Why is Trump Leading? It's the Economy, Stupid

CNN came out with a poll of likely Iowa caucus goers yesterday which was pretty interesting as it asked about which issues were most important to them as well as how each candidate stacked up on those issues.  First, let's look at the voting preference results:

As you can see, Trump continues to lead, while Ben Carson seems to be benefiting nicely from his closing remarks at the primetime debate.  Scott Walker's support seems to be collapsing as he was polling around 20% just a month ago. 

Now the question is, why is Trump still leading?  He seems to have offended a filibuster proof majority of this country and didn't have a particularly good debate, in my opinion.  The answer is, he, by far, is the candidate that people trust the most to improve the economy:

That is a pretty ginormous lead compared to #2, Carly Fiorina and as long as people trust Trump so much on economic issues, he is likely to be a threat to get the nomination.  I know that technically we've been out of recession for the last 6 years but it certainly doesn't feel like it, it feels like a forever recession.   After all, median household income pretty much at the same level today as it was 25 years ago!  It's no wonder that economic issues are the most important issues for Iowa caucus goers when deciding on who to vote for:

Candidates really need to focus on the economy if they hope to overtake Trump and so far, I just don't feel that have, not with any depth.  Talking about reducing taxes to spur the economy is not enough.  That has been our mantra since 1980 and while it worked pretty well then, it's just not as important an issue now (note only 2% view it as the most important issue) because the tax rates themselves just aren't as high as they used to be.  Check out this data from the Tax Foundation in constant 2013 dollars.

Right now, in order to hit the 28% tax rate and you are married filing jointly, you have to make $143,432.  Back then, in 2013 dollars, you had to make just $56,284 to hit that rate.  And if you did make $143,432 you'd be paying a 49% tax rate.  So when Reagan got up there and hammered tax rates, it was effective.  I don't think it is as effective and has hit the point of diminishing returns.  Honestly, even my eyes glaze over when they start talking about cutting taxes, not because I don't want my taxes cut (who doesn't want more money) but because it is just not imaginative and not a big issue. 

I think in order to get voters to believe that you will actually do something about the economy, you really have to start talking about regulations, which are really stifling just about every industry in the country except for technology.  Trump has done a good job focusing on regulations and mentioned how there used to be bipartisan consensus around building a wall with Mexico but the environmental impact statements kept it from happening.  Tell people how specific regulations are keeping certain factories from opening or are destroying farming in Central California etc. 

Another economic issue that should probably be focused on is getting real jobs back into this country.  Trade deals that are not a net positive for this country should probably be walked away from or renegotiated.  We need to cut corporate tax rates so instead of companies moving to Ireland, they move here.  We need to have more skill oriented jobs and fewer McJobs which offer no permanence and really give you no skills.  Trump has been talking about all of these issues but I feel like the other folks have been talking more about their records or are just paying lip service to the economy.  I think if a candidate can convince people that they have a specific plan to get the economy going (that doesn't just involve cutting personal income taxes), they will do quite well.

I wanted to conclude with one more chart from the CNN poll which I found interesting.  They asked which candidate is most likely to change the way things work in Washington:

That is just a jaw dropping result.  44% of Republicans think Trump is mostly likely to change the way things work in Washington despite the fact we don't even know if he will be at all effective.  Congress doesn't exactly react well to bullying after all.  You would think someone who fought unions and death threats like Walker or someone who wants to cut 40% of the federal budget like Paul or someone would will charge any mountain in the name of small government like Cruz would do better.