After the Elections: A More Divided America?

WASHINGTON – Most opinion polls indicate losses for the Democrats, the majority party now holding both the White House and the Congress, in the upcoming mid-term elections. The extent of the probable losses is not clear; but it looks substantial. Of course, nothing new in a trend whereby the party holding the White House loses seats in the mid-term elections. It happens almost every time.

How big a loss for the Democrats?

The issue is how big a loss and to what extent the voters will be signaling through their ballots either mild or profound discontent with the President’s economic and other policies. The scenario this time is  unusual, given the historic severity of the economic situation and the unprecedented dimensions of Government actions to remedy it.

Right now, in the US, after the near catastrophe of 2008-2009 the economic recovery advances; but at a painfully slow pace, (around 2% growth). Unemployment at 9.6% is at a historically high level. What is worse is the high proportion of long term uneploymemt within this mix, as people who have been out of work for several months or years are less likely to find new jobs. In other words, things are barely passable,  still quite bad, or may have even gotten worse in the last year or so, depending on how badly the state you live in has been hurt by the crisis. 

Given this depressing picture, how does President Barack Obama assess his work as chief executive and the country’s political atmopshere on the eve of this vote? A recent The New York Times Magazine story, (“Education of a President”, by Peter Barker, October 12, 2010), presents President Barack Obama as a leader somewhat overwhelmed by the complexities of the messy Washington political process and its acrimonious partizanship, yet adamant in claiming that overall, regarding policy, he did the right things.

Obama: no regrets

In other words, the Washington political process is uglier and tougher than Obama had thought before coming into office; but he has no second thoughts about his priorities, (the economic stimulus, health care reform), and his agenda. He concedes that may be he should have been a bit more political, a bit more inclusive, a bit more focused on communication rather than just execution; but, overall he did the right things and so, by his standards, he did well.

Real differences on the issues

He did well? Not so, according to the opinion polls. And this is precisely the point of contention that dominates this campaign for the Congress and that may cause huge losses for the Democrats. The opionion polls preceding these elections, plus a huge wave of money going to support Republican candidates, indicate that a significant portion, perhaps the majority, of the electorate seems to believe that the President did not do well. 

Many claim that Obama and the Democrats are taking the country “in the wrong direction”. Is this just an issue of misunderstandings, due to faulty communication of the “right policies”? Of course, there is always some truth, reflecting in hindsight, about the importance of how one communicates the message, Perception is reality, in politics probably even more so than in other fields, as so much rides on the credibility and charisma of the political leader/policy-maker. Properly crafting the message may indeed results in persuading more skeptics.

Not just a communication problem

But, even conceding that a more fine tuned message might have gained more converts, America’s mood on the eve of the upcoming mid-term elections is quite negative about the President’s approach, (a lot of money, borrowed money in fact, thrown at problems), his policies and their outcome. This would suggest that here there is more than just a matter of improving communication strategies. The problem seems to be substantive. A big chunck of America does not like the direction this President is taking it.

The Tea Party Uprising

The loudest manifestation of general unhappiness has been brought about not so much by the institutional opposition, the Republican Party now in the minority, but by the “Tea Party Movement”. The Tea Party is a spontaneous, grass roots phenomenon of middle class, mostly white, Americans who looked at the gigantic wave of Washington activism and spending and had an instinctive, rather than intellectual, rejection of the whole thing. In their view, Obama has pushed for way too much spending, too much state intervention and ultimately too much debt. They see this as fiscally irresponsible and at the same time they see “too much Government” as a threat to individual freedoms.

Battle over health care

Their discontent turned into anger unleashed in full force against the most visible “Big Government Plan” pushed by Obama and the Democrats: the health reform plan. While quixotic, sometime extreme, strange and even nonsensical, the Tea Party opposition was and is against the very concept of a larger state that will end up having a deciding role in the way in which Middle America lives. And Middle America has a knee-jerk antipathy towards anything that feels or smells like public encroachment on private business.

The Tea Party phenomenon in context

Now, let’s be clear, the Tea Party Movement, while significant, is one component of the electorate, and thus it does not reflect majority opinion. If we take the population in the populous costal states, East and West, from New York to California, there are majorities there who favor more Government activism aimed at promoting social policies and “fairness” in an otherwise very unequal society with growing disparities between the very rich and everybody else. Still, this spirited, popular, as opposed to intellectual, resistance to state intervention is new and it would be foolish to dismiss it as an irrelevant fringe movement.

Enter the fiscal conservatives

Of course, at some point, the anti-government bias of the Tea Party Movement connected with more traditional fiscally conservative positions. Looking at huge spending and public debt rapidly going into the stratosphere, many, including moderate “Blue Dog” Democrats started wondering how far could this go. How much debt can America accumulate? What will be the fiscal and economic consequences of these unprecedented imbalances? And so the aimless Republicans, having rediscovered the virtue of fiscal restraint, repositioned themselves to lead the forces demanding restraint and opposing new measures that, whatever their merit, would end up increasing the deficit and ultimately the national debt.

