Last minute Christmas shoppers are reflected in a store's window as they walk through Chicago's Loop, Dec. 24, 2014. After enduring a brutal winter, businesses, consumers and investors showed renewed vigor as 2014 wore on and set themselves apart from much of the world.
Photo by Charles Rex Arbogast/AP

How a brighter economy changes the GOP playbook

Updated

Republicans have spent much of Obama’s presidency blaming him for a weak, job-killing economy. So what happens to the GOP playbook when those jobs come back? 

The economy has already added back all the jobs that the financial crisis destroyed. In 2015, the positive momentum is expected to continue: unemployment will continue to fall, GDP growth will be faster, and wage gains might finally start to pick up. Cratering oil prices are more likely to help us than hurt us, at least for the time being. Consumer confidence is now at the highest level since 2008—and President Obama’s approval ratings are finally above water for the first time since September 2013.

RELATED: Congress’s first big fight of 2015

It won’t be anything like a 1990s-style boom. But if and when the recovery finally starts to feel real, the public is likely to give Obama the credit, whether he deserves it or not. “Absolutely it should help lift the president’s approval numbers—it absolutely helps the Democrats,” said John Sides, a political scientist at George Washington University. When it comes to the economy, research shows that “the president bears the vast majority of the credit and the blame,” he explained. 

Republicans are already massaging their message, but they’ll need a whole new approach if the notion of a booming economy jumps from promising trend to national consensus. And conservatives are now wrestling with what Republicans should stand for. 

“Should Republicans congratulate President Obama on a job well done and leave it at that? Well, no. They need to do what they’ve failed to do for the past half-decade and explain why they can do a better job than the Democrats of steering the American economy,” said Reihan Salam, National Review’s executive editor. 

‘Where are the (well-paying) jobs?’

For years, House Speaker John Boehner had the same take on the monthly employment report: “Where are the jobs?” Then November’s blockbuster jobs report finally prompted a different kind of response. “While it’s welcome news that more people found work last month, wages remain stubbornly flat while costs continue to rise, squeezing middle class families and putting the American Dream further out of reach,” Boehner said.

RELATED: Jobs report blows past expectations

The reality is that even the best-case scenario for the economy in 2015 will leave many ordinary Americans wanting. Wage growth could pick up, but the bar is exceedingly low, given that wages barely rose faster than inflation in 2014 and have languished for decades. So far it’s mostly been Democrats who’ve focused on the issue of stagnant wages, using it as a rationale for raising the minimum wage. But Republicans are starting to seize the issue as well, turning the focus to higher-wage, middle-class workers. 

“I do think Republicans have an opportunity on some of those issues to focus on wage stagnation and to focus on middle class,” says Patrick Ruffini, a GOP strategist and co-founder of digital research firm Echelon Insights. “That person right in the middle— how are they doing? Are the gains we’re seeing in the stock market being held by them?” 

Growth and mobility, not income inequality

What will be Republicans’ proposed solution? Some will undoubtedly resurface the reforms that the party has spent years billing as “pro-growth,” arguing that they will result in more broadly shared gains. “They’ll go to the list of reforms for better growth,” says Doug Holtz-Eakin, president of the conservative American Action Forum, citing comprehensive tax reform and deregulation as examples. The same rationale will prompt Republicans to try to block or slow any new regulations from the White House. 

But other conservatives argue that Republicans have tried and failed to convince ordinary Americans that sweeping policy prescriptions are enough. Republican strategist Liz Mair says that the party needs to focus more on “kitchen-table type issues” that resonate with basic concerns about economic mobility in order to make a compelling pitch to the public.

“A lot of people out there still have concerns about education costs, costs associated with health care and health insurance, childcare costs, and increases in take-home pay (as opposed to overall compensation),” says Mair. National Review’s Salam similarly suggests focusing on education and health-care reform, as well as affordable housing.

“If we have income growth for the broad middle, then the broad middle will care a lot less about income inequality,” says Michael Strain, a resident scholar at the American Enterprise Institute.  “I think that people are more interested in growth than in shrinking the rich/poor gap.”

‘Things could be so much better’

Confidence in Congress is at an all-time low, and expectations are even lower. But with full control of Congress, Republicans will be increasingly under pressure to demonstrate what they want to accomplish, particularly as the next presidential election creeps closer. 

Republicans will need to make the case that, yes, progress has been made, “but they could be so much better if more Republican ideas were taken onboard,” said Mair. But, she added, the only way for Republicans to make a credible critique of the economy is if they actually flesh out and move forward with concrete policies that will help ordinary Americans.

That includes policies that help those who’ve been left out of Obama’s recovery as well, said AEI’s Strain. With Democrats united behind the minimum wage and Medicaid expansion, the GOP may be pressed to propose their own solutions to helping lower-income families, as Republicans like Sen. Mike Lee have argued.

RELATED: Obama’s 2014 report card

“I don’t think it’s reasonable to expect to 2015 will be some kind of magic wand to heal wounds—we need micro policies to help some of the folks who’ve been left behind,” he said, pointing out that more people have stopped looking for work altogether, and the problem is expected to persist even after we return to full employment. His preferred solution would be an expansion of the Earned Income Tax Credit for low-income Americans—one issue that both Obama and Republicans like Rep. Paul Ryan and Sen. Marco Rubio have flagged. 

In fact, what’s striking about the next chapter for the economy is how much Democrats and Republicans will end up agreeing on the biggest issues holding the country back: an outdated tax code, low-quality education, stagnant incomes, and fewer people in the workforce. In theory, a stronger economy could help move some of the solutions forward, as higher revenues and lower spending on the safety net could fund help tax breaks and new investments. But a significant legislative breakthrough is still unlikely to happen.

“Even if improving economic times might alter the type of issues on the agenda, an improved economy doesn’t make legislative compromise all that much easier,” said Sarah Binder, a political scientist and Congress expert at George Washington University. “In an age of toughly competitive and polarized parties, it’s party control that really pays the biggest dividend for making major policy change. “

John Boehner and Money

How a brighter economy changes the GOP playbook

Updated