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Obama’s defeat – and his likely victory in 2012

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It looks grim for President Obama: the American people have delivered a stinging rebuke to his policies. Partisan stalemate will block any new achievements. Republicans will frame the agenda and thus public opinion. The White House will be paralyzed by congressional investigations.

All of that is true. And all (or, at least, most) will contribute to Obama’s re-election in 2012.

For starters, the presidential electorate itself will be quite different: a much higher proportion of voters will be Democrats. More Americans will be employed – unemployment, now hovering close to 10% nationwide, will be below 8% (and perhaps even 7%), which, while not exactly low, will moderate a lot of the current anger while simultaneously allowing the President to claim that things are moving in the right direction (and to whatever extent they’re not, Republicans will now share the blame). A much lower percentage of the electorate will be seniors – and significantly fewer, in all likelihood, will be voting Republican.

This last point is important: CNN exit polls showed only 39% of seniors voting Democratic, compared to a usual figure of more like 49%. Why the drop off this year? Republicans successfully stole a page from the Democratic playbook and panicked seniors about Medicare cuts, due to Obamacare. The dilemma this poses for Republicans going forward, however, is their promise to cut federal spending, a cynical juxtaposition better managed in a 30-second campaign ad than in two years of governing. The only specific suggestion Republicans have put forward on that front is to freeze “discretionary spending” – sounds good, but totally eliminating discretionary spending would save only 5% of the budget. If the GOP (or, for that matter, anyone) is serious about cutting spending, they’ll have to cut Social Security, Medicare and Medicaid (which funds long-term care for seniors more than healthcare for the poor). Even those voting this year – who had a distinctly more Republican and more conservative cast than the larger presidential-year electorate – told pollsters that they agreed with Democrats, not Republicans, on virtually all the issues. Wait until they hear what some of these new Republicans are really for, like eliminating Social Security, Medicare and – my favorite – unemployment insurance. It is, indeed, a recipe for less government – but not, shall we say, most Americans’ cup of tea.

And there’s one way Republicans actually promise to grow government: over a dozen different investigations of the White House, making their conduct in the Clinton era look mild. We know how well that went over with voters. It seems that internal White House polling showed this as the single best argument against the GOP – but the administration couldn’t figure how to put it out there without sounding like whiners. Republicans will take care of that problem for them. 

The Republican majority swept into governors’ mansions across the country will have a harder time:  almost all states are facing budget deficits in the neighborhood of 20%, after having made similarly-deep cuts already for two years running. The easy cuts are gone – but polls indicate the public believes it can have lower taxes and less government while keeping all the government services it wants. At the state level, unlike the federal, this fantasy can’t be indulged year after year. The other party can now enjoy the fruits of inheriting a bad situation.

Ultimately, of course, you can’t beat somebody with nobody: Republicans can’t just run against Obama, and each of their leading contenders at the moment is even more seriously flawed. As bad off as Obama is now, his re-election chances actually just improved, and his popularity likely will soon, too. 

That’s not to say that the President can just play rope-a-dope. His challenge is to show he’s listening (his failure to do so thus far being, more than any substantive issue, the real cause of mainstream discontent with him) and to turn the themes on which Republicans found success to his advantage. A modest policy agenda might include the following:

  • Cut taxes: specifically, extend the Bush cuts, but not for the wealthiest Americans.
  • Double-down with payroll tax cuts: not only do most Americans pay more in payroll than income tax, this would specifically target job creation. 
  • Force the issue on Social Security and Medicare: lay out a blueprint to eliminate the federal deficit in ten years, starting immediately and setting round-number targets for spending reductions – including entitlements – but challenge the House to fill in the details (which, after all, is its constitutional duty). And propose an alternative to reduced Social Security and Medicare benefits: lifting the cap on earnings subject to payroll tax.
  • Force banks to lend to small businesses. While at it, ask Congress to rewrite Chapter 11 to treat mortgage debt like any other, so homeowners can restructure it through the bankruptcy process.
  • Call on Congress to end earmarks – and then veto any that pass.
  • Protect corporate profits. Republicans have long argued to restrict the use of union dues for political activities – shouldn’t people who invest in a company for its profit potential be able to stop those profits from being siphoned away to political contributions against their will?
  • Pre-empt the insurance mandate debate: one needn’t favor making insurance mandatory (I don’t – and neither did candidate Obama), but it’s the price for insurers taking all comers, which most people want. Let individual states decide whether to impose a mandate and help the poor pay for it: if they do, the federal government ought to assume the Medicaid long-term care burden and turn it into a sensible – and more efficient – program providing seniors the protection they deserve. 

Proposals like these raise one central question: whether Republicans are really for smaller government and lower taxes for all Americans or, as David Stockman, Ronald Reagan’s budget director, conceded, it’s all just a “Trojan Horse” to funnel benefits to the rich. Basically asked that on election night, the House Republican Whip, Eric Cantor, actually responded that taxing yachts hurts working people, too. How can Obama beat arguments like that?