Friday, October 12, 2007

Taking Kansas National
I watched the first hour or so of the Republican presidential debate in Michigan the other day. It was fascinating, just as a window into how willfully and completely these guys have disconnected themselves from American life as people experience it on a day-to-day basis. Asked about the economy, and the evident disconnect between statistics that show prosperity (stock market gains, low inflation and unemployment rates) and the widespread perception that we're in or approaching a recession, the candidates mostly responded that the strong economy is, in Fred Thompson's words, "the greatest story never told."

The truth, as anyone paying attention can tell you, is that the current economy closely resembles the hypothetical of Bill Gates in a room with a hundred retail clerks: on average, that's a roomful of millionaires. As The Wall Street Journal reports, the gains of those at the top more than offset the declines for those in the middle and bottom--so we have both statistical prosperty and widespread stagnation or deterioration:
The richest Americans' share of national income has hit a postwar record, surpassing the highs reached in the 1990s bull market, and underlining the divergence of economic fortunes blamed for fueling anxiety among American workers.

The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.
The IRS data go back only to 1986, but academic research suggests the rich last had this high a share of total income in the 1920s.

Even without their other disadvantages--the Iraq War, the incompetence and dishonesty of the Bush administration, and the widespread perception of corruption--I honestly wonder how the Republicans expect to win next year when the party refuses even to acknowledge that most Americans are struggling to hold their ground, let alone get ahead. I suppose it has something to do with the core contention of modern conservatism that government can't do any good in matters other than war--so policy actions that might help improve families' circumstances but require some additional spending, like broadening college access or health coverage, are prima facie unacceptable.

Indeed, at the Michigan debate, which focused on economic issues, the presidential contenders talked not about addressing the problems of working families but the need to hold the line or force deeper cuts on "discretionary" spending (other than the military, of course) and "reform" non-discretionary programs like Social Security and Medicare so as to get the budget under control. That these programs are so popular that even Bush after his re-election and with Republican congressional majorities couldn't come close to "reforming" (read: undermining) them evidently didn't register.

I'm not the only person to note how weird this all is. The conservative David Brooks in today's New York Times warns his co-partisans that they're on the brink of losing this argument before it's even truly begun:

You’d think that [the Republicans would] start every election by putting themselves at the kitchen tables of middle-class families with ambitious kids. Their first questions would be: What are the barriers to their mobility? What concrete help do these people need to realize their dreams?

Yet at the Republican economic debate in Michigan this week, there was no talk of that. The candidates declared their fealty to general principles: free trade, lower taxes and reduced spending. They talked a lot about the line-item veto and the Chinese currency. But there was almost nothing that touched concretely on the lives of the ambitious working-class parents who are the backbone of the G.O.P.

Sometimes the candidates seemed more concerned with massaging the pleasure buttons of the Club for Growth than addressing the real concerns of the middle class. They talked far more about cutting corporate taxes, for example, than about a child tax credit for struggling families.
Instead this ground is being seized by a Democrat. Over the past few months, Hillary Clinton has issued a string of specific policy programs aimed directly at members of the aspiring middle class.

Yesterday, it was a tax credit for college. Earlier in the week, Clinton offered a plan to give families down the income scale access to 401(k)-style plans. Right now, 75 million workers have no employee-sponsored pension accounts. The way our tax code is structured, people up the income ladder get big tax incentives to save, while working people, who have the most trouble saving, get the smallest incentives.

Under the Clinton plan, if a family making up to $60,000 a year put $1,000 into a new 401(k) account, they would get a $1,000 matching tax credit. The plan would create millions of new investors. Struggling families could choose mutual fund options and participate in the capital markets. They’d be encouraged to move away from a month-to-month mentality to a saving-for-the-future mentality.

Clinton’s plan poaches on economic values that used to be associated with the Republican Party. Moreover, it undermines the populist worldview that is building on the left of her party. Instead of railing against globalization and the economic royalists, Clinton gives working people access to Wall Street and a way to profit from the global economy.

Brooks's column reminds me of the smartest policy piece I've ever read in a right-wing publication: "the Party of Sam's Club." Written about two years ago as the Bush administration was really starting to unravel, the authors shrewdly observed that the Republicans were losing touch with their own base: white middle-class and working-class families who were with them on social issues but starting to feel that the Republicans weren't addressing their domestic concerns. They urged the party leaders to flesh out and develop the Bush/Rove "big-government conservatism" that had been implied, if not promised, in 2000. Specific proposals included a child investment credit that's strikingly similar to what Hillary Clinton recently proposed (a very good idea, by the way); a variant on the universal individual mandate to purchase health care that Mitt Romney signed into law in Massachusetts (and has mostly disavowed on the campaign trail); and, most shockingly to me as I re-read it today, subsidizing low-wage work as part of a second phase of welfare reform.

If you've heard any of these ideas advanced by any Republican presidential candidate in this cycle, you've been paying much closer attention than I have. More likely, the problem is that the dominant interests in the Republican coalition couldn't give a rat's ass about any of this stuff: Brooks's jab at "the pleasure buttons of the Club for Growth" could have been written by most any Daily Kos poster. Maybe it's inevitable that when any group has unfettered access to power for as long as the Republican business interests have, they lose track of what it takes to retain that power in even a flawed and provisional democracy like ours.

In the absence of a viable domestic platform, maybe the Republicans plan to run another campaign on xenophobia, fear, and "social conservatism." Thomas Frank's "What's the Matter With Kansas?" sets out how this has been their model for a couple decades now. But it will be tough in 2008, for a few reasons: first, because the domestic issues are increasingly insistent, second, because their leading candidate is anathema to the social conservatives, and third, while support remains high for fighting "terrorism," there seems to be a broad consensus that the Republicans haven't done this in a smart way, either.

Other than demonizing Hillary Clinton or whatever Democrat becomes the face of the party, I find it almost impossible to see how they plan to win next year.

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