It Wasn't Just Iraq

Just about everyone understands the importance of Iraq to the Democrats' success in the 2006 midterm elections. Far fewer, we suspect, understand that the Democrats owe a good chunk of their 2006 success to an issue that has historically been one of their strongest: the economy.

Throughout the campaign, polls regularly indicated that the economy was the second most important concern of voters (behind Iraq); polls taken in the last weekend by Pew, ABC News/Washington Post and Newsweek confirmed this. On Election Day, 39 percent of voters deemed the economy “extremely important” to their House vote, and those voters backed the Democrats by a wide 59 percent to 39 percent margin. Similarly, a post-election poll by Democracy Corps and the Campaign for America's Future found that jobs and the economy was cited by 26 percent of voters as their most or second-most important issue (again, only lagging behind Iraq), and those voters supported Democrats by a 63 percent to 36 percent margin.

Nor was this voting pattern confined to House races. In key Senate contests across the country, especially where candidates highlighted the country's continuing economic problems, Democrats also benefited greatly from voters who said the economy was central to their vote. In Ohio, where Democrat Sherrod Brown struck an explicitly populist note, 42 percent of voters said the economy was extremely important to their vote and these voters supported Brown over Republican incumbent Mike DeWine by a stunning 71 percent to 29 percent margin. In Pennsylvania, where Democratic candidate Bob Casey ran hard against big oil, big pharma, the insurance companies, and Bush's tax cuts for the rich, 38 percent said the economy was extremely important to their vote, and that group supported Casey over Republican incumbent Rick Santorum by 66 percent to 34 percent. And in Missouri, where Democratic candidate Claire McCaskill echoed Casey's populist themes, with a special emphasis on health care, 45 percent of voters said the economy was extremely important, and these voters backed McCaskill over incumbent Jim Talent by 60 percent to 37 percent.

Clearly, the economy mattered greatly in the 2006 election. In fact, it was one of the great unifying themes of this year's campaigns, as essentially all Democrats, including the victorious House candidates who have been labeled “conservative” because of their positions on social issues, promised to raise the minimum wage, oppose Social Security privatization, stand up to corporate interests, and get a better, fairer deal for the middle class. The importance of the economy to Democratic campaigns may also be seen by how they spent their ad dollars. A study by the Campaign for America's Future tracked television advertising expenditures in 11 diverse Senate, House, and governors' races. They classified ads by the issues they covered and found, intriguingly, that jobs and the economy (defined narrowly, so it excluded seniors' issues like Medicare and Social Security) actually had the highest ad expenditures -- higher even than corruption or Iraq.

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Understanding the contribution of the economy to the Democrats' 2006 victory is important for several reasons, one of which is to vindicate the progressive critique of the Bush economy as delivering little in wage and income growth for the ordinary family, even as it ratcheted up insecurity around health care, retirement, and the availability of middle-class jobs. That's why voters punished the GOP on the economy, even though the Bush administration did deliver reasonably good economic growth and relatively low unemployment. Indeed, on Election Day, 81 percent of voters told exit pollsters they had just enough financially to get by or were falling behind and 68 percent thought life for the next generation of Americans would not be better than today. All these voters supported the Democrats by wide margins. Democrats should note this and continue to focus on America's very real economic problems and how to solve them.

But another reason to be very clear on the role of the economy is that this issue, as important as it was this year, may have to increase in importance in future elections if Democrats hope to maintain and extend their gains. The Iraq conflict, after all, will not go on forever and corruption is unlikely to be as big an issue going forward for the simple reason that the GOP has now lost much of the power that facilitated its corruption. And, critically, the Democrats have now acquired a considerable contingent of new voters who are very interested in seeing progress made on these economic problems, but are less interested in the Democrats' social liberalism (in contrast to much of the Democrats' professional and upscale political support).

This can be seen clearly by looking at which voters shifted to the Democrats in 2006. The national exit poll shows that non–college-educated (working-class) voters shifted from supporting GOP candidates for the House by 51 percent to 48 percent in 2004 to supporting Democratic candidates this year by 53 percent to 45 percent. The exit poll also shows that white voters went from giving GOP House candidates a very strong 57 percent to 42 percent advantage in 2004 to a much narrower 51 percent to 47 percent advantage this year. While it is impossible to generate a precise estimate at this point (the internals of the exit poll have not yet been publicly released so we don't know directly, for example, how white non-college voters cast their ballots), a rough estimate is that about half of the shift toward House Democrats this year came from white working-class voters, about 35 percent from white college-educated voters and about 15 percent from minority voters (overwhelmingly from Hispanics).

The challenge for Democrats, then, is to keep -- and expand -- their support among these new voters in 2008 and beyond, while the salience of the Iraq and corruption issues fades. There are certainly reasonable arguments to be made that Democrats' efforts to do so will be facilitated by defusing Republican values issues and continuing to close the gap on national-security issues. But the Great Attractor, it seems to us, must lie in the Democrats' economic program, a potential source of huge comparative advantage over the GOP. White working-class and Hispanic voters, it seems fair to say, are unlikely to cast their lot enthusiastically with the Democratic Party because it is the socially liberal or the peace-oriented party. They are much more likely to do so because they feel the Democrats provide a way forward for them in the turbulent new economy.

