Obama and the State of Democrats

For months it has been obvious: President Barack Obama and his advisors don’t get it— in the language they use and the policies they pursue.

The significance of November’s defeat of the entire Democratic ticket in Virginia was overstated in the media, but Gov. John Corzine’s loss in the governor’s race in New Jersey—and little-noted but significant losses in the comfortably Democratic suburban New York counties of Suffolk and Westchester—confirmed at the ballot box what the polls had been screaming long before Massachusetts.

In September 2009, generic congressional ballots showed Republican leads increasing weekly. Independent voters were deserting the Democrats in droves. By October, more ominous signs of declining Democratic Party identification began to appear. Getting to this low point so quickly was inconceivable less than a year earlier. How did this happen?

The timing of Obama’s victory was a double-edged sword. Obama benefited by having Election Day 2008 occur when the economy was in free fall. At the same time, however, Obama had the misfortune to get elected in the first year of the serious downturn. FDR, on the other hand, had three years for the GOP to be saddled with the blame for the economic collapse before he took office in 1933.

Initially, voters accepted Obama’s contention that the nation’s economic distress was Bush’s fault. But by the fall of 2009, that explanation began to wear thin.

To understand the political context of 2010, Obama is now in the equivalent of 1931—the second year following the onset of the Depression. For that reason, his administration must act dramatically—and effectively—or, regardless of its rhetoric, it is doomed to look like a contemporary replay of Hoover’s. And time is short.

For months, as millions of Americans lost or remained without jobs, or lost their homes, or both, the White House has appeared unsure about where it stood on the debilitating “jobs versus deficit” debate—an issue that should have been settled in the 1930s, when the Democrats emphasized jobs and economic recovery and the Republicans emphasized deficits.

Yet, in the past 30 years, the Democrats have time and again been drawn toward the losing side of the debate over deficits—an issue on which they have zero credibility.

For years, polls have shown that independent and other swing voters don’t believe the Democrats can balance their own checkbooks, much less the federal budget. Facts don’t seem to matter. During his first term, Reagan had run up the largest peacetime deficit in American history—dwarfing those of the New Deal—and yet swing voters still thought, by a wide margin, that the Republicans were more trustworthy on this issue.

So during the 1994 campaign, every time Walter Mondale ran a TV spot about the deficit, he raised the salience of the issue—thereby pushing swing voters into the GOP column. Stupidly, Mondale reversed the party positions of the 1936 election. The Democrats ran on the deficit, and Reagan ran on economic recovery. Guess who won?

One might have thought that the experience of the Mondale campaign would have settled the jobs vs. deficit debate for Democrats once and for all. It didn’t. The Obama White House—after its initial bailouts and stimulus spending—seemed frozen, apparently fearful that a more dramatic and expansive response to the nation’s joblessness would make it vulnerable to GOP attacks for creating a larger deficit.

So, by the end of his first year Obama was getting the worst of both worlds—a large deficit and a truncated recovery.

The Obama administration today—and until people are back on the job—faces two choices: 1) a continued, substantial budget deficit and continued high rates of unemployment, or 2) an even greater budget deficit but with a significant (and visible) lower level of unemployment.

In the first case, they lose. In the second, they win.

Obama at a crossroads

But even more is at stake. Lost in the discussion about the unclear White House policy choices leading up to the State of the Union address was the fact that a weak White House response to the nation’s economic distress threatened the basis of Democratic electoral strength. For more than 70 years, pollsters have consistently found that the strength of the Democrats is that they represent working people, ordinary folks, the common man, middle-income Americans and so on.

Conversely, while scoring strong points on national defense, fighting terrorism and keeping taxes down, the greatest single negative for the Republicans among swing voters was that they represented Corporate America and the rich. And this sentiment is shared by 40 percent of self-identified Republicans!

In short, the strength of the Democratic Party is found in its “representational” character—in being seen as on the side of ordinary working and middle-income Americans. This may deflate the egos of the folks who staff liberal think tanks, but it is these “representational” factors—rather than perceived competence that undergird Democratic strength at the ballot box.

Thus, counter to the popular narrative, Gov. Thomas Dewey (R-N.Y.) was actually seen as more competent to be president—even by the late shifters who provided Harry Truman with his upset presidential victory in 1948. But these same voters saw Truman as the candidate of the party that represented ordinary folks, even if he was not especially skilled at governing. The result: Truman’s representational strength trumped Dewey’s perceived competence.

In 1988, 40 years later, a last-minute survey of swing voters convinced Democratic presidential candidate Mike Dukakis to jettison his disastrous “competence” message and move to a populist “which side are you on?” theme that triggered a 10-point Dukakis rally (for probably the least populist-appearing populist in the history of populism). This reduced Bush’s lead from 16 to six points, probably saving Democratic control of Congress that year.

If voters perceive that the Democratic Party is no longer representing ordinary people, it will lose not only particular elections, but its long-term underlying strength as a party. To millions of Americans, the huge bailout of the giant banks and other financial institutions contrasted sharply with what appeared to be Obama’s unclear, halting and lukewarm response to the plight of millions of economically distressed Americans. The perception that the Democrats no longer represented regular folks started to pick up steam. It didn’t help that, as late as December, when the media was daily reporting multi-billion dollar profits for these same financial institutions, the administration was advancing a plan to tax the benefits of those in the workforce fortunate enough to still have both good jobs and good health benefits.

Where to now?

Most Americans (like many Econ 101 students) have a hard time understanding Keynesian economics. Explaining to people what would have happened had we not bailed out the big banks is simply lost on them. Facts and figures from a government agency in Washington will not sway them. What matters are jobs in the community for dad, mom, spouses or out-of-work children.

The Obama administration must understand that if it does not act aggressively, massively and effectively on the jobs front in coming months, the Democrats will lose seven decades of dominance as the party that represents the economic concerns and interests of ordinary working and middle income Americans.

Options for Obama abound: Mixing jobs, populism and American nationalism, for example, creates a perfect political trifecta for the Democrats. One of the State of the Union dial focus groups indicated that the strongest pro-Obama response occurred when the President suggested ending tax breaks for corporations that outsource American jobs.

Up to now, Obama has shown a reluctance to address the massive imbalances in our trade. But if he’s looking for a way to save and create American jobs, that’s one fertile area.

Fortunately for Obama, the critical swing voters, while often conservative on other issues, are considerably more inclined to believe that the Democratic Party—rather than the GOP—is on their side when it comes to caring about their economic well-being … and standing up to the big insurance companies, the big drug companies and the big banks.

This is the Democrats’ economic populist strength. It is a strength that Obama inherits.

But Americans must start finding jobs in substantial numbers by summer, or this Democratic political legacy—along with the President’s highly skillful presentations—will be for naught. Progressive Democrats must press the White House to continue the course it has appeared to embark on following the State of the Union—understanding fully that a dramatically expanded economic-recovery and jobs program will trigger a shrill Republican outcry and the deficit will indeed go up—but so will Obama’s numbers.