Inherited fiscal problems

In truth, the trend towards higher debt, driven largely by the dynamics of a more and more expensive welfare systems with costly unfunded entitlement programs, started a long time ago and it is largely dictated by an aging population whose retirement costs will be higher and higher. The problem is that Obama, having inherited huge imbalances getting progressively larger, made them worse by adding to the debt via expensive emergency measures aimed at stabilizing a country faced with a horrible economic crisis.

Obama’s deficits

But he did all this without having the ability to convince anybody that a healthy fiscal course correction will take place later on. In other words, while some appropriate things have been said about the need to spend a lot now, while we certainly know that we have to create a path to lower spending down the line, for the time being America has seen only the huge increases in spending. There is nothing serious on the table, right now, (except for a bipartisan Commission that will make recommendations on fiscal policies after the elctions), about policies that will change the dynamics of public spending and thus reduce the deficit. On top of that, all this new spending, (think of the stimulus), did not produce the advertised effect. So, from the standpoint of “Joe Public” small bang for the buck. We have got deeper into debt and we do not much to show for it.

Anti state revolt

All this has given the strongest opponents of this President the opening to call him an ideologue, someone who wants more public spending and state control over the economy for its own sake, as a matter of ideological conviction. He does all this, many say, because he is a “socialist”. Well, this may be a stretch. But it is not altogether an exaggeration to assert that this President, unlike his Tea Party vociferous opponents, is not uneasy in an environment in which Washington-led public policy manages more and more “stuff”.

And here is precisely the problem and the open question: “How much state does America want and at what cost”? –especially since public policy and the gigantic apparatus supporting it is very disappointing in terms of cost effectiveness and results.

State action always bad

The way Middle America sees the picture is that it is bad as a matter of principle to give too much power to the Government, because inevitably this state power will restrict individual freedoms. At the same time, the Government is thought to be intrinsically unable to deliver whatever it promises. Or, at the very least, it will do so at a higher cost with mediocre results at best. Unfortunately, the record supports this pessimistic view.

Obama’s extraordinary action justified

In fairness to President Barack Obama, his administration coming in January 2009 did its best in dealing with an economic and financial crisis of immense proportions that seemed to threaten the very fabric of the American economy and its once upon a time revered financial institutions. Extraordinary spending, via the stimulus plan, via the massive bailouts, with Uncle Sam ending up owning auto companies and banks, not to mention “Freddie” and “Fannie”, the mismanaged mortgage finance companies, was up to a point both necessary and inevitable to prevent disaster. Yes, up to a point inevitable. But up to which point? When did Obama cross the magic line that caused the Tea Party uprising as a reaction?

Health care triggered the revolt

Who knows, really. I venture an idea. I believe that the political choice that ignited the vocal opposition, beyond the handling of the recession, was Obama’s thrust on health care reform, (see above).  The choice of focus on health care reform as the brand new, signature initiative of the Obama administration was not a reaction to the economic meltdown. It was by no means dictated by events. This was deliberate, it was a political choice and in my judgment an ill advised one.

My theory is that a President elected by a large coalition dominated by “the have not” and by the almost unanimous minorities, that is by those who felt left behind by the socially insensitive or inept Republicans, needed to prove that there were indeed tangible gains coming from the election of a Democrat –and the very first African American President in US history at that.

Health care was a political choice, not dictated by events

And so Obama decided to respond to this yearning. And so he pushed health care reform as a key social reform aimed at improving the conditions of millions of uninsured, while ending bad practices of the insurance companies, such as refusing to cover people with pre-existing conditions. This way Obama would make a concrete gesture to his natural constituencies , while reaffirming an agenda aimed at promoting fairness –a major theme of his campaign.

This may be fine in principle. But the timing was ill advised. In the midst of a huge recession, while the stimulus was not stimulating much, Obama decided to change the topic, or add another big one, by pushing for health care reform.

Reform not going to the core of the issues….. 

I have already discussed health reform at length health in other articles. Very briefly, the key point is that while Obama’s package has the merit of increasing the numbers of those who will be covered, this partial reform does not do much to address the real systemic flaws that make health care so extravagantly expensive in America. (On average, America spends for health care 6 to 7% more of its GDP than most other developed countries). This reform does not address “wellness polices” and meaningful prevention. Even worse, it does not really address the “fee for service” approach that creates a strong economic incentive for health care providers to overdo, over prescribe and over treat almost anything; thus adding to cost while providing no value.

The perfect storm we have created is a society of millions of people who over many decades developed very unhealthy habits, (think of the obesity epidemic, substance abuse, alcoholism and lack of physical exercise), and armies of doctors who salivate at the thought of more and more millions of diabetics who need more and more treatment.

These are the structural issues that cause the cost explosion of health care delivery in America. And these have not been directly addressed by the “Obamacare” reform.