Based on the 2006 campaign, the Democrats might feel they already have the right economic program. After all, the populist notes struck by many candidates road-tested well in various campaigns, and the House Democrats' “Six for ‘06” program contains a number of economic provisions that are well-received in most polls (raise the minimum wage, provide a tax deduction for college tuition, cut student loan interest rates, have the government negotiate for lower prescription drug prices, end tax breaks for oil companies and corporations that outsource U.S. jobs, no privatization of Social Security, and so on). Perhaps all that is necessary is to move steadily down this path or, at most, turn up the volume on one or another part of this agenda. The latter is a debate that is already breaking out between those (like the New Democrat–oriented Third Way group) that call for more investment in economic opportunity, especially through a wide range of tax credits, and those (like the Campaign for America's Future and Senator-elect Sherrod Brown) who call for an emphasis on economic security and a full-throated populism, especially on the trade issue.

We believe this debate misses the point. The basic problem is that the current Democratic approach on the economy fundamentally misreads what voters want on the economy and fails to outline a long-term vision that will attract and retain middle-class voters. Until that problem is solved, tweaking the current agenda in the direction advocated by either camp is likely to do little good.

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Understanding why this is so requires a brief trip into the Democrats' past. Throughout the 1960s and 1970s, as the political scientist Mark Smith has shown, Democrats were seen, by wide margins, as the party of prosperity and growth. In the 1980s, however, the tables turned. The Republicans -- with their emphasis on individual striving and limited government -- were seen by a majority of Americans as the party best able to manage the economy. In the 1990s, the Democrats came back and largely eliminated the Republican margin. Yet, with the notable exception of their impressive showing in recent polls, they have yet to prove capable of forging a strong and lasting advantage on the economy -- especially with middle- and working-class white voters, who in 2004 said they trusted Bush over Kerry on the economy by wide margins.

Democrats do have strong economic commitments, of course. But strong commitments do not automatically add up to a strong agenda. What's been missing within the Democratic Party is the kind of larger vision that formed on the other side of the aisle during the GOP's long years in the wilderness -- a vision that laid out a few key aims, mobilized key constituencies around them, and developed messages and ideas that could both capitalize on voters' existing leanings and change those leanings. Amid all the hand-wringing about “framing,” the basic problem consistently gets missed: Democrats need to articulate an underlying economic philosophy that motivates and anchors what they say and do in office. You can't build a frame without a foundation.

And not any old foundation will do: A message is better than no message, but some messages are better than others. When the discussion turns to economic policy, Democrats usually veer toward two polar strategies, as we're already seeing in the aftermath of this election: the investment approach and the populist approach. Each has worked well for the Democrats at key moments in the past. Yet neither is wholly suited to the political and economic challenges of today, because neither captures Americans' complex response to the new insecurities they face.

The obvious historical referent for the investment approach is the Clinton years, when strong growth substantially increased Democrats' standing on the economy. But the Clinton experience is actually quite cautionary. Yes, Clinton did gain re-election and bolster the party's image. Still, he was not able to re-establish Democrats' decisive economic advantage, and he presided over a strengthening of GOP control not just of the federal government, but also of the economic agenda.

What's more, economic security has become a more pressing problem -- and public concern -- since the Clinton years. Recent polling shows extremely high levels of anxiety about declining job security, dwindling workplace health and retirement benefits, and the growing strains on family finances. In response, many centrist Democrats have actually edged away from the investment line they once embraced. The Brookings Institution's Hamilton Project, headed by Clinton-era economic gurus such as Robert Rubin, has made economic security a centerpiece of its agenda. Meanwhile, former Clinton aide William Galston recently observed, “The economy and Americans' perception of it have changed … in ways that require corresponding changes in our economic agenda and in the ways we talk about it … Selective benefits for the middle class are at best a small piece of the answer. We must be prepared to take on the larger structural challenges.”

This is where the populist prescription rears its head. The weakness of the investment line, according to populist thinkers, is precisely that it fails to appeal directly to voters' deep concerns about economic security, or to draw sharp lines between the parties. What is needed instead, the argument continues, is a powerful morality tale -- of the privileged stacking the deck against ordinary hardworking people.

And yet the populist prescription has its own weaknesses. Perhaps the most serious is that it fails to take seriously the extent to which many of the “people” aspire to be among the “privileged” and believe they will be. In a March 2006 poll, for example, 80 percent of Americans described themselves as middle class or poorer. Yet an amazing 44 percent believed it was very or somewhat likely that they would become wealthy. These findings are consistent with polls over many decades that show Americans to be great believers in class mobility (despite the reality that such mobility is probably no higher in the United States than in the supposedly class-bound nations of Western Europe).

