Abstract
The housing crisis precipitated by the Great Recession of 2007–2009 was an unprecedented challenge for federal administrators, and it was not handled well. Recent research indicates what went wrong and how. A case is made that federal ineffectiveness in dealing with the housing crisis angered Americans, and that anger was a likely factor in the election of Donald Trump as president in 2016.
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As the title of this essay states, federal administrators merely “helped” get Donald J. Trump elected president in 2016, and, as we explain throughout, they inadvertently helped Trump by their misguided policies and mismanagement of the housing crisis. But by no means were a few bureaucrats central in electing Trump. Context matters, and far more formative factors, some of which have been present for decades, underlay Trump’s triumph. These include the following factors, which I have selected somewhat, but not entirely, arbitrarily.
Job Losses Caused by the Great Recession. More than 30 million people lost their jobs during the Great Recession of 2007–2009, and the labor market was “exceptionally sluggish after the Great Recession” (Kalleberg and Till). Memories of those deeply troubled times doubtlessly persisted during the presidential election held seven years later.
Immigration. Those job losses likely hardened popular anti-immigration views, particularly among those Americans who had lost their jobs—and even among some of those who had kept their jobs during the Great Recession, but worried that lower-cost immigrants might take their jobs. Since 1965, pollsters have asked Americans about immigration. In every single survey (with one exception–the 2020 survey), more Americans preferred less immigration than those who preferred more. In general, Democrats and independents express more favorable views about immigration than do Republicans, whose responses “have not changed much over the past decade” (Younis, 2020). Hence, it perhaps should not be surprising that Trump wanted to “appear tough on immigration … an issue that was at the heart of Trump’s successful 2016 campaign” (Fox and Spagat, 2020).
The Flat Average Real Wages Issue. There is a perception, one widely held by the public and by not a few experts as well, that average real wages (that is, the spending power of wages after adjusting for inflation) have not increased since at least 1979. These experts, however, by no means fully agree that average real wages are flat, and some believe that average real wages have risen. One conservative analyst, for example, concludes that real wages have increased, on average, by about 1 percent per year, 1979–2018 (Strain, 2019)—a percentage that might strike one, in reality, as still pretty flat.
What does seem to be widely agreed upon by analysts is that average real wages for those workers at the lowest end of the economic scale have barely moved over forty years (e.g., DeSilver, 2018; U.S. Congressional Research Service, 2019).
Three researchers at the Brookings Institution put the matter wryly: “Methodology” in determining whether average real wages are “rising, falling, or stagnating … really, really, really matters” (Reeves, Pulliam, and Schobert, 2019).
The Widening Wealth Gap and Its Crushing Consequences. Unlike the real wages issue, our fourth and final factor leading to Trump’s election is uncontested. It is the deep and widening wealth gap in the United States. Since 1987, the National Opinion Research Center has found “repeatedly” that about three-fifths of Americans agree or strongly agree that “differences in income in America [are] too large” (Whoriskey, 2011).
Facts unambiguously support this perception. The surge in income inequality began in 1980, and currently costs the median worker in the U.S. an average of $42,000 per year. If the United States’ income distribution had stayed the same as it had done between 1950 and 1980, the bottom 90 percent of income earners currently would have been $47 trillion wealthier in 2020; the lowest annual income category ($35,000 and lower) today would be $61,000, and the middle category of annual income, at $72,000, currently would be $120,000 (Price and Edwards, 2020).
Between 1979 and 2007, income increased by 10 percent for the most affluent fifth of Americans; for the three-fifths of Americans in the middle reaches, incomes fell by 2 to 3 percent (the middle class, in fact, shrank in every single American state, 2000–2013 [Henderson]); and for the wretched fifth at the bottom, income hemorrhaged by an astonishing 18 percent (U.S. Congressional Budget Office, 2011).
The higher that one ascends the income ladder, the greater the gap. During the same period (1979–2007), the top 1 percent of earners more than doubled their share of the nation’s inflation-adjusted, after-tax income, rising from 8 to 17 percent, and now accounts for nearly 24 percent of Americans’ inflation-adjusted, pre-tax (or total) income, a share that has not been seen since 1928 (Henry, 244, 2018).
America’s income gap, at forty-first out of 158 nations, is not only far wider than those of any European country, Canada (which ranks a low 119th), and Japan, but is even wider than those of China, India, Iran, Russia, and many others, most of which concentrate in underdeveloped countries in Africa, Asia, and Central and South America (U.S. Central Intelligence Agency, 2020).
According to at least one authority on the subject, America’s income inequality happened largely “because antitrust laws were neutered. Labor unions shriveled because corporations were allowed to bust unions. Wall Street … bailed out when its bets soured. … Taxes on the top were cut, tax loopholes widened” (Reich, 2020).
A wide (and widening) wealth gap has some very real destructive effects on society. Large income disparities associate with slower economic growth and lower tax revenue, whereas small disparities correlate with speedier growth (Ostry, Berg, and Tsangarides, 2014) and higher tax revenue (S&P Capital IQ, 1, 2014). Relative to societies with narrow wealth gaps, those with wide ones experience: lower economic and social mobility (Kreuger, 2012) and lower rates of life expectancy and educational performance, but higher rates of obesity, imprisonment, homicide, infant mortality, drug abuse, and teenage births (Wilkinson and Pickett, 19, 2009).
Finally, the wider a society’s wealth gap and the greater its income inequality, the deeper its political polarization and the more gridlocked its public-policymaking (Voorheis, McCarty, and Shor, 2015). Sound familiar?
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Henry, N. How Public Administrators Inadvertently Helped Get Donald J. Trump Elected President: The Great Recession, the Housing Crisis, and the Failure of Public Policy. Public Organiz Rev 22, 1325–1342 (2022). https://doi.org/10.1007/s11115-021-00519-3
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DOI: https://doi.org/10.1007/s11115-021-00519-3