It’s (Still) The Economy, Stupid
In 1980 former California Governor Ronald Reagan defeated incumbent President Jimmy Carter whose administration had mired the nation in an economic “malaise.” Reagan set about to enact the policies needed to right the ship urging voters in the 1982 mid-term elections to “stay the course.”
They did not.
Although Republicans lost only one seat in the Senate to preserve their majority, Democrats gained 26 seats in the House of Representatives expanding their majority in that chamber and complicating Reagan’s plans for the last two years of his first term.
Despite that by 1984 the economy had rebounded and running on a “morning in America” theme Reagan romped to a landslide re-election victory. As a result of his policies the nation embarked on an almost unprecedented period of economic prosperity.
The preponderance of polling in the 2024 Presidential election found the economy and illegal immigration to be the top two concerns of the electorate suffering from the economic impact of hyper-inflation that characterized the Biden years. Voters generally viewed Donald Trump as best able to handle both of those problems.
Deportation of illegal aliens has necessarily resulted in some unpleasant scenes upon which the Left has capitalized. Protests peaceful and otherwise have been the go-to tactic for the open borders crowd. Despite that, recent polling shows President Trump continues to get high marks for his handling of the immigration problem.
Seeking to avoid Ronald Reagan’s mid-term electoral fate President Trump has moved quickly and aggressively to reverse Biden-era policies that have hamstrung the U.S. economy. The economy, however, is a veritable Rubic’s Cube of actors and policies and defies quick action. Policy reversals, as Reagan learned, take time for the impact to be felt.
The question now is will President Trump’s policies have the desired impact before voters go to the polls in November of 2026? Data currently is mixed, but polling is showing a growing discontent among the electorate. This is due in large measure because the cumulative over 21% inflation that occurred during the Biden Administration is baked into the equation so even more “normal” rates of inflation nudge prices to record levels.
In last month’s “off year” elections Democrats won high profile races in heavily Democrat New Jersey, Virginia, and New York City. In and of itself these results are not surprising and have been given more credence than they merit. However, the elections did expose “affordability” as a growing voter concern.
The Lincoln Institute’s Fall 2025 Keystone Business Climate Survey of business owners, CEOs and managers found “current economic conditions” and “future economic conditions” have risen to the top of business concerns surpassing traditional top concerns such as taxes, regulations, and finding qualified employees.
As the Trump Administration enters its second year it will become increasingly difficult to convince the electorate that their economic problems are the result of Biden-era policies – even though that is clearly the case.
For example, energy costs are on the rise. Pennsylvanians especially are bracing for a significant increase in electricity costs. This is a fundamental case of too much demand chasing too little supply. But why is there too little supply? The environmental Left reflexively fights any plan for new fossil fuel or nuclear power plants despite those being the only dependable sources of base load electricity. They have siphoned billions of taxpayer dollars to subsidize so-called “renewable” power sources which have failed to live up to their promise. All of this while rigging the market in favor of electric powered vehicles which add stress to the power grid.
The looming major battle will be over health care. The deceptively named Affordable Care Act (ACA), commonly known as Obamacare, has been an abject failure suppressing market forces and propped up by ever increasing taxpayer subsidies.
Democrats forced a month-long partial federal government shut down over soon-to expire Covid-era additional subsidies – an expiration for which every single Democrat in congress voted for in 2020. Although those subsidies go largely to insurance companies and account for only about 3% of the total subsidy the Left is disingenuously blaming the expiration of those subsidies for the substantial increases in premiums required by the systemic failure of the ACA.
Add in the Federal Reserve’s handcuffing of the housing market by its slow reduction in interest rates and affordability has become a problem at the kitchen table. This is a red flag for the Trump Administration and congressional Republicans. As James Carville famously said: “It’s the economy, stupid.” The Left has gotten out in front with messaging. The GOP must reclaim the high ground quickly or 2026 will be a repeat of 1982.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of American Radio Journal and Lincoln Radio Journal. His e-mail address is lhenry@lincolninstitute.org.)
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