Paul Nitze: Between the storms
November 11, 2010
There isn’t all that much new under the sun. Pundits must be paid, and so all manner of narratives have been rigged to fit last Tuesday’s returns. This was a rejection of health-care reform. No, it was about the Wall Street bailout. Or maybe it was the stimulus bill that swept the GOP back into power?
My hunch is that all of this editorializing is bogus. Much as we would love to believe that the paths taken or not taken by the president or congressional Democrats account for their huge losses last Tuesday, history tells us otherwise. University of Denver professor Seth Masket has shown that the level (and direction) of real personal income is the best predictor of midterm election results. If we feel poor and economically insecure, we kick the bums out, regardless of what they’ve been up to recently.
If narrative is what you’re after, let me suggest a book that just turned 10 but has aged well – Rick Perlstein’s “Before the Storm.” On one level, Perlstein offers up an alternative history of the 1960s, centered on Barry Goldwater’s run for the roses in 1964. Goldwater got “shellacked” (the word of the moment) at the polls after Johnson caricatured him as a radical and a madman, but he set the stage for Nixon, and later Reagan.
On another level Perlstein’s account is about ideological mutations in American politics. Put differently, it’s about how good ideas turn spectacularly bad, and about the strange bedfellows who get together to offer up an alternative.
I thought of Perlstein as I watched ABC’s “This Week” last Sunday morning. David Stockman and Mike Pence were on the show to debate where Republicans should push economic policy after the election. Stockman, who was Reagan’s budget director, has become something of a Ghost of Christmas Past to the Republican Party. Pence is a fresh face who just stepped down from his House leadership post to contemplate a 2012 presidential run.
Stockman told host Christiane Amanpour that we are a nation in decline, this century’s British Empire. We could manage our decline, he said, or we could continue on the path of fiscal and monetary insanity. Pence took an entirely different tack. By his account, voters care most about one thing – making all of the Bush tax cuts permanent. Spending cuts will take care of the deficit.
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The depth of their disagreement, and the delusion that was captured in Pence’s position, suggests an opening for President Obama. Budget hawks from the two parties lied down together briefly in the early ’90s, before the 1994 midterms made a hash of bipartisanship. But our cupboard wasn’t quite bare back then.
In particular, Republicans of an older generation, like Stockman, have watched with horror of late as the Federal Reserve has intervened deeply in the markets. Under Ben Bernanke, the Fed has moved way beyond its historical mandate, and has deployed all manner of novel tactics to boost the economy, including its recent move to print $600 billion in new money.
Last Tuesday’s results had the effect of cutting short the fuse on our fiscal time bomb. A day of reckoning that might have waited another decade will arrive sooner, perhaps within three or four years. And if there is a benefit to two years of gridlock, it’s that the president will have time to muse on who will come together to get us out debt.
Goldwater popularized Arizona and the American West as the last refuge of personal freedom. He may have been a Jewish-American heir to a department store fortune, but he’s best remembered for a famous photo in which he’s tricked out in western gear, holding a rifle. He lost in 1964, but his personal appeal went a long way to inspiring the movement conservatives who elected another good-looking westerner 16 years later.
It’s been a rough few years for western states. Colorado has suffered, but our neighbors have suffered far worse, especially Nevada and Arizona. So it may be no coincidence that reality-based politics were a bit more successful in the West in 2010.
Some pragmatic Democrats, like Michael Bennet, managed to hang on against challengers who took the Pence line on fiscal policy. A few pragmatic Republicans, like Bob Bennett were tossed out. Others, such as Lisa Murkowski, survived.
It’s too much to hope that with unemployment at 10 percent and wages stagnant we’ve seen the worst of the economic storm. I’m afraid the worst is yet to come. But now that Goldwater’s message of small government and personal responsibility has come full cycle, and become an addiction to big government and low taxes, we can hope for new political alliances that will begin to walk us back from the brink.