The Roosevelts versus Ronald Reagan.

Back at the start of the Twentieth Century, Theodore Roosevelt had posited that big business and a foreseeably big labor would require a big government to balance their power and solve complex new problems. For a long time, it appeared that “the Republican Roosevelt”[1] had been prescient. The New Deal, launched by his cousin Democrat Franklin D. Roosevelt, greatly expanded the government’s role in the economy. That trajectory continued until the election of Ronald Reagan in 1980. Since then, Republicans have inveighed against the expansion of state power (unless national security can be invoked). What do Americans think about this issue in the early Twenty-First Century? A January 2014 opinion poll captured a fundamental division of opinion.[2] A majority (57 percent) agreed with the statement that “we need a strong government to handle today’s complex economic problems.” However, a very substantial minority (41 percent) rejected that idea in favor of letting a free market operate without “the government being involved.” To belabor the obvious, 57 + 41 = 98 percent of Americans. There is no uncertainty in the minds of Americans about this issue, no mushy middle ground on which compromise is possible. Two tribes confront each other. In Europe, on the other hand, there is a broad consensus on the role of government in the economy.

This has important implications for the economically-battered ordinary American. In 2010, the median wage was $26,364. After adjusting for inflation, this was the lowest real median wage since 1999.[3] In 2014, American median net worth per adult hit $44,900. Japan, Canada, Australia, and many Western European countries ranked ahead of the United States, which came in at 19th .[4] Apparently, if Americans are offered a choice between earning another $20,000 a year and getting another month of vacation, they would take the pay.[5] One could interpret this as Americans being workaholics. One could also interpret it as a sign of the economic stress under which many Americans are operating.

The question is what to do about this pathetic performance. The opposing positions generally pit redistribution through taxation policies (i.e. “strong government”) against pro-growth and social mobility policies (i.e. “let the market operate”).

If you combine federal, state, and local taxes, Americans are among the lowest taxed people in the developed world. Here the US ranks 31st, trailing most of the countries with higher median net worth.[6] Where does American federal spending go? Almost two thirds of it (65 percent) goes to three categories: Social Security (24 percent); Medicare/Medicaid/CHIP (22 percent); and defense (19 percent).[7]

None of this goes to the question of which group is correct. Perhaps neither one is entirely correct. Europeans are laboring under an “austerity” that would never be tolerated in the US. It does suggest that there is a core dispute that is more powerful—and important—than the “culture wars” that obsess the media and Democratic activists. Hence, Bernie Sanders.

[1] As Yale historian John Morton Blum called one of his books.

[2] “Poll Watch,” The Week, 17 January 2014, p. 17.

[3] “Noted,” The Week, 4 November 2011, p. 18.

[4] “The bottom line,” The Week, 20 June 2014, p. 34.

[5] “Poll Watch,” The Week, 24 July 2015, p. 15.

[6] “Noted,” The Week, 25 April 2014, p. 16.

[7] “Noted,” The Week, 25 April 2014, p. 16. It is worth pointing out that most countries don’t spend anything like the share of the budget on defense as does the US. Instead, they rely on the US in an emergency. That frees up a lot of resources for social programs. Then the federal nature of American government means that much spending is done by state and local authorities. Some European countries, in particular, have a more centralized system.

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Future Election Demographics 2.

This is tedious, but I wanted to know more about it. Back before the November 2014 “deluge,”[1] Nate Cohn foresaw the Republican avalanche and explained why it would happen.[2] The Democrats have won the majority of the popular vote in five of six presidential elections, so they represent the majority of Americans, right? Well, no.

Essentially, the Democrats have conquered the big cities.[3] The Republicans have conquered the outskirts of cities and the rural areas. Thus, big cities in “red” states vote “blue” and far-suburban and rural areas of “blue” states vote “red.” However, the urban voters also are irregular voters, while rural and exurban voters are regular voters. So there are two rival constituencies, one alternately larger and smaller; the other steady and strong.

Cohn argues that “more than ever, the kind of place where Americans live—metropolitan or rural—dictates their political views.” This is comforting to American liberals, who associate the people living outside the cities with the supporters of William Jennings Bryan in the Scopes “Monkey Trial.” (Awkwardly for this analysis, Bryan was a Democrat.) Obviously, the opposite might just as easily be true: that their political views determine where people live. Maybe, some people are fed up with all the negative factors that they associate with great cities and move elsewhere. Well before President Obama took office, traditionally Democratic voters in places like West Texas and West Virginia abandoned the presidential candidate over “social issues.” It isn’t just him. It’s the party.

