What’s Really Going On with American Politics and Governance?: Monday Focus for June 30, 2014

Attention Conservation:

• 1/4 I find myself frustrated with usually-reliable Gerald Seib. Our political disruption problems today are driven by 3 factors: the
• 2/4 Reagan-Thatcher bet on inequality in 1990, the Gingrich bet on obstructionism in 1993 (and doubling-down on it in 2009), and the Obama
• 3/4 bet in late 2009 that the macroeconomic dog would go to sleep and should be let to lie as a strong recovery took hold. Our political
• 4/4 disruption problems not driven by “globalization, alienation, populism”. That framing doesn’t tell us what needs to be and can be done.

I find myself very frustrated with the usually-reliable Gerald Seib:

Gerald Seib: Three Forces Are Disrupting the Political Order: “Crazy things are happening…. Americans agree with… Obama on… Iraq and Afghanistan, climate change, immigration, but his approval… slumps…. [Cantor] outspends an unknown primary opponent 40 to 1 and loses…. Just 27% of Americans think the economy will get better…. Globalization, alienation and populism. Each… disrupts…. The reactions… are an attraction to isolationism and protectionism… feeling increasingly alienated from traditional institutions…. Even while the job-approval rating of the Democratic president fell to 41% in the new Journal/NBC poll, sentiments toward Republicans were lower. In fact, voters said that by a small margin, they wanted Democrats to win control of Congress in this November’s election. It isn’t logical—-but logic isn’t the order of the day…

In my view, three things are going on:

1. The Failure of the Reagan-Thatcher Bet: The (domestic) neoconservative diagnosis of the inflation, energy shock, and social unrest problems of the 1970s was that social democracy had become sclerotic, and that we needed to shrink the public sphere and–more than everything else–widen inequality in order to provide the enterprising with the incentive to enterprise. This bet failed. But it set in motion processes that have led to an enormous increase in income and a still more enormous future increase in wealth inequality. This has meant that those who aren’t in the top 5% are living little if any better than their predecessors. They have more cheap electronic toys. But they must buy more expensive houses, endure more difficult commutes, face (until ObamaCare is implemented) the likelihood of medical bankruptcy or non-treatment if something went seriously wrong, and feel–correctly–that the avenues of upward mobility open to their children are closing off. And this has meant that those who are in the top 5% but not in the top 0.1% now feel envious: a generation ago they could see themselves as being as upper-class as America ever got save for Newport’s 400; now they know that there are 130,000 households out there who really do live in a very different and upper-class world. This is the first defining process of our age.

2. The Doubling-Down on the Gingrich Bet: Back at the start of 1993 republicans thought that their presidency had been stolen. It was, they thought, their presidency–if the election was legitimate. Nobody was happy that Jimmy Carter had been president and he had been elected only because Richard Nixon had disgraced himself. Kennedy and Johnson had gotten in only by stealing both the Negro vote by promising civil rights and the racist white southern vote by reminding them that a Republican–Lincoln–had freed the slaves. Roosevelt had gotten in only because of the Great Depression and then maintained himself and Truman via Hopkins’s corrupt political machine. Woodrow Wilson had gotten in only because that madman Theodore Roosevelt had split the party in a fit of pique. The last legitimate, fair victory by a Democratic non-incumbent had come with that triangulating bastard Grover Cleveland’s election in 1892. And now, the Republicans thought back in 1993, Ross Perot had just done a TR and Slick Willie, the Hick from Arkansas who if he had had an ounce of shame would have quit the race once Gennifer Flowers opened her mouth, had squeaked in.
    
   since Clinton was not a legitimate president the right strategy, Newt Gingrich convinced the Republican Party, was to wage all-out ideological war against all Democratic priorities, demonstrate that Clinton could not govern and was the second coming of Jimmy Carter, take back the congress in 1994, demonstrate again that Clinton could not govern, and take back the presidency in 1996.
    
   When 2009 came along, the Republican leaders–Boehner, McConnell, and company–decided that Gingrich’s mistake had been that he had limited all-out opposition to Democratic priorities. Slick Willie had managed to sign both NAFTA and welfare reform, and so that triangulating bastard could portray himself as a reasonable bipartisan or non-partisan statesman rather than a Democratic Party ideologue. They had to keep voters from thinking that, so whatever Obama was for, they were against: Mitt Romney’s health-care policy? They were against it! John McCain’s climate policy? They were against it!! Ronald Reagan’s Grand Coalition foreign policy? They were against it!!! George H.W. Bush’s long-run budget policy? They were against it!!!! And, they correctly calculated, the supine Washington professional press corps would not highlight the fact that what was Kenyan Muslim Socialism this year had been the announced policies of pre-2009 Republican standard bearers: Republicans could say “We have always been at war with Eurasia!” and the most the supine journamalists would say was “opinions of who we have been at war with differ”.
    
   What Boehner, McConnell, and company failed to realize was that in the eyes of their base they were “Washington” as much as–nay, more than, Barack Obama was. Barack Obama had only gotten to Washington in 2009, after all. To promote the narrative that “Washington” had failed and the bums should be thrown out would give their base a very good reason to throw them out as well.

3. The Do-Too-Little Economic Policy of Obama: One extremely well-informed observer describes the attitude of the highest levels of the Obama administration in late 2009 as this: We have stopped the downturn and saved the financial system, and now the economy will recover on its own. We don’t need to do anything else to boost the economy. We don’t need to do anything to preserve our levers of power to boost the economy in the future. We should put the economy on autopilot, turn to other things, and simply declare that “green shoots” are coming for as long as it takes. That was a crucial, decisive, unforced, and profoundly stupid policy error. Housing, change in monetary regime, extra rounds of fiscal stimulus using Reconciliation and other tools, leveraged use of residual TARP funds–all not just left on the table, but actively pushed aside. And the Obama administration has been unable to admit even to itself that it was an error because that would have required and would require too many immediate personnel changes.

Globalization has been proceeding steadily since 1945: remember the days when it was first Japan and Germany, and then Korea and Taiwan that were the low-wage exporters? Alienation is readily understandable as a consequence of (1) and (3) in the eyes of the first generation of Americans ever not to live materially better than their parents’ generation. And populism is a natural consequence of all three: people tell you Washington is broken, you live no better than your parents’ generation, and the past seven years have been extremely and unusually rough for you or at least for a lot of people you know. Why should that make you trust institutions?

Yet Seib does not connect the dots…