November 11, 2008

Reward The Democratic Coalition, or Pay The Price in 2010

The interest of the media is focused on Obama's team, which is no small matter, but in order to assess the chances of success of the new democratic president, we should start from the basics: the coalition he put together, and the situation of the country. Let's remember what we wrote here in March:
While the interest of the media is focused on the candidates, political scientists should look at the tectonic shift under way in the American electorate. Seven years of Bush Administration have played the role of midwife to a new coalition of groups that is making the party younger, more liberal, and more responsive to women, Latinos, and African-Americans.

The exit polls have indeed validated this prediction: Obama won 99-1 among African Americans, 67-30 among Latinos, and 66-30 among the 18-29 voters. At the same time, Obama had the best results of any Democratic candidate among postgraduate educated Americans (64%) and a good performance among Catholics (53% versus the 47% collected by catholic candidate John Kerry).
Contrary to the conventional wisdom of a race "too close to call," spread by mainstream media, these results were easy to forecast because of long-term trends in the American electorate:
About 90 percent of those identifying with a political party vote for that party's presidential candidate The exit polls in 2004 showed that John Kerry had won 89 percent of the Democratic vote, George W. Bush 93 percent of the Republican vote. As it is, this translates in a huge advantage for the party that is ahead in what political scientists call "party identification," simply because the pool of voters is larger. And what is the situation on this front? The Democratic advantage is now of almost 10 points,
In October, it was about 7 point, which matched precisely the gap of 6.5% between Obama and McCain after all the votes were counted.
And what was the main issue of this election? Economy, as we wrote back in April:
McCain is the Republican candidate in a year when all the the strong currents of American politics favor the Democrats. The economic crisis and the social tragedy of million of people losing their home will be on the forefront of voters' concerns in November. The same can be said for the Iraq war, that vanished from the TV screen, but not from the mind of citizens: two-thirds still want the troops home ASAP.
After the Convention, if Obama will adopt Bill Clinton's 1992 slogan "It's the Economy, stupid!" that will be enough for the Democrats to win.
Now, the problem is that the voters trust Obama to deliver the miracle of a good economy in a matter of weeks, when under any conceivable scenario the American economy will not grow at all next year, and will remain in dire straits in 2010, too. According to The New York Times, "2009 could turn out to be fairly miserable. The American consumer, long the spender of last resort for the global economy, may finally be spent."
This means that any incremental measure, any fiscal timidity in launching new programs targeted to the most depressed areas and to the most suffering segments of the population would be catastrophic. We must remember that even mild downturn as the one of 1990 have lasting consequences: at that time, an imploding real estate bubble, a construction bust, a banking crisis, and a credit crunch made the nation's gross domestic product fell 3.0 percent in the fourth quarter of 1990 and 2.0 percent in the first quarter of 1991. But even after the economy started expanding again, the unemployment rate kept rising until it hit 7.8 percent in June of 1992, and people keep thinking that economic conditions were bad still in 1994.
Obama probably raised unrealistic expectations, but his message was received as a promise: "the public expects results, and may not listen to excuses for very long if a Democratic Congress and a Democratic White House can't get their act together in time." Therefore, the Obama administration would pay the ultimate political price if it doesn't act boldly. The fate of Clinton, who acted clumsily in his first 100 days, and was not able to convince a democratic Congress to pass his health care reform should be remembered: two years later, the Democrats lost 55 seats in the House, and the Republican majority last for the next twelve years.
Right now, there is indeed a vast conspiracy of bankers and lobbyists to have Obama's ear, and convince him that the catastrophic Paulson's plan (money with no strings attached) should continue. This is the first thing to reverse: not one dime should be thrown into Wall Street's toxic pit, and the FBI should start investigate both those who accepted the money, and those who disbursed it.
The second point should be solving the tragedy of foreclosures, leaving families in their homes as much as possible; to this purpose, it will be necessary to create an agency charged of buying mortgages and renegotiating them with banks, as it existed between 1936 and 1951 (one of the great successes of the New Deal).
Last, but not least, it is urgent to provide fiscal relief to families under $75,000 a year (the core of Obama's coalition) and to launch a plan of rebuilding American crumbling infrastructures, starting with the states where this task is more urgent: Pennsylvania, Ohio, Indiana, Michigan. Instead of "saving" General Motors, let's build some high-speed railways, and metropolitan transit systems.