Causes and Consequences of the Great Election

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With the Republicans scoring a decisive victory in the Nov. 2 election, the salient questions are: why did it happen, and what effect if any will it have on this country’s governance?

Let me amplify my remark that the Republicans scored a decisive win. As of this writing, the GOP has gained a net of 61 House seats, with the possibility of picking up more (as close races get sorted out). This is the greatest gain in House seats in 60 years. The Republicans have taken a net of six senatorial seats; and they have netted six, possibly seven, governorships. Flying under the mainstream media radar, but hugely consequential, is the net gain of 20 state legislatures and about 700 state legislative seats — consequential, because the state governors and legislators have great redistricting power, and redistricting will necessarily follow the 2010 census. There is just no way to spin away the fact that this was a severe pounding for Obama's party.

For all their mistakes, the Republicans, like hedgehogs, got the one big thing right: they made the election a referendum on Obama and his policies.

So why did the Republicans score such a victory? Several factors are important. To begin with, Obama’s two years in office have revealed him as a narrow-minded leftist ideologue, and a shallow-thinking one at that, who lied about all manner of things. His foreign policy failures have been exceeded only by his domestic policy failures, making him already appear worse than Jimmy Carter, in only a fraction of the time it took Carter to reveal himself as bad. After two years in office, Obama's habit of whining about everything being Bush’s fault rings especially hollow.

For all their mistakes, the Republicans, like hedgehogs, got the one big thing right: they made the election a referendum on Obama and his policies, and the voters responded accordingly.

And there is the undeniable role played by the populist Tea Party organization. This loosely-knit group of populists consists mainly of people discontented about the fiscally ruinous policies that the Troika of Obama, Reid, and Pelosi implemented. The tea partiers brought enthusiasm to the election cycle, and they rightly saw the need to get rid of RINOs such as Mike Castle and Lisa Murkowski. For this they deserve praise. My major criticism is that they stink at vetting candidates — they chose some whose backgrounds were shaky at best (such as Christine O’Donnell, Sharron Angle, and Carl Paladino). Angle, for instance (a candidate whom I reluctantly supported financially), proved to be not exactly a polished public speaker. She lost to Reid in what should have been an easy pickup.

I generally support groups that are unafraid to challenge liberal or overly “moderate” Republicans in primary contests. I'm thinking of such organizations as the Club for Growth, which helped to fund Pat Toomey’s defeat of Arlen Specter in the primary and Toomey’s victorious run for the Senate for Specter’s old seat. But going RINO hunting only makes sense when you have done your homework and identified outstanding candidates to replace the RINOs. Notable here was the Club for Growth’s support of the seasoned and powerfully articulate Marco Rubio — a man with a compelling life story. His candidacy was precisely the way to dump an unprincipled “moderate” hack such as Charlie Crist.

The Tea Partiers show the normal drawbacks of populists. I share their dislike of big government, but I don’t think that the traits of ignorance and passion sit well together. The Tea Party won’t go away, and I wouldn’t want it to; but some coherent thought about what is wrong with the government and what can be done to fix it would be useful. Interesting in this regard was a poll of Tea Party members, showing that 62% of them opposed cutting Medicare and Social Security.

Populists usually profess support for free market economics, but curiously oppose many of the practices that define the system.

I believe that passionate populism was the main reason why the election went the way it did. I also believe that anti-government sentiment will continue to grow, and that the passion we have witnessed so far will reach a public-choice tipping point regarding the welfare state. As the baby boomers age, the expenses of massive entitlement programs will rise inexorably. Ever increasing deficits will wreak havoc with our economy, and we will see repeated outbursts of anti-government populism.

But populism is a two-edged sword. Anti-government populism can get out the vote, but it is an incoherent position, containing within itself the seeds of its own incompetence. The populists hate political pros, and want only neophyte Mr. Smiths going to Washington. But that sets the stage for many more Carl Paladino meltdowns: the populists get charmed by a seemingly likeable outsider (someone who never held any political office, not even a freaking school board seat) and give him the primary victory over more established candidates, only to find numerous defects exposed in the main campaign.

Worse, populists usually profess support for free market economics, but curiously oppose many of the practices that define the system. For example, free market economists from Adam Smith on have stressed the importance of free trade. But populists on both the Left and the Right reject it, espousing a mercantilist philosophy that Smith fought hard to overturn centuries ago. Obama claims that he is creating jobs, but in stoutly opposing free trade, he ensures that job creation will remain lower than it would otherwise be. Many populists would do likewise.

