Trump's Unfulfilled Rust Belt Renaissance Poses Risks for 2020

(Bloomberg) -- Donald Trump landed in the White House by winning three Rust Belt states Democrats had carried in previous elections -- Michigan, Wisconsin and Pennsylvania -- and his re-election could hinge on whether he can hold them.

It won’t be easy. On the eve of the 2016 vote, Trump vowed at a raucous late-night rally in Grand Rapids, Michigan, to bring transformative change. “Michigan stands at the crossroads of history,” he said. “If we win Michigan, we will win this historic election and then we will truly be able to do all of the things we want to do.”

Trump returns to Grand Rapids on Thursday night with his promise of a Rust Belt renaissance unfulfilled. Across all three states, Trump and his party have struggled since his election: public opinion of him has eroded; Republicans lost badly in November’s midterm elections; and according to a Federal Reserve measure of state-level economic performance, Michigan and Pennsylvania continue to trail the U.S. overall.

In Wisconsin, where economic conditions have kept pace with U.S. growth, Trump’s approval rating is nonetheless underwater.

Some of the president’s allies have begun to worry. “If Trump doesn’t win Michigan in 2020, he isn’t going to be president,” said Steve Bannon, Trump’s former campaign chairman and White House strategist.

Trump's Unfulfilled Rust Belt Renaissance Poses Risks for 2020

In 2016, Trump’s vowed he would revitalize a Great Lakes region buffeted for decades by global economic trends that hollowed out the manufacturing sector and ravaged paychecks. He also took a hard line against the North American Free Trade Agreement and China’s trade practices. That pitch proved just strong enough for him to win: Trump’s 77,000-vote margin of victory in Michigan, Pennsylvania and Wisconsin delivered his Electoral College victory over his Democratic opponent, Hillary Clinton.

“A lot of these blue-collar Democrats do feel that the president has stopped the U.S. from getting sand kicked in its face,” said John Brabender, a Republican consultant who works on campaigns in Pennsylvania. “But these are incredibly fluid voters and the race will probably come down to them once again. If those Democrats switch back in places like Pennsylvania and Michigan, it’s going to be really hard for the GOP to hold onto the White House.”

Wisconsin Democratic Senator Tammy Baldwin said many people in her state “felt hopeful during the 2016 campaign that they were being seen and heard” by Trump in a way that they didn’t with Clinton. But she argued that Trump’s tax overhaul gave disproportionate benefits to upper earners and corporations, and that his efforts to roll back health insurance subsidies mean “working people know they’re getting the short end of the stick.”

Continued Struggles

Trump’s weakened standing reflects the region’s continuing struggles. Michigan is a case in point. Last fall, General Motors Co., announced plans to end production in two southeastern Michigan auto plants. Data from the U.S. Commerce Department’s Bureau of Economic Analysis shows that personal income growth in Michigan during Trump’s presidency is among the lowest of any state. And in recent weeks, Trump started a Twitter attack on the United Auto Workers, blaming union leaders for GM’s decision to idle a plant in Lordstown, Ohio.

“The optimism and excitement you heard from workers two years ago is mostly gone,” said Mark Gaffney, former Michigan president of the AFL-CIO. “A lot of those people haven’t abandoned him. What you hear now is, ‘He’s being picked on by the liberal media.’ But his support is diminished.”

Obama Voters

One flashing warning for Trump is that voters who backed President Barack Obama in 2012 and went for Trump in 2016 have begun to peel away. In a March 21 poll, Optimus, a Republican data-research firm conducting an ongoing study of Michigan, Wisconsin and Pennsylvania, found that Obama-to-Trump voters were willing to defect to an array of the Democrats running for the party’s presidential nomination.

In Michigan, Trump was holding 84 percent of these voters; in Pennsylvania between 70 percent and 79 percent, depending on his Democratic opponent; and in Wisconsin, only about 66 percent. Though a relatively small number, Trump’s margins were so narrow he can’t afford much erosion.

“Our data shows Obama-Trump voters beginning to move away from the president,” said Scott Tranter, a partner at Optimus. “That, along with the historic turnout spike we saw in 2018, suggests a tougher path for the president in these states where there are simply more Democratic-leaning voters than Republican-leaning voters.”

Democrats have taken note of the president’s struggles and moved to exploit them. The Democratic super-PAC Priorities USA has announced a $100 million blitz focused on all three states that will include a large digital advertising campaign and staff on the ground.

Pivotal States

“Michigan, Wisconsin, and Pennsylvania are three of the four states that we view as being the most pivotal in terms of deciding the 270th electoral vote,” said Josh Schwerin, communications director for Priorities USA. Perennial swing state Florida is the fourth.

The group is particularly focused on a different set of Midwestern defectors: people who supported Trump in 2016 but cast a midterm vote for a Democratic candidate.

Priorities USA research found that health care is the top issue on which these voters will make their decision about who to support in 2020. The Trump administration’s decision this week to support a lawsuit that would invalidate Obamacare, Schwerin said, is another sign that momentum in these states is moving against Trump.

Senator Debbie Stabenow, a Michigan Democrat, said Trump ensured health care will be the No. 1 economic issue in her state in 2020. “I’ve had a number of people say to me, ‘Gosh, when I supported President Trump I didn’t think he was gonna take away my health care,’” Stabenow said.

With the presidential election still 19 months away, that momentum could still shift. “The big unknown factor here is who winds up being Trump’s opponent,” Brabender said. Optimus polls of potential head-to-head matchups in these states show that while Trump generally loses to any of the top-tier Democratic hopefuls, the margins are mostly narrow.

While the Federal Reserve is cutting its forecast for economic expansion and market sentiment is turning toward fears of recession, bright spots remain – including in Michigan. Earlier this month, GM announced that it would spend $300 million and add 400 workers at an auto plant north of Detroit that will produce a fully electric Chevrolet.

Local leaders in Michigan said Trump’s electoral prospects will hinge on whether positive economic developments filter down into paychecks, as Trump promised they would. “While so many numbers, from GDP to unemployment, say the economy is good and growing, the wage gains have not worked their way through system yet,” said Gaffney, the former Michigan AFL-CIO president. “There are guys sitting here two years after Trump saying, ‘Where’s my raise?’ That’s a problem for Trump.”

©2019 Bloomberg L.P.