The traditional Democratic strategy had been to win more than the cities. The party’s embrace of divisive social causes (gay marriage, abortion, gun control, expanded federal powers in many areas) undermined this strategy. President Obama won election in 2008 and 2012 by wagering on urban core populations. He expanded the Democratic vote in 68 urban areas that had gone for Al Gore in 2004, but didn’t dent the Republican vote anywhere else.[4] In the process of building his “Me-Me-Me” coalition of African-American and hipster voters, the President further alienated part of the old Democratic base.[5] In the future, the party will have to figure out whether it needs to walk back away from some of those positions or to just wait for a majority for voters to catch-up with them. (Growing Republican support for gay marriage and government action on climate change suggest that the latter might be the best approach.)

What works at the level of Presidential races isn’t going to work at the level of House races. At the level of the House of Representatives, two things are true. One is that Democrats have massive majorities in a relatively restricted number of urban Congressional districts. A second is that Republicans generally have narrow-to-solid majorities in a majority of Congressional districts. Thus, many of the votes in Democratic districts are “wasted” votes. In sum, the Republicans have a long-term grip on the majority in the House of Representatives.

Are Democratic policies in cities driving out Republicans to the suburbs and exurbs? Is any struggle within the Republican Party the real story in American politics? Is deadlock between legislature and executive the American fate in an age demanding decisions?

 

[1] See: http://en.wikipedia.org/wiki/Deluge_%28history%29 for the way that my Democratic friends and family think about it.

[2] Nate Cohn, “Why Democrats Can’t Win,” NYT, 7 September 2014.

[3] They have won the young and the racial minorities—African-Americans above all.

[4] For example, in 2012, President Obama won 52 percent of the vote in Pennsylvania, but only 28 percent of the Congressional districts; 52 percent of the vote in Virginia, but only 36 percent of the Congressional districts. .

[5] This isn’t the same as saying that he permanently alienated them from the Democratic Party.

Demonomics.

“Liberalism” has always been about freeing people from restraints in order to achieve their full potential as human beings. In the 19th Century, that meant free speech, free markets, representative government, and an end to government regulations that favored protected interests. By the end of the 19th Century, American liberals recognized that their initial plans had failed to foresee the rise of powerful organizations (big business, big labor), the destructive power of prejudices, and inequality of opportunity. What we think of as modern liberalism emerged from this recognition as liberals sought to create a strong state that could hold in check and mediate between powerful organized interests. It then went beyond this mission to attack the racial prejudices and economic disabilities that held back people from reaching their potential. Subsequently, liberals went on to endorse “expressive liberalism” that allowed people to enunciate their core identity (such as being gay) or controversial opinions.

What are we to make of the definition of current liberalism tossed off by Nate Cohn in the New York Times? Cohn defines the Democratic Party’s mission as one of simply “expanding the safety net.”[1] Apparently, there is no philosophy behind this mission, beyond winning elections by spending far more money out of tax revenues than the Koch brothers have at their disposal. In the absence of such a philosophy, Democrats turned to raiding the program of “reform conservatism” for ideas. Health care insurance reform (“RomneyCare”), earned income tax credits, and college tax credits all began as ideas on the right, but were taken over by Democrats without ideas of their own.

Recent efforts to define an agenda for the future have undermined the unity of the party. On the one hand, the Party focused on easing the plight of the poor through the expansion of health insurance to the small minority of Americans who desired it, but could not afford it, and by trying to raise the minimum wage. On the other hand, liberal activists on the left wing of the party have pushed it to embrace causes which—however sensible in the eyes of reasonable people—clash with the interests or values of many Democrats: climate-change, gun control, and amnesty for illegal immigrants. As a result, Cohn remarks, the Democratic Party lacked a “coherent message for the middle class… in 2014 or even 2012.”

