage modifications; (2) ideas for managing the vast supply of REO properties; and (3) options for jumpstarting sidelined consumer demand for housing, particularly among first-time buyers.
Richard Smith, President and Chief Executive Officer, Realogy Corporation
David Stevens, President and Chief Executive Officer, Mortgage Bankers Association
Kevin Schneider, President and Chief Executive Officer, Mortgage Insurance-U.S., Genworth Financial
Ellen Schloemer, Executive Vice President, Center for Responsible Lending
Moderator: Jim Tankersley, National Journal
Keynote Address 11:45 a.m. – 12:15 p.m.
Sen. Johnny Isakson (R-Ga.)
Luncheon Keynote Discussion: The Government’s Role in Housing—Too Little, Too Much or Just Right? 12:30 p.m. – 1:30 p.m.
Douglas Holtz-Eakin, President, American Action Forum
Michael Mandel, Chief Economic Strategist, PPI
Moderator: David Wessel, The Wall Street Journal
Panel III: Housing, Tax Policy and Deficits 1:30 p.m. – 2:30 p.m.
Reducing the nation’s mounting debt and deficit has become an issue of paramount concern for both policymakers and the public. As the recently-formed deficit-reduction “supercommittee” wrestles with what are certain to be difficult choices, tax policies that encourage homeownership—chief among them the mortgage interest deduction— are increasingly the topic of debate. This panel will provide a balanced look at the costs and benefits of using tax policy as a means of promoting homeownership in the broader context of the push toward deficit reduction.
Lawrence Yun, Chief Economist, National Association of Realtors
Donald Marron, Director, Urban-Brookings Tax Policy Center
Stan Humphries, Chief Economist, Zillow
Moderator: Michael Mandel, Chief Economic Strategist, PPI
Location The Liaison Hotel 415 New Jersey Avenue NW
Washington, DC 20001
Join the Progressive Policy Institute, e21 and some of the nation’s best thinkers and leaders on housing policy for a daylong conference aimed at new ideas to restore America’s housing market and jumpstart the economy.
For weeks, August 2—the date on which the U.S. Treasury might have defaulted on its debts—was the deadline that drove policymakers toward a deal on raising the debt ceiling and lowering the nation’s spiraling debt and deficits.
Another pending deadline—October 1—has won far less attention. But it too could have far-reaching impacts on the U.S. economy if Congress allows it to expire.
This date is when the maximum size of a mortgage loan (the “loan limit”) that can be insured by the Federal Housing Administration (FHA) or bought by government-sponsored mortgage giants Fannie Mae and Freddie Mac (the GSE’s) drops significantly. On October 1, these loan limits will fall in 669 counties in 42 states and the District of Columbia, with an average reduction of more than $50,000 and in some cases by more than $100,000. In these areas, many prospective homebuyers once eligible for an FHA loan would no longer qualify, while others may face the prospect of a higher-cost “jumbo” loan.
The result could be the potential sidelining of a key segment of homebuyers, which in turn would further weaken demand, depress home prices and drop another wet blanket on consumer confidence as Americans continue to watch their home equity evaporate. Needless to say, this is the last thing the housing market or the economy needs as it struggles toward recovery.
Without question, government should ultimately pare back its involvement in the housing market and let private capital play the leading role. But this should also happen when the markets are ready, not according to an arbitrary timetable. Unfortunately, the initial conditions that warranted the current loan limits in the first place have not improved substantially. Nor does it seem private sources are ready to jump in if government support were to end.
The U.S. housing market continues to stumble. The median home price is now at its lowest level since April 2002 and the percentage of Americans who believe that homeownership is a safe investment continues to decline. Meanwhile, policy is largely at a standstill. Treasury Secretary Tim Geithner continues to urge a go-slow approach on the phase-out of government supported mortgages through Fannie Mae and Freddie Mac. And all House Republicans can come up with is trying to kill the Obama Administration’s efforts to stem foreclosures through the Home Affordable Mortgage Program (HAMP) and other related programs.
Economist Robert I. Lerman has proposed a cost-effective way to reinvigorate the stalled housing market: The federal government should provide a million vouchers that allow low-income renters to become homeowners and allow some of the two million holders of rental vouchers to convert them into homeownership vouchers.
The basic idea is that these vouchers would create a new pool of potential owners to buy up depressed housing stock. Since the federal government already provides rental vouchers, it may as well turn those rental vouchers into ownership vouchers. And actually, doing so would save the government money, since in almost all housing markets mortgage payments would be lower than the market rent.
The plan has other benefits as well. As Lerman writes:
A rise in home prices would reduce the number of homeowners who find their homes worth far less than their mortgages. It would discourage these “underwater” homeowners from walking away from their mortgages; allow more families to refinance at low interest rates, thereby reducing the rate of foreclosures; and, ultimately, it would generate new construction jobs and spur associated job growth. Increased home values also can play an indirect role in job creation, since more small business owners would again be able to use their home as collateral for loans to maintain and expand their business.
In short, “Homeownership Vouchers” is a smart way to stimulate the housing market, expand the dream of homeownership to low-income families, and give the economy some added juice, all while potentially saving the government money.