In aspiring to rise higher on the economic ladder, moreover, middle-class Americans generally adopt a bifurcated view of their economic situation that is not easily reflected in populist rhetoric. On the one hand, they tend to believe that things have changed for the worse -- that the economy is doing poorly, that the security that families once enjoyed is disappearing, that leaders just don't get it. On the other hand, these very same Americans believe that they are holding up their end of the economic bargain, that they are working hard and doing right by their families, that their story is one of optimism and hope, not pessimism and despair. Even today, with most voters embracing a negative economic story overall, many still believe a positive economic story applies to themselves. Populism appeals to the negative, pessimistic side of voters' outlook, but it frequently falls short in appealing to the positive, optimistic side.

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In many respects, these twin perceptions are rooted in the same basic trend: the increasing transfer of economic risk and responsibility on to American families. This trend has certainly left some Americans better off, although gains for the median family have been decidedly unimpressive. Yet they have also meant that middle-class Americans face much greater economic insecurity than they did a generation ago. This insecurity makes Americans worried that old economic guarantees are evaporating. But turned around, it also encourages them to believe that they are ultimately responsible for their own fate, and that if they work hard enough they can get ahead. These are not contradictory beliefs; they are two sides of the same coin.

President Bush, with his recent proposals for an “ownership society,” responded to one side of this two-sided coin. What the ownership society ultimately represents -- whether in the form of private accounts in Social Security or health savings accounts or new tax breaks for savings and investment -- is a call for individual management of economic risks. In this sense, it is an acceleration of recent sweeping trends in risk management, rather than an attempt to reverse them. The ownership society speaks to the side of many Americans that says “I am responsible for my own success, and I will succeed.”

The Achilles' heel of the ownership society, as the dismal fate of the president's proposal for privatization of Social Security suggests, is that it does not speak to the other side of Americans' views of the economy: the belief that the shift of economic risk has already progressed too far, the desire for some basic foundations of economic security to deal with the new risks and strains of the 21st century.

Indeed, pollsters regularly report 10- to 15-point advantages for economic-security messages over various versions of Bush's low-tax ownership society. Polls also suggest a consistent preference for a role for government that promotes security in the context of expanded opportunity, as opposed to a government role that keeps taxes low to promote self-reliance. (When Americans were asked in 2005, for example, whether they were “more concerned with the opportunity to make money in the future, or the stability of knowing that your present sources of income are protected,” 62 percent favored stability and just 29 percent favored opportunity.) Bush gambled that Americans imbued with the ethos of individualism would fail to recognize the huge risks the ownership society represented. He made the wrong bet, and his misstep has helped provide Democrats with an opening to reverse the tide he hoped to further.

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To seize that opening, democrats need to refashion the theme of security for the 21st century, putting forth a set of simple ideas and arguments for providing Americans with the secure financial foundation they need to reach for the American dream.

The starting point for this vision is a simple but forgotten truth: Economic security is a cornerstone of economic opportunity. When Democrats talk about social insurance they tend to focus on how programs like Social Security and Medicare help prevent financial disaster. But there is another, more positive way to talk about insurance: as a way for families to get ahead. Just as businesses and entrepreneurs are encouraged by basic protections against financial risk to invest in economic growth, so adequate security encourages families to invest in their own future -- something many now find quite difficult. It's not easy to invest in the future, after all, when a sudden drop in income or rise in expenses could completely blow away your family budget. That sense of insecurity will make a person less likely to invest in specialized training, cultivate new career paths, aggressively change jobs -- the very things that are likely to allow that person to get ahead.

There is a huge void in American politics just waiting to be filled by public leaders who can speak convincingly about the need to provide economic security to expand opportunity. Efforts to increase health coverage and contain health-care costs (including the cost of prescription drugs), to improve the quality and availability of child care, to defend and extend guaranteed retirement benefits (including Social Security), to provide middle-class families with strong incentives to save and build wealth, and to make college and specialized training available to all are the subjects of countless and competing policy prescriptions. But the important thing is that these policies should be put in the context of helping Americans get ahead. These are measures to allow the typical American family to raise its head from the day-to-day struggle of an insecure world and concentrate on its most heartfelt wish: to achieve the American Dream.

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With this approach, the democrats' mantra can be simple and repeated endlessly: providing security to expand opportunity. The Republicans, in contrast, provide nothing, leaving hardworking American families without the secure base they need to get ahead. That's the wrong message in this day and age and Democrats can make Republicans own it, if they play their cards right.

Over the next two years, Democrats should use their newfound power over the agenda to set goals and formulate ideas that force Republicans to take a stand on the domestic issue of our day: the economic insecurity of the American middle class. No 50-point programs. No triangulating targeted measures. Just one powerful vision, backed up by bold ideas on health care, retirement and job security, and family finances.

So repeat after us: “providing security to expand opportunity.” Try it, you'll like it -- and more important, so will the typical American voter. Indeed, that voter just might start seeing the Democrats again as the clear and easy choice to make on the economy, election after election, just as they did in the Democrats' heyday. And with that home-court advantage back, the Democrats' long-term electoral prospects are likely to remain bright even when noneconomic concerns do not loom as large as they did in 2006.

Jacob S. Hacker, professor of political science at Yale University, is author of The Great Risk Shift: The Assault on American Jobs, Families, Health Care and Retirement. Ruy Teixeira is a fellow at The Century Foundation and co-author of The Emerging Democratic Majority.

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