The emerging agenda of the Democrats focuses on what Cohn labels the “parent agenda”: In fact, it is best seen as part of response to the “great wage slowdown” of recent decades. Under the banner of fairness and promoting equality, the “parent agenda” will seek to redistribute resources from the wealthy to the middle class. In part this will be accomplished through the tax system: an expanded earned income tax credit (a transfer payment), child tax-credits, universal preschool, and universal precollege. In part it will be done by the state substituting for the decrepit union movement that cannot bargain for employees: paid family leave is the initial idea, but others are likely to follow. It will require higher taxes on upper income groups, The great advantage to the “parent agenda” is that it can be presented as providing opportunities, rather than as outright redistribution. It isn’t liberalism or even redistribution. It’s just retribution.

All this seems to represent an intellectual exhaustion on the part of the Democratic Party. Doubtless it would be thrown into an even more stark relief if not for the intellectual exhaustion of the Republican Party. The Republicans cling to tax cuts and “patriotism” (i.e. high defense spending by the many and military service by the few) in place of creating an “opportunity society” that might liberate those whom the Democrats have abandoned.

[1] Nate Cohn, “The Parent Agenda, The Democrats’ New Focus,” NYT, 10 February 2015.

 

The ticking clock.

President Obama and the Democratic majority began his first term by launching a stimulus bill and creating a national health insurance system.[1] Both had failings, real and purely imaginary. Many voters responded to the ravings of the Tea Party and mainstream Republicans had little choice but to fall into line. The 2012 elections began to movement toward a Republican majority in Congress that culminated in the elections of 2014. Along the way, the Republican majority in the House not only blocked any further stimulus spending, but actually forced spending cuts through the sequester. Americans are still paying for that foolishness. By November 2014 President Obama and the Democrats were facing a two year-long march through the desert. Republican majorities can block any policy initiatives from the White House just as effectively as the White House and the Senate blocked the policies of the Republican House for the last four years. Aides are beginning to leave the White House to prepare for future campaigns on behalf of others or to cash in their chips by becoming consultants.

By early January 2015 the unemployment rate was down to 5.6 percent and falling, and the deficit had shrunk to 3 percent of GDP. This seemed to some observers to open a new “post-recession, post-panic era.” What will be the political themes of this new period? The mainstream of the Democratic Party is intellectually exhausted, while the left-wing (Elizabeth Warren, Bernie Sanders) is filled with enthusiasm.[2]

Betes noire of the Democratic Party (to judge by my cousins’ posts on FB) include big banks and inherited wealth and money earned from assets. The bêtes blanche are the middle class working Americans.[3]

In part, the President appears to have said “OK, I’ll do what I wanted to do from the start—govern the country like I’m the king.” He used his “prosecutorial discretion” to temporarily amnesty millions of illegal immigrants”; he dumped the policy of pretending Communist Cuba is just going to go away. In part, the President appears to have decided to lay down markers for the course his Democratic successors should follow.[4] In his state of the union address President Obama pitched a new tax plan. The plan proposed to raise the tax on capital gains, force people to pay when they inherited assets, and put a stop to 529 education savings plans because well-off people use them more than do lower-income people. The additional revenue would be used to fund a $500 tax credit to families where both parents work, and to cut taxes on families with children.

Right now this plan is going nowhere. It’s just more hot air from a guy who has always believed too much in the efficacy of speech. Republicans are philosophically opposed to high taxes on assets because the economy needs investment to grow. Still, going forward, it sets up a straight fight between Capital and Labor as the basic issue in the 2016 election. Whether that’s the best solution to the current American problems is open for debate. (See: Inequality 1.) Whether Democratic candidates will feel bound by Obama’s speeches also is open for debate.

[1] Neil Irwin, “Obama’s Tax Proposal May Help in Setting a Framework for 2016,” NYT, 18 January 2015.

[2] This same pattern led to disaster in the 1970s and 1980s. One can’t help but wonder if the Democratic Party is headed down the same road as the British Liberal Party in the early 20th Century. See: George Dangerfield, The Strange Death of Liberal England (1935).

[3] This loose terminology sets academics to grinding their teeth for its lack of “rigor,” but the meaning is clear enough: pissed-off people who actually vote.

[4] Given the way Hillary Clinton and Leon Panetta have rushed into print with memoirs of their service under a still-serving president, you can understand his indifference to the effect on subsequent candidates. I’m leaving Robert Gates out of this because he’s in a different category of public “servant.”