…but politically contentious: The Tea Party rallied

But, even if we suspend judgment on the merit and effectiveness of this reform, just because Obama was pushing hard for it, this became the most contentious political issue and thus the issue that gave people the impetus to join the “Tea Party Uprising”. Of course, there was much misinformation and a lot of nonsense, (the plan was thought to include forced euthanasia decreed by “Death Panels”, as well as denial of treatment), in what was said at thousands of rallies around the nation convened to protest health care reform.

But the instinct of most protesters was not so wrong. This President –they felt– instead of really focusing on policies that would confront the economic crisis at hand, (stimulate job creation, corporate tax reform, a real plan for major investments in renewable energy), chose instead to have a war against the medical insurance companies in an effort to reshape a huge chuck of the US economy to his own liking. To many, this smelled like social engineering by a left wing politician up to no good.

The divide became deeper

In the end the reform passed. But by the slimmest of margins. The acrimonious debate in turn made the overall Washington political climate even more toxic, thus silencing the voices of the pragmatists who are more inclined to go across party lines in order to have compromises. As a result: very little collegiality left after the health care battle and more sharply divided parties.

Republicans riding the wave of discontent

The Republican opposition, while not particularly attractive regarding its ability to present an alternative, modern and inclusive policy vision, correctly understood that there was an emerging anti-Obama movement in the nation and decided to ride this wave. In its wisdom, the Republican Party decided to oppose and in fact obstruct almost everything the administration would present, hoping that this would translate into more votes at the upcoming mid-term elections.

In the Senate, where the rules over protect the minority, nothing gets done, unless a party has more than the 60 votes necessary to end an obstructionist filibuster, (endless debate). Thus a determined Republican minority can and did effectively impede almost any legislation to move forward. By the same token, even an individual Senator can block the confirmation of any White House nominee for the executive branch or the judiciary.

Dysfunctional Washington

In truth nothing new here. This propensity towards gridlock is a consequence of a constitutional system consciously created long ago so that it would be easier to block legislative initiatives rather than ram through the system anything a determined majority may want. In this rather dysfunctional policy-making process not even a party holding the White House and sizable majorities in both branches of Congress has the freedom to implement its programs.  Still, all this aside, Middle America is feeling the impact of a recession, while believing that its representatives in Washington are incompetent, misguided or clueless.

And this widespread perception of office holders’ incompetence, beyond the Tea Party phenomenon, is at the source of the prevailing anti-incumbent sentiment. This anti-incumbent sentiment is largely driven by many independent voters who had trusted the Democrats in 2006 and 2008, given the disappoint Republican Party record. Now the independents are unhappy about the Democrats. And so the Democrats, being now in the majority, have most of the incumbents and thus thgey have more to lose.

Elections: catastrophe or just setback?

In the end, the outcome of the election may be catastrophic for the Democrats or just bad. We shall see in a few days what the voters will decide. Still, whatever the outcome, it would be unwise for President Obama and for the Democrats in Congress to ignore the anti-statist mood conveyed by the Tea Party Movement and now embraced by chastened Republicans who have rediscovered the virtues of fiscal frugality. Sure enough, some spectacularly unfit Republican candidates who won the primaries only because of strong Tea Party groups support, especially in critical Senate races, may end up doing very poorly. Still, it would be a mistake to dismiss the whole movement as amateurish and immature.

America’s basic politics: center right?

It has been said that the dominant political instinct in America is center-right. This may not be entirely true, owing to the millions of minority voters who feel semi-disenfranchised and the millions of formerly middle class voters squeezed by outsourcing and other negative consequences of globalization. These voters look at Washington for relief. And perhaps rightly so. Disappointment notwithstanding, they are likely to continue voting for the Democrats. But if this is so, we have a country split in the middle regarding the role of the state in mitigating inequality and promoting growth.

Consensus on growth promoting policies is possible

The trick, and in fact the secret formula for enginnering some bipartisanship after the elections is in determining the shape of this relief for the underprivileged, while promoting genuine pro-growth measures. Is it going to be more costly handouts or policy measures aimed at creating real opportunity?

In a very recent talk in California, Secretary of the Treasury Timothy Geithner pointed out that the way in which Washington can promote long term American prosperity is in redoubling investments in public education, in basic science, in more tax relief for R&D and in lowering US corporate taxes so that companies do not feel penalized by operating in the USA. These are good ideas. Quite frankly, any Republican could have said the same things without fear of being criticized by the orthodox right wing of his/her party.

My hope is that, whatever happens in these elections, it may be possible to gather a policy consensus around sensible ideas like those put forward by Secretary Geithner.

The alternative, I am afraid, is political stalemate and, lacking clear policy guidance from Washington, the further erosion of American competitiveness. Betting on the wisdom of the Washington establishment, believing that when push comes to shove they will eventually do the right things, may be unwise. But sometimes they can surprise us.


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