While easy monetary policy and a large fiscal stimulus have limited the economic downturn and helped generate modest growth, few believe the economy can grow fast enough to reduce unemployment without the recovery of the housing sector. Yet, no such recovery is in sight. As of late December 2010, the headline story was “Housing Recovery Stalls: Fresh Fall in Home Prices is Headwind for Economy.”1 Construction output remains 30 percent below pre-recession levels and is no higher today than it was a year ago (about 30 percent of all lost jobs were in the construction industry). The unemployment rate among construction workers is about 19 percent, double the national average. There are still 7 million homes in foreclosure or with mortgages that are 90 days delinquent. House prices continue to stagnate.
So far, federal initiatives aimed at shoring up the housing sector have cost tens of billions of dollars but have been ineffective and poorly targeted. The tax credit for homebuyers may have sped up some home purchases, but it did so at a high cost and with benefits flowing to many high-income families. It subsidized purchases that would have taken place without the credit, resulting in a cost to the taxpayer of $43,000 per new home purchased and a total budget cost of $15-20 billion, which was twice as much as Congress expected. President Obama’s Homeowner Affordability and Stability plan has reached only a small percentage of eligible homeowners.
The potential benefits of increasing the demand for owner-occupied housing are enormous. A rise in home prices would reduce the number of homeowners who find their homes worth far less than their mortgages. It would discourage these “underwater” homeowners from walking away from their mortgages; allow more families to refinance at low interest rates, thereby reducing the rate of foreclosures; and, ultimately, it would generate new construction jobs and spur associated job growth. Increased home values also can play an indirect role in job creation, since more small business owners would again be able to use their home as collateral for loans to maintain and expand their business.
Last week, the Progressive Policy Institute released a Memo to President Obama, which contained 10 Big Ideas for Getting America Moving Again. How did the President’s speech match up to our recommendations?
Overall, he did quite well. Eight of our ten ideas were largely consonant with proposals included in the address, and the future-oriented rhetoric echoes the language in our memo. We also appreciate his willingness to look to both sides of the aisle to find solutions.
However, we were disappointed that he did not discuss the sluggish housing market, and that he did offer any ideas to address the roots of the partisan rancor in Washington.
Our overall grade: B+
Here’s a proposal-by-proposal scorecard:
1. Removing Obstacles to Growth: A Regulatory Improvement Commission
We proposed: A periodic review process conducted by a Regulatory Improvement Commission, modeled loosely on the BRAC Commissions for military base closures.
The President said: “To reduce barriers to growth and investment, I’ve ordered a review of government regulations.”
Analysis: The President clearly understands that we need to prune obsolete and ineffective regulations and stimulate economic innovation and entrepreneurship. But agency self-review is inadequate.
Grade: A-
2. Internal National Building: A National Infrastructure Bank
We proposed: Smart, innovative financing solutions that enable us to restore the backbone of our economy. A well-structured National Infrastructure Bank can play this role by leveraging public dollars with the participation of private-sector investors.
The President said: “The third step in winning the future is rebuilding America. To attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods, and information — from high-speed rail to high-speed Internet.”
Analysis: Making infrastructure one of five sections of the speech gave it real prominence. But the President needs to do more than just propose “that we redouble those efforts.” He needs to lay out a mechanism to do that rationally, and to identify clear funding for it. A National Infrastucture Bank could accomplish that.
Grade: A-
3. A Way to Pay for High-Speed Rail
We proposed: Restructuring the Highway Trust Fund into a Surface Transportation Trust Fund that recaptures its original mission—to build and maintain an efficient national transportation network—and updates that mission to reflect 21st-century priorities, including upgrades to our passenger and freight rail systems.
The President said: “Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. “
Analysis: We applaud the President’s full-throated commitment to high-speed rail. However, he’s going to need to figure out a way to pay for it. We suggest he read Mark Reutter’s excellent memo on how to finance high-speed rail.
Grade: A-
4. Restoring Fiscal Discipline in Washington
We proposed: Restoringfiscal discipline in Washington by trimming the $1.1 trillion in outdated tax expenditures, capping domestic spending (including defense), eliminating supplemental defense budgets, and slowing mandatory expenditures by reducing benefits for affluent retirees.
The President said: “Starting this year, we freeze annual domestic spending for the next five years… we cut excessive spending wherever we find it –- in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes… we should also find a bipartisan solution to strengthen Social Security for future generations…we simply can’t afford a permanent extension of the tax cuts for the wealthiest 2 percent of Americans.”
Analysis: The President clearly gets the seriousness of the looming debt crisis, but understands the difference between smart cuts and needed investments. But he could have come out more strongly in favor the Fiscal Commission’s work, and he only paid lip service to entitlements.
Grade: B+
5. Setting National Targets: A Balanced Energy Portfolio
We proposed: A national Balanced Energy Portfolio with a target fuel mix allocated into thirds by 2040: one third of our electricity generated by renewable resources, one third by nuclear power, and one third from traditional fossil fuels.
The President said: “By 2035, 80 percent of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all — and I urge Democrats and Republicans to work together to make it happen.”
