Saturday, November 6, 2010

Lessons of Rebound for the Democrats

The all-important midterm election in the USA is over with the Republican Party ‘shellacking’ the ruling Democratic Party. In American history, never before was so much money, an astounding $4 billion, spent for a midterm election. In all likelihood, Rep. John Boehner will become the new Speaker, replacing Nancy Pelosi, in the House of Representatives after the lame-duck session. The election results showed that the Democratic Party had lost touch with the voters that made Obama the president and it the winners in the Senate and the House of Representatives just two years ago.

While the election results were not really a surprise since most sample polls taken before the election-day had predicted that the Democratic Party would lose many seats, no one expected that the Republicans would gain some 60 seats in the House and six in the Senate. Republicans also showed significant gains in state legislative elections where their candidates defeated about 650 Democrats, the most in nearly a half-century, giving them control of more legislative seats than at any time since 1928.

There is no doubt that the Tuesday’s election outcome was more a reflection of unpopularity of the ruling party, especially the policies of the Obama administration, than an endorsement of the Republican Party. As it happens during the midterm elections, unlike the Republican loyalists, many loyal supporters of the Democratic Party, e.g., the Afro-American and the Hispanic voters, did not go to the polling booths to cast their votes last Tuesday. The independents that were a major force behind the 2008 election win for the Democratic Party had their reasons to either avoid the polling booths or change their minds. President Obama and the Congress had failed them in fulfilling the promises made before the 2008 election. They felt betrayed, duped, used and frustrated. The ‘change’ promised by Obama was a hoax to them!

To many loyal supporters of the Democratic Party the election results were simply unbelievable, especially after the landslide victory in 2008, when besides having a Democratic President in the White House they also won control of the both Houses in the Capitol Hill. They became myopic and arrogant, and lost touch with their priorities. They forgot that 2008 was more of an exceptional election year than a norm when voters usually decline to give either party a clear and durable mandate. The American voters like a divided government between administrative and legislative branches, more like a check and balance policy, which encourages negotiation and compromise over one-sided arrogance and display of raw political power.

In his post-election press conference, President Obama admitted that he was ultimately accountable for the election outcome. It was a ‘humbling’ experience for him. He said, “In the rush of activity, sometimes we lose track of the ways that we connected with folks that got us here in the fist place.” As some critics would say that the Democrats’ downward slide with popularity began when they pursued the healthcare overhaul (thus, strengthening the social security net) in 2009 rather than investing political capital on more steps to stimulate the economy.

Such election upsets are not uncommon for the ruling party in the American history. In 1982 during President Reagan’s first time in office, his party had lost the overall national vote by a whopping 12% points. Despite that midterm hit, Reagan survived and won the 1984 election, and was even able to place his vice president Bush Sr. in the Oval Office when he had retired. Economy was an important factor then, as it is today. The unemployment rate at 10.4% in 1982 was higher than today’s 9.6%. During Reagan’s first two years, that rate had actually grown compared to Obama’s when it has actually shrunk. Back then, the annual inflation rate was 6.25% compared to today’s 1.1%. The 30-year mortgage, fixed rate in 1982 was 14.61% compared to today’s 4.23%. The average GDP growth rate for the four previous quarters is 3.1% today while it was in the negative territory at minus 2.1% in 1982. Most importantly, Reagan had a lower popularity rating (42%) compared to Obama’s 44%. In 1984, Reagan was credited for reviving the economy and won the re-election in a landslide barely seen ever since, in spite of the fact that he was accused of ignoring the ‘social safety’ net.

As we all know, priorities are always important in life – individual and collective. When a ruling party fails to understand what these priorities are with its electorates and fails to take actions on such higher priorities, it is doomed to lose election. The other important lesson is that voters have short memories. It is as much true in a liberal democracy like the USA as it is in other parts of the world, including Bangladesh and India with illiberal democracies. If this was untrue it’s inconceivable to imagine that American voters would have overwhelmingly approved of the Republican Party that was responsible for hatching the worst economic disaster to haunt this country since the great depression of the 1930s.

Not everything is lost for the Democrats though. They still retain a slim majority in the Senate. They have President Obama in the White House, one of the most charismatic persons since the days of Clinton to occupy that office.

A Democratic growth agenda may require devising a new strategy to stimulate the economy while not ignoring its social security net. However, it won’t be an easy task given the Republican Party’s penchant for easing the tax burden on the wealthy 1% of the population earning annually more than a quarter million dollars. Like many critics of the program, I don’t see how this Republican prescription would stimulate the economy other than adding extra $700 billion to the daunting budget deficit. The Republicans in the Congress won’t like to raise the taxes, and Democrats won’t cut spending on benefits. Unless some compromise is made there, partisan gridlock, although unwelcome by most American voters, may again become the realities of the next two years. Such gridlocks, much like the Clinton years, may actually backfire for the Republicans in 2012.

Economics would continue to dictate the politics of the USA for a foreseeable future. The voter frustration on this critical issue would continue to decide who gets elected and who gets dumped. The sad saga here is that there is no consensus amongst the reputed economists, and there are too many in the USA, to fix the economic problem. They tend to be long on diagnosis and short on prescriptions. The U.S. economy needs a strong tonic and not water-downed measures that would only accelerate the collapse of its interest-based capitalist economy.

The Democratic Congressmen in the House should resist the Republican push to repeal the hard-fought healthcare reform bill. Much of the opposition to that bill comes not from what’s in it but rather the fact that it can be seen as a proxy for big government. Such genuine concerns must be allayed properly without compromising on the essence of the bill which the voters generally support when asked issue by issue.

The Democrats cannot also be viewed as betraying the popular causes for which it was elected in office in 2008. They simply cannot play cat-and-mouse with the independents -- an ever growing segment of the American population -- that were crucial to their success in 2008 election by voting and believing that Obama was going to deliver ‘change’ by bringing fundamental changes in how America is perceived around the world. The president also needs to shake up his inner circle of advisers. Ms. Pelosi, the outgoing speaker in the House, is one of the least popular politicians in the USA, and should consider dropping out of any consideration from becoming the minority leader in the new Congress.

On November 9, 1994, President Bill Clinton faced the press after losing scores of seats in the Congress and admitted with humility that “not enough people have felt more prosperous and more secure or believe we were meeting their desires for fundamental change.” He tried to work with the GOP on a plethora of issues and fought it in a budget standoff that led to a government shutdown. That formula of willingness to compromise to find common grounds and showdown, when appropriate, actually helped Clinton’s image and assured his reelection two years later. President Obama thus has a good precedence to follow in the upcoming days.

It is the Republicans who will be judged now unfavorably for any arrogance and scorched-earth policy that can lead to government gridlock. The impatient voters want results and good governance, and not gridlocks. They want the two political parties to make progress in finding jobs, improving economy and ensuring that they would have social security benefits when they retire. It is that simple! And nothing else!

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