In looking for the proverbial silver lining in a very cloudy election, Democrats can take comfort from one result. The Republican victory finally blew away the Democrats' disastrous strategy of trying to attract voters by being the party of perpetual budget-balance.
Last week at Washington strategy meetings, senior Democrats from both the party's liberal and moderate wings agreed that budget-balance was no longer a winning card -- if indeed it ever was. Instead, the issuedividing the parties has become how best to use temporary deficits to energize the economy.
Not only is the economy softening; we are engaged in a buildup for a possiblewar. On both counts, deficits are now entirely defensible.
The Bush administration wants to deepen the deficit by making permanent the upper-bracket tax cuts enacted in 2001, and by adding new tax breaks for corporations and high income investors. This is advertised as an "economic stimulus."
As an alternative, Democrats are now working on a very different stimulus package. One version would use federal revenue-sharing to help hard-pressed states avoid cutting services, in everything from schools to Medicaid. The package would also extend unemployment compensation, and add tax breaks for lower and middle income families. Robert Reich particularly urges a temporary cut in the payroll tax, which would benefit everyone who works for a living.
For despondent Democrats, this welcome strategy offers a politically vividcontrast between the party of the many and the party of the few. As you are doubtless sick of reading, more than half of the Bush tax cuts go to thetop one percent of the population. But schools and health benefits and a state government that doesn't have to cut services in a recession and payroll tax relief would benefit most Americans.
Of the leading possible Democratic candidates for 2004, only Sen. John Edwards of North Carolina still calls for further cuts in social outlay inthe name of budget balance. But you don't hear Al Gore talking about his famous lock-box any more. He's talking about national health insurance and investment in children. John Kerry, the party'sother front-runner, told me that he also favors short-term deficit spending on social outlays to stimulate the economy, as well as a long-term move to universal health insurance coverage.
In an election overshadowed by looming war, the Democrats might have made gains on pocketbook issues. But numerous polls, both before theelection and since, made clear that voters didn't know what the Democrats stood for.
It's about time that the people's party rallied around a coherent economic theme -- one that contrasts a program to serve the affluent with a program that benefits nearly everyone else. The budget-balance conceithas been a millstone around the Democrats' necks, and one worthy of HerbertHoover.
Dealing with fiscal excess made sense in the late 1980s and early 1990s, an erawhen Republicans had run up huge and dangerous deficits. Under Clinton, Democrats forced through a tax hike on the richest two percent, trimmedspending and got rid of the deficit entirely by 1998.
But by then, budget balance had ossified into an article of faith among many House and Senate Democrats. Gore's advisers persuaded him that by promising to keep running a budget surplus and using the proceeds to pay off the national debt, he would look like a protector of SocialSecurity.
This invented "lock-box," the theory went, would prevent the Republicans from giving away the rapidly accumulating surplus in the form of tax cuts for the rich. That theory, of course, went up in smoke with Bush's immense, 10-year tax cut of 2001.
Even after that partisan defeat, many Democrats continued to argue for fiscal prudence as their political salvation. But if the holy grail isbudget balance, and Republicans have just given away more than a trillion dollars of revenue in a tax cut that Democrats lacked the nerve tochallenge, then the hapless Democrats are left with an utter dead-end of beingthe party that slashes social spending. But isn't that why we have a Republican Party?
Their self-annihilating budgetary pose is the reason why Democrats in 2002 seemed to stand for exactly nothing. One minute they were talking budget balance; the next minute they were talking about adding drug benefits to Medicare. It didn't add up.
Now, maybe, Democrats can reclaim their historic stance as the party that usespublic outlay to benefit ordinary voters. That's what public schools do. That'swhat Social Security and Medicare do. And the voters actually seem to like it.
Robert Kuttner is co-editor of the Prospect.