Analysis: The President is thinking big, but also recognizing that nuclear and natural gas need to be part of any energy mix.
Grade: A
6. Greening the Pentagon: An Energy Security Innovation Fund
We proposed: An Energy Security Innovation Fund, housed in the Pentagon, to help companies bridge the gap. Such a fund would leverage public dollars with private money to support research and deployment of the most promising green products.
The President said: “We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo projects of our time.”
Analysis: The next clean energy breakthrough is going to require support from the government. But Obaa should look beyond the Department of Energy and recognize that the military can be a fertile source of innovation, too.
Grade: A-
7. Bringing Public Education into the 21st Century
We proposed: To radically transform public education by growing charter schools, ending teacher tenure as we know it, spurring a network of “Innovation Zones”, and creating a “Digital Teacher Corps”.
The President said: “Our schools share this responsibility. When a child walks into a classroom, it should be a place of high expectations and high performance. But too many schools don’t meet this test.”
Analysis: Education is clearly the key to our ability to “win the future,” and the President understands this. We support his Race to the Top program and the call for more bright young people to go into education. But we also hope he thinks more creatively about radical new ideas for 21st century education, embracing the possibilities of charter schools, digital education, and “innovation zones.”
Grade: A-
8. Lifting Housing Markets: One Million Homeowner Vouchers
We proposed: An innovative way to jump-start the housing market would be for the federal government to provide a million vouchers that allow low-income renters to become homeowners.
The President said: (Nothing)
Analysis: Surprisingly, the President failed to mention the sluggish housing market, which many economists believe is one of the leading factors holding back an economic recovery.
Grade: F
9. Align Innovation and Immigration
We proposed: Aligning innovation and immigration by providing a citizenship path for foreign students with advanced technical degrees and illegal immigrants’ children who are interested in national service.
The President said: “I strongly believe that we should take on, once and for all, the issue of illegal immigration… I know that debate will be difficult. I know it will take time. But tonight, let’s agree to make that effort. And let’s stop expelling talented, responsible young people who could be staffing our research labs or starting a new business, who could be further enriching this nation. “
Analysis: The President deserves points for having the courage to bring up immigration reform. But he clearly gets it: our global competitiveness depends on continuing to be a magnet for the world’s best and brightest.
Grade: A
10. Taking Power from Special Interests: A Fair Way to Finance Elections
We proposed: A hybrid Fair Elections system introduced by Sen. Dick Durbin (D-Ill.) to allow federal candidates to choose to run for office without relying on large contributions by using federal money to match small donations.
The President said: (Nothing)
Analysis: Campaign finance reform is not on the agenda, and the President does not seem particularly interested in putting it there. This is too bad. A great way to break the partisan rancor in Washington would be change the way politicians get elected to office. As long as congressional campaigns are privately funded, and as long as the big donations come primarily from ideologues and special interests, pragmatic candidates are going to have a tough time raising the resources they need to get started, and a difficult time winning in all-important low-turnout primaries.
Grade: F
Conclusion:
Overall, it was a great speech. It laid out the problems that we face as a nation, and provided a vision of an America that invests smartly in the future, building infrastructure, providing educational opportunities, and remaining a magnet for the best and brightest in the world, and all in a way that could move us past partisan divides.
Back in March, I stepped out of my comfort zone and wrote this op-ed for the Local Opinion page in the Washington Post. For the first time in a good long while, I wasn’t writing about national security, foreign policy, or the military. Rather, I penned a piece on a mentoring relationship I have with Tim Cofield, a 55 year old bipolar-schizophrenic with serious substance abuse and housing issues. This weekend, the Post published an update to that piece about the last eight months of Tim’s life. Here’s an excerpt:
Tim Cofield needed his public defender again way too soon. After his release from jail in March, I wrote on this page that Tim would soon be back in front of a judge if he did not get consistent access to substance-abuse counseling, mental health care and stable housing. Tim, who turned 55 on Wednesday, is a bipolar-schizophrenic who has rotated in and out of jail, usually for narcotics and parole violations, for most of his adult life.
Eight months later, Tim still isn’t receiving the care he needs. The result has hardly been surprising. His latest incarceration was from mid-October, when he submitted “dirty urines” at substance tests, until last week. It was the cognac Courvoisier, he told me.
…
It might be unrealistic to think that counseling, mental health services or the long public housing list will be improved overnight, but they don’t have to be. The past eight months convince me that Tim needs to catch one simple break to have a chance at turning his life around immediately: a job.
…
[A] job would mean much more than a few extra dollars in his pocket. A job would give him a stake in his own life. It would build a sense of accomplishment, occupy time otherwise spent with questionable associates and create a reason to save money for long-term goals. Moreover, as Michelle Singletary wrote in The Post just this month, a job would reduce Tim’s and others’ recidivism and crime throughout the community.
Kevin Drum notes my last post and then wonders, “What I’m more curious about is what this looked like in the 50s, 60s, and 70s. Was optimism about our kids’ futures substantially higher then?”