Again, many populists (especially those of the Right) hate the free flow of labor, aka immigration; and the arguments they use make it clear that they are just as opposed to legal as to illegal immigration. They believe that immigrants cost large numbers of jobs, result in lower wages, and (this is usually directed at Latinos) that they refuse to assimilate. Of course, if these ideas are sound — and I do not think that they are — then they argue against all immigration, legal or illegal.

Yet again, many populists (especially those of the Left) love government programs that supposedly help the working class. As I noted earlier, even the majority of Tea Partiers have passionate feelings for Medicare and Social Security. Indeed, Republicans made great hay of pointing out that Obamacare cuts $500 billion from Medicare. But let’s be honest: even without Obama's dramatic expansion of governmental healthcare and the comparatively modest expansion under Bush’s senior drug assistance program, the system of Medicare, Medicaid, and Social Security have been admitted to be unsustainable even by its own trustees.

The Republicans gained from the populist anti-government surge. But the question is what they will be able to do with it, and here I remain skeptical. What are the chances they will actually be able to repeal Obamacare? Rather small. And even if they did repeal it, would that solve the entitlement explosion built into Medicare, Medicaid, and Social Security? Certainly not. The dirty secret is that while people rage against big government, even tea partiers love certain government programs, at least until those programs explode.

And what are the chances the Republican House will be able to get America back on track towards free trade? Again, almost nil. As to the chances of the Republicans getting comprehensive immigration reform, one that insures a reasonable flow of labor to American business, well, these are completely nil also.

The Republicans will be able to do some modest good, such as stopping the proliferation of bailout and stimulus bills, and the creation of new entitlements. And I suspect they may save Bush’s tax cuts, including those for the wealthy. But the bankruptcy of the nation still looms. It is doubtful that, in the near term at least, Republicans can institute the radical changes that are needed to bring entitlement programs into sustainability, or to expand our free market economic system — slashing regulation, lowering corporate income taxes, reforming immigration, getting more free trade agreements enacted, and expanding free choice in education.




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Google's Tax Dodge

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Curiously, most of the money that computer and internet-related companies give to political causes goes to Democratic candidates. For example, of the $12.9 million the high-tech industry contributed to candidates in this election cycle, over two-thirds ($8.4 million) went to Democrats.

A particularly strange case is that of Marissa Mayer, a top executive at Google. She held a fundraiser at her mansion to help Democratic politicians. Guests paid over $30,000 each to attend. Obama was the star performer, and had nothing but praise for Google. Amazingly, he showed none of his usual business bashing. The intense love shown on both sides was deeply touching. Who would have thought that these captains of industry would support so staunchly a man committed to raising taxes on the rich?

Mayer was not unique in her support for our neo-socialist president — 75% of all donations by Google employees went to the Democrats.

Yet even as the Google crew partied with Obama, news surfaced showing that Google had used tricky strategies to pass most of its foreign profits through Ireland and the Netherlands to Bermuda. These strategies — with cute names like “Double Irish” and “Dutch Sandwich” — saved Google over $3 billion in taxes, lowering its effective overseas tax rate to a measly 2.4%.

So it is that even as key elements of Google’s management attempted to help elect the party devoted to raising taxes, especially on the hated rich, the corporation itself dodged taxes artfully. Pretty slick for a company that has the boastful motto, “Do no evil.” It should be, “Pay no taxes.” And while they’re at it, maybe the Google high-fliers should google-search the word “hypocrisy”...




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The Lonely Lunch Bucket

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Usually when one side in politics loses big, its defenders will deny that the people rejected their ideas.

Republicans said so in 2008 and partisans of the Democrats began saying so even before the election of 2010.

Here is Michael Lind, writing in Salon (November 2). He notes that the Democrats have joined other center-left parties in Germany, Italy, France, and Britain in electoral banishment.

The reason, he argues, is that all these parties “abandoned their traditional working-class constituents in order to woo bankers and professionals.” Instead of pushing for more social benefits and a higher minimum wage, they have embraced the market and refocused their progressivism on “non-economic causes like renewable energy, mass transit, the new urbanism, gay marriage, identity politics and promotion of amnesty for illegal immigrants.”

The Democrats have hardly given up on social benefits — see Obama’s health-insurance law — but they did go for renewable energy, gay marriage, etc., as Lind says. They do have pals on Wall Street — and more of them perhaps than they traditionally had (though even FDR had his Bernard Baruch). But imagine if the Democrats had defined themselves exclusively as a pro-union, lunch-bucket Hubert-Humphrey-and-Walter-Mondale party. They would have been even deeper in the woods than they already are.

The gist of Lind’s argument is that the Democrats are losing because they don’t have the courage and wisdom to agree with Michael Lind. That argument allows Lind to make the further claim that the people do agree with him. And some do. I know them — and they are feeling politically very lonely.




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