How much government do we want and how much are we willing to pay?

As the 2020 election cycle ramps up, voters will have many decisions to make including selection of a Democratic nominee for president to vie against President Trump, already in campaign mode. At issue is the basic role of government versus the plight of individuals, including the economy, their personal finances and how much they pay in taxes. In his role as party peacemaker, former President Barack Obama is reported to have recently urged new Democratic members of Congress to think big but to also think about the costs associated with funding big ideas.

There is a divide on any number of key issues and philosophies including how much government is too much, or too little. And how do we manage debt and deficits?

Beneath the surface, much of what will likely guide many voters’ decision-making will revolve around the economy. More than a year-and a-half before Election Day, the economy is slowing with rising downside risks.   

An overarching debate involves the need for government in some form. A centuries-old Aristotle quotation comes to mind explaining the fundamental need for government and law: “At his best, man is the noblest of all animals; separated from law and justice he is the worst.”

Policy versus personality

Any discussion about the general election outlook inevitably includes the allure of personality dictating voter decision-making. Seeming to come from almost nowhere, Democrats Beto O’Rourke and Alexandria Ocasio-Cortez have skyrocketed onto the scene, capturing attentions helped by social media. In the increasingly tribal environment, there has been a visceral backlash from those seemingly fearful or dismissive of the newcomers’ ascension.

A stance of the business lobby and President Trump has been that the economy, indeed society, is overburdened by regulation. That philosophy was at the heart of Executive Order 13771, signed by Trump in January 2017 directing federal agencies to eliminate two regulations for every new one put into place.

While trust in government has declined over the years, coinciding with a broader decline in trust in institutions generally, the wholesale resistance against regulations runs the risk of throwing out the proverbial baby with the bathwater.

The current status of American regulation has been thrust into the spotlight as the U.S. was effectively embarrassed into the position of being the last government to ground Boeing 737 Max aircraft after two fatal passenger jetliner crashes. As more evidence has come to light and as Congress and other authorities investigate, it appears that that the regulatory process failed.

Another tipping point came in late January during the partial government shutdown as federal paychecks were interrupted, TSA agents failed to show up for work, food safety was seen at risk and release of important economic data was interrupted. The shutdown became no longer politically palatable. 

Whether looking at safe drinking water, clean air, worker safety, consumer protections, screening airline passengers or keeping the nation safe more broadly with the military, law enforcement and intelligence agencies, government at all levels is what separates individuals from the jungle, so to speak.

But as the saying goes, the devil is in the details.

A fight within the Democratic party

More broadly, the debate among Democrats and by voters in general, has huge implications. Hanging over the field is the expectation that former Vice President Joe Biden will jump into the race. Polls indicate that Biden and progressive Bernie Sanders, a self-described Democratic Socialist remain atop the pack. Biden has tended to be more of a traditional Democrat while Sanders has supported proposals like Medicare for all, raising the federal minimum wage to $15, restrict stock buybacks and provide tuition-free education.

Polls have indicated that Democrats are prioritizing electability even if that means sacrificing focus on issues they hold dear. On the other side, some Republicans appear to be betting that by branding the opposition as being socialist that the details of the discussion can be avoided.

Could the Democrats still make a hard break to the far left as election day draws closer? One can recall the 2016 election cycle’s dramatic GOP pivot to Trumpism. Traditional Republican stances favoring strong international alliances, multilateral trade agreements and fiscal austerity were abandoned. Imagine if a time traveler, suddenly appearing on the scene, was told that a president was personally calling out individual companies, going against the traditional grain of the “free market” or was seemingly agnostic to NATO. That traveler might have been tempted to bet that it wasn’t a Republican leveling the verbal barrage (and lose their bet).

All personal finance is local (and personal)

To bring this back around to Americans’ pocketbooks, much depends on the plight of the U.S. economy leading up to November 2020 and the years thereafter. History suggests that Trump will have a hard time making the case for re-election if the nearly decade-old economic expansion has ended or is faltering by then. Many economists think a recession looms in the next few years, although predicting the exact timing of recessions is difficult.

Bankrate surveys of individuals, however, consistently find that a huge cross-section of the American public continues to struggle, despite the largely favorable headwinds associated with strong growth and low unemployment. Most live paycheck-to-paycheck. There’s a long way to go toward attaining sufficient savings for retirement and emergencies. Some 3 in 10 Americans have more credit card debt than emergency savings, even as the Federal Reserve continued to increase interest rates over the past year.

One price of the 2017 tax cut is rising debt and deficits forecast for years to come unless there’s legislative intervention. Whether Americans opt for new and larger programs without being willing to fund them through new sources of revenue, adding further to government debt, remains to be seen. 

As the 2020 election cage fight plays out, individuals would be wise to focus on their personal financial goals including saving for retirement and emergencies while paying down debt. They are money goals withstanding the test of time while garnering support from people of all political stripes. 

Mark Hamrick is senior economic analyst and Washington Bureau Chief for Bankrate.com. He also serves as volunteer president of SABEW, the leading organization for financial and business journalists. He previously served as president of the National Press Club in Washington, DC.

 Follow me on Twitter: @Hamrickisms