The results I showed were mostly from a fantastic database of polling questions called “Polling the Nations”, which I recommend to everyone (though it’s not free, it’s not that expensive relative to other resources). That’s why they only start in the mid-80s, and there’s a gap between the mid-00s and the two or three polls I cite from this year and last (my look at this question was a few years ago).
Anyway, Kevin’s query reminded me that there’s another compilation of polling questions that is also amazing—the book, What’s Wrong, by public opinion giants Everett Carll Ladd and Karlyn Bowman. And it’s a free pdf.
So, let me add some results to those I posted before. I’m focusing, to the extent possible, on questions that ask parents about their own children. When people are asked about “kids today” instead of their own kids, they are much more likely to be Debbie Downers—a phenomenon that journalist David Whitman dubbed the “I’m OK, They’re Not” syndrome, which is much more general than questions about children’s future living standards. Also, let’s be careful to distinguish between levels and trends.
First, let’s look at the confidence parents have that life for their children will be better.
Percentage of parent confidence that life for their children will be better
Year
Very confident
Fairly confident
Not at all confident
1973
26%
36%
30%
1974
25
41
28
1975
23
39
32
1976
31
39
25
1979
25
41
29
1982
20
44
32
1983
24
38
33
1988
20
45
28
1992
17
46
31
1995
17
44
34
2000
46*
N/A
48*
Source: Roper Starch Worldwide; *Washington Post/Kaiser Family Foundation/Harvard
That last one shouldn’t be directly compared with the others—not only did it only offer a yes-or-no response, it was also asked of all adults. More on that in a sec. What we see from the Roper surveys is a fairly steady decline in solid confidence, but not much of a trend in pessimism.
The main dynamic is that parents have moved from being “very” confident to “only fairly” confident. It looks like there may have been a small decline in optimism from the late 1980s through the mid-1990s. But it’s interesting that from 1973 to 1995, between 61percent and 70%percent were at least fairly confident that their kids would be better off.
The Washington Post polling result provides a nice opportunity to look at the “I’m OK, They’re Not” pattern, since all adults were asked the question, even though fewer than half had children under 18 in their household. In a poll my employer* commissioned from Greenberg Quinlan Rosner Research and Public Opinion Strategies, we asked parents about their expectations for their children’s living standards. We asked people who had no children under 18 at home about “kids today.”
Pooling everyone together, 47 percent of adults said kids would have higher living standards. But the parents were much more optimistic about their own children, with 62 percent saying their kids’ living standards would improve. So the Washington Post result might have been right in the range of the Roper results had the question been asked only of parents.
Other polls have asked whether parents think their children will be better off when they are the same age:
Percentage of parents that think their children will be better off when they are the same age
Year
Better off financially
Not better off
1981
47
43
1982
43
41
1983
44
45
1985
62
29
1986
74
19
1991
66
25
1994
47*
39*
1995
54
39
1996
52
39
1996
51‡
N/A
1997
51‡
N/A
1999
67‡
N/A
Sources: ABC News/Washington Post; *Newsweek; ‡Pew Research Center
So optimism declined between the mid-1980s and early-1990s, recovered starting in the mid-1990s, and generally remained above early 1980s levels (when the economy was in recession). Except for 1983 majorities or pluralities hold the optimistic position.
Another series of polls asked parents whether their children will have a better life than they have had. They also indicate a decline in optimism from the late 1980s to the early 1990s and a subsequent rebound:
Parents outlook on their children’s life
Year
Better life
About as good
1989
59%
25%
1992
34
33
1995
46
27
1996
50
26
2002
41*
29*
Sources: BusinessWeek; *Harris Poll
Strong majorities thought the children would have as good a life as them or better, and while more people thought their kids would have a better life than thought they would have a worse life, optimism failed to win a majority of parents in a number of years. The trends appear to reveal a decline in optimism from the mid- or late-1990s to the early 2000s. Considering all of these trends thus far, a fairly clear cyclical pattern is emerging, as Kevin observed in his post.
The early 2000s dip also shows up in Harris Poll questions asking whether parents feel good about their children’s future:
Percentage of parents that feel good about their children’s future
Year
Feel good
1997
48%
1998
65
1999
60
2000
63
2001
56
2002
59
2003
59
2004
63
Source: Harris Poll
The dip is revealed to be related to the 2001 recession, as optimism rebounded thereafter, again following the business cycle. Again, solid majorities generally take the optimistic position.
The longest time series available asks parents whether their children’s standard of living will be higher than theirs. Unfortunately, it appears that most of these polls ask the question of adults without children too:
Percentage of parents that believe their children will achieve a higher standard of living
Year
Higher standard of living
Lower standard of living
1989
52%
12%
1992
47
15
1993
49
17
1994
43
22
1994
45*
20*
1995
46
17
1996
47*
N/A
1998
55*
N/A
2000
59*
N/A
2002
61*
N/A
2004
53*
N/A
2006
57*
N/A
2008
53*
N/A
2009
47/62†
N/A
2010
45‡
26‡
Sources: Cambridge Reports/Research International; *General Social Survey; †Economic Mobility Project; ‡Pew Research Center
Once again the cyclical pattern emerges, though it is not quite as clear in the mid-2000s. Optimism is far more prevalent than pessimism in every year, reaching majorities from the late 1990s until the current recession. Even today, optimism is no lower than in the mid-1990s, and the EMP poll implies that when looking just at parents with children under 18 living at home, solid majorities continue to believe their kids will have a higher living standard.
