The Democrats' Energy Problem

It is not much more than a year since the 2000 presidential election was finally decided, but it seems like an eternity. The Republicans have now accomplished what they were unable to achieve at the polls: They have gained decisive control of the national debate and virtually locked their agenda in place for years to come. The tax cut laid the foundation; then September 11 and the war on terrorism provided the functional equivalent of the Cold War. It is the Reagan formula all over again: tax cuts, huge increases in military expenditures, deficits, and the consequent exclusion of all the initiatives that liberals might offer.

In the face of Bush's popularity, many Democrats have comforted themselves with the thought that his father also enjoyed stratospheric ratings after the Gulf War in 1991 but was beaten by Clinton the next year. In this year's elections, moreover, Bush won't be on the ticket, and the historical pattern favors the party out of the White House. In this reassuring view, Democrats should fight the midterm elections only on local issues and wait to challenge the Republicans frontally in 2004, by which time the Bush bubble will have burst.

When the Gulf War was over, however, it was over. The war on terrorism has no end in sight. The brilliant success of the Afghan campaign has raised expectations of what force can accomplish not just in Iraq, but even in Iran and North Korea. And since terrorism can emerge suddenly anywhere, it provides an indefinite warrant for intensified security measures as well as renewed defense spending. Homeland security gives the Republicans an overarching rationale for everything that they have wanted to do, and they plan to use it to create a new Republican era in American politics.

After September 11, no Democrat who fails to recognize the gravity of the genuine threats that Americans confront has a prayer. But Democrats will seem to have acquiesced in Bush's entire framework for both foreign policy and domestic priorities unless they start drawing sharp distinctions between the justifiable response to terrorism and the Republican seizure of the historical moment.

The one element in the current picture that works in the Democrats' favor is the Enron collapse. Unless there is a major new disclosure involving the administration, however, this is not a political scandal in the usual sense. It offers a lesson in the excesses of deregulation, to be sure, but its chief political significance is as a paradigm of misconduct.

As Enron got into trouble by hiding its losses with deceptive accounting, so the Bush administration and Republican Congress hid the true cost of last year's tax cut with deceptive accounting. The legislation created absurd anomalies in the tax laws that lawmakers knew would have to be changed: Millions of people whose tax rates were cut would be caught by the "alternative minimum tax"; some cuts were phased in, then phased out, all to keep down the official total cost, which the press dutifully reported even though it sharply understated the losses in revenue that would occur if and when the program was fully implemented.

The accounting deceptions in the tax cut were not an anomaly. The same kind of financial dishonesty has characterized the case for Social Security privatization and the proposals to "voucherize" Medicare. And what is particularly noxious in these efforts is that they would transfer risk to the unsuspecting, leaving many of them without the security in retirement they have counted on. That, too, is part of the Enron paradigm: an indifference to the long-run consequences for ordinary people, while the boys on top enrich themselves. The usual demand in wartime is for shared sacrifice, including higher taxes. What other war in our history has seen tax cuts for the wealthy and reduced benefits for low-income people, as in Bush's new budget?

The one parallel is the Reagan-era Cold War, which began with phony supply-side estimates of rising tax revenues from falling tax rates and left America with a colossal overhang of debt. It took the 1990s to work our way out of that hole, and now Bush and the Republicans are looking to put us back in it. The Democrats should set aside their qualms about attacking a popular president and use the Enron disaster as a "teachable moment" about the disastrous consequences for the country of financial deceit.

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