Taken together, there is very little evidence that a supposed stagnation in living standards is reflected in Americans’ concerns about how their children will do. The survey patterns show that parental optimism follows a cyclical pattern, generally is more prevalent than pessimism, and did not decline over time. In fact, we can compare beliefs in 1946 to 1997 for one question—whether “opportunities to succeed” (1946) or the “chance of succeeding” (1997) will be higher or lower than a same-sex parent’s has been:
· Roper Starch Worldwide (1946)—64 percent of men said their sons’ opportunities to succeed will be better than theirs (vs. 13 percent worse); 61 percent of women said their daughters’ opportunities to succeed will be better than theirs (vs. 20 percent worse)
· Princeton Religion Research Center (1997)—62 percent of men said their sons will have a better chance of succeeding than they did (vs. 21 percent worse); 85 percent of women said their daughters will have a better chance (vs. 7 percent worse)
As one would expect, mothers in 1946 believed their daughters would have more opportunity, but surprisingly that view was even more prominent in 1997. And among men, there was very little change. Notably, unemployment was slightly lower in 1946 than in 1997, so this isn’t a matter of apples to oranges.
Or even more strikingly, consider two polls asking the following question: Do you think your children’s opportunities to succeed will be better than, or not as good as, those you have? (If no children:) Assume that you did have children.
· Roper Starch Worldwide (1939)—61 percent better vs. 20 percent not as good vs. 10 percent same (question asked about opportunities of sons compared with fathers)
· Roper Starch Worldwide (1990)—61 percent better vs. 21 percent not as good vs. 12 percent same
While the 1939 question only refers to males, given the relatively low labor force participation of women at the time, it is perhaps still comparable to the 1990 question. However, the unemployment rate was 17.2 percent in 1939 compared with 5.6 percent in 1990. Still, the two are remarkably close.
OK, can we put this question to bed? Americans believe their children will do as well or better than they have done, and this belief hasn’t weakened over time. Now let’s get back to arguing about objective living standards rather than subjective fears about them.
* For the love of God, nothing you’ll ever read on my blog has anything to do with my job—there are people at Pew whose ulcers flare at employees’ side hustles like mine.
Everyone’s approvingly linking to this Edward Luce piece on “the crisis of middle-class America.” I want to set myself on fire.
Seriously, it’s discouraging to see so many people who should know better (because they’ve argued these points with me before) promoting this article. I can’t think of another piece in the doomsday genre—and there are many—that gets it so consistently wrong. I’ll stipulate that none of the criticisms below are intended to minimize the struggles that many people are facing. But it’s important to get this stuff right. Let me dive in, with Luce’s words in italics and my responses following:
Yet somehow things don’t feel so good any more. Last year the bank tried to repossess the Freemans’ home even though they were only three months in arrears.
The share of mortgages either in foreclosure or 3 or more months delinquent is 11.4 percent, which, because 30 percent of homeowners have paid off their mortgage, translates into 8 percent of homes. So the Freemans’ situation is typical of about one in twelve homeowners, or not quite 3 percent of households (since one-third rent).
Their son, Andy, was recently knocked off his mother’s health insurance and only painfully reinstated for a large fee.
Luce is arguing that there’s a new crisis facing the current generation. About 30 percent of those age 18 to 24 were uninsured in 2008 when the National Health Interview Survey contacted them. I don’t have trends for that age group, but the share of Americans under age 65 without health insurance coverage was 14.7 percent in 2008, up from…14.5 percent in 1984.
And, much like the boarded-up houses that signal America’s epidemic of foreclosures, the drug dealings and shootings that were once remote from their neighbourhood are edging ever closer, a block at a time.
Well, the violent crime rate in 2008 was 19.3 per 1,000 people age 12 and up, down from 27.4 in 2000 and 45.2 in 1985.
Once upon a time this was called the American Dream. Nowadays it might be called America’s Fitful Reverie. Indeed, Mark spends large monthly sums renting a machine to treat his sleep apnea, which gives him insomnia. “If we lost our jobs, we would have about three weeks of savings to draw on before we hit the bone,” says Mark, who is sitting on his patio keeping an eye on the street and swigging from a bottle of Miller Lite. “We work day and night and try to save for our retirement. But we are never more than a pay check or two from the streets.”
The key question is, again, Is this worse than in the past? The risk of a large drop in household income has risen modestly, but people experiencing a drop end up much better off than in the past. For example, the risk of a 25 percent drop in income over 2 years has risen from 7 percent among married couples in the late 1960s to 14 percent in the mid-2000s (based on my computations from Panel Study of Income Dynamics data). But if you look at the average income of married-couple families after their 25 percent drop, it rose from $40,000 to $63,000 (in constant 2009 dollars).
Solid Democratic voters, the Freemans are evidently phlegmatic in their outlook. The visitor’s gaze is drawn to their fridge door, which is festooned with humorous magnets. One says: “I am sorry I missed Church, I was busy practicing witchcraft and becoming a lesbian.” Another says: “I would tell you to go to Hell but I work there and I don’t want to see you every day.” A third, “Jesus loves you but I think you’re an asshole.” Mark chuckles: “Laughter is the best medicine.”
Hmmm…just a typical American household…
The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
Adjusting for household size and using the PCE deflator to adjust for inflation, median household income in the Current Population Survey rose from $29,800 in 1973 to $40,500 in 2008 (in 2009 dollars, again based on my compuatations). Factoring in employer and government noncash benefits would show even more impressive growth.
In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start.
This is entirely a function of changes in the population composition (more Latinos) and in the share of employee compensation going to health insurance and retirement plans.
Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.
Nope. The evidence is ambiguous, but the best studies imply that intergenerational economic mobility hasn’t changed that much in the past few decades. Intra-generational earnings mobility has increased since the 1950s, though it has declined among men.
Alexis de Tocqueville, the great French chronicler of early America, was once misquoted as having said: “America is the best country in the world to be poor.” That is no longer the case. Nowadays in America, you have a smaller chance of swapping your lower income bracket for a higher one than in almost any other developed economy – even Britain on some measures. To invert the classic Horatio Alger stories, in today’s America if you are born in rags, you are likelier to stay in rags than in almost any corner of old Europe.
Tim Smeeding’s research based on the Luxembourg Income Study shows that in general Americans have higher incomes than their European counterparts as long as they are in the top 80 to 90 percent of the income distribution. Below that, incomes are more comparable across countries, and the living standards of Americans look less impressive. The US has comparable intergenerational earnings mobility to Europe, according to Markus Jantti’s research, except among men (but not women) who start out at the bottom. In terms of occupational mobility, David Grusky’s research shows we’re as good or better as anywhere else, but this doesn’t translate into earnings mobility because we let people get rich or poor to a greater extent than other countries do. Jantti and Anders Bjorklund have estimated that Sweden would have the same mobility as the U.S. if the return to skill was as high there as it is here. Finally, employer benefits further complicate how “bad” we look.
Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer grinding income stagnation. It is another to realise that you have a diminishing likelihood of escaping it – particularly when the fortunate few living across the proverbial tracks seem more pampered each time you catch a glimpse. “Who killed the American Dream?” say the banners at leftwing protest marches. “Take America back,” shout the rightwing Tea Party demonstrators.
Unsurprisingly, a growing majority of Americans have been telling pollsters that they expect their children to be worse off than they are.
Totally wrong. The key here is to only look at polling questions that ask people about their own kids, not kids in general. Here are the relevant survey results I could find:
General Social Survey (1994)—45 percent said their children’s standard of living will be better (vs. 20 percent worse)
General Social Survey (1996)—47 percent
General Social Survey (1998)—55 percent
General Social Survey (2000)—59 percent
General Social Survey (2002)—61 percent said their children’s standard of living will be better (vs. 10% worse)
General Social Survey (2004)—53 percent
General Social Survey (2006)—57 percent
General Social Survey (2008)—53 percent
Economic Mobility Project (2009)—62 percent said their children’s standard of living will be better (vs. 10 percent worse) (unlike GSS and PRC, asked only of those with kids under 18)
Pew Research Center (2010)—45 percent said their children’s standard of living will be better (vs. 26 percent worse)
BusinessWeek (1989)—59 percent said their children will have a better life than they had (and 25 percent said about as good)
BusinessWeek (1992)—34 percent said their children will have a better life than they had (and 33 percent said about as good)
BusinessWeek (1995)—46 percent said their children will have a better life than they have had (and 27 percent said about as good)
BusinessWeek (1996)—50 percent expected their children would have a better life than they have had (and 26 percent said about as good)
Harris Poll (2002)—41 percent expected children will have a better life than they have had (and 29 percent said about as good)
Harris Poll (1997)—48 percent felt good about their children’s future
Harris Poll (1998)—65 percent felt good about their children’s future (17 percent N.A.)
Harris Poll (1999)—60 percent felt good about their children’s future (15 percent N.A.)
Harris Poll (2000)—63 percent felt good about their children’s future (17 percent N.A.)
Harris Poll (2001)—56 percent felt good about their children’s future
Harris Poll (2002)—59 percent felt good about their children’s future
Harris Poll (2003)—59 percent felt good about their children’s future
Harris Poll (2004)—63 percent felt good about their children’s future
Pew Research Center (1997)—51 percent said their children will be better off than them when they grow up
Pew Research Center (1999)—67 percent said their children will be better off than them when they grow up
Bendixen & Schroth (1989)—68 percent said their children will be better off than they are
Princeton Religion Research Center (1997)—62 percent of men said their sons will have a better chance of succeeding than they did; 85 percent of women said their daughters will have a better chance
Angus Reid Group (1998)—78 percent said children will be better off than them
Washington Post/Kaiser Family Foundation/Harvard (2000)—46 percent said they were confident that life for their children will be better than it has been for them
Economic Mobility Project (2009)—43 percent said it would be easier for their children to move up the income ladder
Economic Mobility Project (2009)—45 percent said it would be easier for their children to attain the American Dream
Also, polls consistently show that Americans say they have higher living standards than their parents.
And although the golden years were driven by the rise of mass higher education, you did not need to have graduated from high school to make ends meet. Like her husband, Connie Freeman was raised in a “working-class” home in the Iron Range of northern Minnesota near the Canadian border. Her father, who left school aged 14 following the Great Depression of the 1930s, worked in the iron mines all his life. Towards the end of his working life he was earning $15 an hour – more than $40 in today’s prices.
Thirty years later, Connie, who is far better qualified than her father, having graduated from high school and done one year of further education, makes $17 an hour.
It’s not valid to compare her pay mid-career to her father’s at the end of his career—and also, how much work experience does she have relative to him? Did she take time off to raise kids?
The pace of life has also changed: “We used to sit around the dinner table every evening when I was growing up,” says Connie, who speaks with prolonged vowels of the Midwest. “Nowadays that’s sooooo rare.”
Time-use surveys show that while parents spend more time working (because of mothers) than in the past, they do not spend less time with children. They spend less time doing things by themselves.
Then there are those, such as Paul Krugman, The New York Times columnist and Nobel prize winner, who blame it on politics, notably the conservative backlash which began when Ronald Reagan came to power in 1980, and which sped up the decline of unions and reversed the most progressive features of the US tax system.
Fewer than a tenth of American private sector workers now belong to a union. People in Europe and Canada are subjected to the same forces of globalization and technology. But they belong to unions in larger numbers and their health care is publicly funded.
Though unionization has declined markedly in most of these countries, and their health care policies are increasingly becoming too costly. Also, most of the decline in unionization in the U.S. occurred before Reagan took office.
More than half of household bankruptcies in the US are caused by a serious illness or accident.
This is bad Elizabeth Warren research—she counts a bankruptcy as being “caused” by illness or accident if one was reported, but the household could have been in serious debt before these occurred. At any rate, bankruptcies are exceedingly rare (under 1 percent of households—see Figure 13).
Pride of place in Shareen Miller’s home goes to a grainy photograph of her chatting with Barack Obama at a White House ceremony last year to inaugurate a new law that mandates equal pay for women.
As an organizer for Virginia’s 8,000 personal care assistants – people who look after the old and disabled in their own homes – Shareen, 42, was invited along with several dozen others to witness the signing.
Ah…another representative household…
More and more young Americans are put off by the thought of long-term debt.
Evidence?
Had enough? I have speculated that to the extent economic insecurity has increased, it reflects the impact of a negativistic media (amplified by gloom-and-doom liberalism).
Pieces like Luce’s—and the blog posts it generates—affect consumer sentiment. Ben Bernanke and Tim Geithner aren’t the only people who can inadvertently talk down the economy.
Last Thursday morning, I was perched and staring at Tel Aviv in the distance to my left, Haifa to my right, and the vast Mediterranean Sea that seemed to separate them. My crow’s nest view was from a lookout point from the Israeli settlement of Alfei Menashe, which is situated clearly inside the West Bank and guarded by the controversial barrier that separates Israel from the Palestinian territories (I had to chose my words carefully there — the Israelis call it a “security fence” and the Palestinians have far less PC terms for it. In the name of impartiality, I’ll go with “controversial barrier.”)
Israeli settlements in the West Bank have been a lightening rod for criticism and division. The major settlement push took hold under Menachem Begin, Israel’s prime minister from 1977-83, who supported Israeli construction in the West Bank and Gaza Strip as a way to consolidate Israel’s territorial gains in 1967’s Six Day War. In the present context, they’ve become a key issue as the Israelis and Palestinians negotiate peace — as Israelis continue to build new settlements or expand existing ones, it appears as though Israel’s government is interested only in tightening its grip on Palestinian territories, not giving them back.
Construction in and around Israeli settlements came to the forefront in George W. Bush’s 2003 “Roadmap for Peace,” which called for a “freeze on settlement expansion.” Ariel Sharon, Israeli prime minister at the time, suggested that such a freeze was impossible due to the need for settlers to build new houses and start families. The issue has remained controversial ever since.
Occasionally, this family issue has been falsely referred to as “natural settlement growth.” In reality, “natural growth” is completely different. Here’s how it works: legal Israeli settlements are allotted a certain municipal boundary, but construction initially takes place on a small percentage of the designated land. “Natural growth” means that over time, the settlement expands to these full territorial boundaries. As construction continues, particularly for settlements deep on the West Bank, it certainly does look like an Israeli land grab.
In November, the Netanyahu government announced a 10-month moratorium on settlement construction, with an exemption for East Jerusalem. It’s due to be lifted in September.
The latest flare-up occurred during Vice President Joe Biden’s trip to Israel in March when the Israeli Interior Ministry announced the approval of construction of 1,600 new apartments in East Jerusalem. (NB: The Interior Ministry is headed by right-wing Shas Party member Eli Yishai, a rival to PM Netanyahu. The Interior Ministry’s announcement was likely designed to embarrasse Netanyahu during Biden’s visit.)
So, how do we sort this out? What’s the real concern with settlements, and how is the issue leveraged for political posturing?
The first thing to note is that certain settlement construction is more important (worrying) than others. Growth should only be highly controversial in settlement areas that will, one day, certainly be evacuated and turned over to Palestinian control.
If you look at a map of the West Bank, this includes the row of small settlements along the spine of the Jordan River and all those scattered in a seemingly random pattern throughout the heart of the territory. Jewish inhabitants in these locations number anywhere from a handful to a few thousand, and Israeli governments (yes, even those lead by Bibi) realize that they will not be part of Israel after a peace deal. Construction here in any form is unacceptable.
The biggest problem in this regard is Ariel, a settlement some ten miles behind the 1949 Green Line border. With about 80,000 Jewish residents living in relatively new apartment blocks that extend to its full municipal boundaries, both sides acknowledge moving them is probably more trouble than it’s worth. That’s why “new” construction in a place like Ariel technically isn’t that controversial–Ariel’s boundaries are firm, so construction won’t expand Ariel’s reach into the West Bank. Most likely, Ariel will be walled off as a non-contiguous part of Israel (with some sort of a land-bridge to the “mainland”), just like Kaliningrad is separated from the rest of Russia. Or Alaska from the US. Furthermore, a Palestinian state will be compensated with land elsewhere for Ariel.
Moreover, construction in many — though not all — of the settlements in East Jerusalem is less of a big deal than it seems. Certain settlements, like Alfei Menashe in the first paragraph of this post, will very likely become part of Israel in a peace deal. Settlements in Jerusalem, like the Gilo settlement in the city’s south, may indeed be over the Green Line, but it, like Ariel, is a well-developed community that has been considered a regular Jerusalem suburb for decades. It’s clear to both sides that Alfei Menashe and Gilo — communities that have reached their allotted territorial capacity and have no more room for “natural growth”– will become permanent parts of Israel in a peace deal, and, critically, that the Palestinian state will be compensated with land elsewhere.
In other words, continued construction in a place like Gilo is controversial only because it is symbolic and plays well in the media. In reality, building a new apartment block right in the middle of a settlement technically violates the general construction “freeze,” but in reality isn’t a strategic expansion. Even so, Vice President Biden must severely object to these letter-of-the-law violations because they smack of Israeli tone-deafness to this political sensitivity.
That means that when we hear of construction in settlements, we have to be careful to separate the acceptable-but-tone-deaf construction from the strategically unacceptable. Greater understanding of the strategic and tactical realities of settlements would help diffuse an intense public sensitivity to a highly complex issue.
“Flip-flopping” on major issues can be hazardous to your political health. “Flip-flopping” when you’ve branded yourself as a brave principled “maverick” can be especially dangerous. And “flip-flopping” on grounds that you were confused about the issue in question is really, really bad, particularly when you are on the far side of 70.
That’s why John McCain may have ended his long political career the other day when he responded to attacks by primary challenger J.D. Hayworth on his support for TARP (popularly known from the beginning as the “Wall Street Bailout”) by claiming he was misled by the Fed Chairman and the Treasury Secretary into thinking the bill was about the housing industry, not Wall Street:
In response to criticism from opponents seeking to defeat him in the Aug. 24 Republican primary, the four-term senator says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.”Obviously, that didn’t happen,” McCain said in a meeting Thursday with The Republic’s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”
What makes this claim especially astonishing is that McCain was rather famously focused on TARP at the time. He suspended his presidential campaign to come crashing back into Washington to attend final negotiations designed to get enough Republican support for TARP to get it passed. He was, by all accounts, a very passive participant in these talks, but it’s not as though he wasn’t there. And you’d think his memories of the event would be reasonably clear, since it probably sealed his electoral defeat.
It’s not obvious how McCain can walk this statement back. And in terms of the political damage he inflicted on himself, it’s hard to think of a suitable analogy without going all the way back to 1967, when Gov. George Romney (father of The Mittster) destroyed his front-running presidential campaign by claiming he had been “brainwashed” by military and diplomatic officials into erroneously supporting the Vietnam War. He never recovered from that one interview line. (Sen. Gene McCarthy, who did run for presidential in 1968, was asked about the Romney “brainwashing” by David Frost, and quipped: “I would have thought a light rinse would have been sufficient.”).
McCain has a more sizable bank of political capital than George Romney ever did, but in a primary contest where he was already in some trouble, the suggestion that he was brainwashed by a Republican administration into fundamentally misunderstanding the central national and global issue of the moment–not to mention the central current grievance of voters with Washington–could be fatal. It doesn’t help that it will vastly reinforce Hayworth’s not-so-subtle claims that McCain is a fine statesman whose time has come and gone, and is now losing it.
“Flip-flopping” on major issues can be hazardous to your political health. “Flip-flopping” when you’ve branded yourself as a brave principled “maverick” can be especially dangerous. And “flip-flopping” on grounds that you were confused about the issue in question is really, really bad, particularly when you are on the far side of 70.