The Magazine

The Democrats' Economic Problem

(Besides being unemployed.)

Nov 18, 2002, Vol. 8, No. 10 • By STEPHEN MOORE
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THE ELECTION NIGHT returns were not even fully revealed before liberals began handing out recriminations. Across the country, Democratic activists and deep-pocket donors were devastated by the failure of party leaders to use the sagging economy to deliver a knockout punch to the Republicans. But it's not as if they didn't try.

In the weeks leading up to the election, the party's three heavyweight 2004 presidential aspirants--Tom Daschle, Dick Gephardt, and Al Gore--plastered Bush for mishandling the economy and the stock market. At the Democratic economic summit on October 11, Rep. Charlie Rangel raged that George W. Bush is a 21st-century Herbert Hoover. The Democratic National Committee ran a TV ad in battleground states showing a pitiful, 70-something grandfather returning to work because he's lost his retirement money in the stock market. The message: This is the miserable economy Republicans have given us.

Trouble is, the public didn't buy into the Democrats' "blame Bush" offensive. Polls showed voters were about equally divided on which party could better steer the economy back to prosperity. Why was that? After all, the Democrats had a point. The economy has been pretty miserable in these past two years, especially when contrasted to the high-growth and bullish Clinton years.

But here is where the Democrats kept getting tripped up. What program did they favor to juice the economy? Voters never knew. If you listened carefully, you got the sneaking suspicion that they hadn't a clue. In fact, the economic prescriptions that you heard from Democratic party leaders ranged from weak to moronic.

Al Gore's eagerly awaited pronouncements on the economy amounted to a grand to of one idea: extending unemployment insurance benefits. Then you have people in the liberal wing of the party, such as Ted Kennedy and Hillary Clinton, who want some old-fashioned priming of the Keynesian pump through massively increased federal expenditures. Dick Gephardt endorsed a $200 billion deficit-spending plan with more money for school construction, more money for bankrupt states, and $75 billion for complicated new tax credits. This plan would surely create jobs . . . for tax accountants and H&R Block employees. In his next breath, and with a straight face, Gephardt excoriated President Bush for running up the deficit.

In sum, when it comes to fixing the economy, the Democrats are completely schizophrenic. They are arguably as confused as the feckless Republicans about what to do.

But there was one idea that almost all Democrats (except those in tightly contested Senate races) agreed on: What is poisoning the economy these days is the Bush tax cut. "Our problem is that the Democrats whine and whine," fumed Democratic senator Fritz Hollings of South Carolina. "Everybody knows what the problem is. What's the solution? We say the reason for the trouble is 'We don't know.'" Then he boomed with almost comical conviction: "We do know. It's the tax cuts."

Democrats also tried to pummel Republicans for wanting to gamble Social Security on the "risky scheme of privatization." Democrats in unison asked voters, Do you really want your Social Security dollars gambled on Enron stock? Now they're scratching their heads, wondering why the Social Security demagoguery fell flat with voters--especially young ones.

The answer seems to be that private Social Security accounts are not just good economics. They can be a surprising political winner, too. Across the country, Club for Growth-endorsed Republican candidates--including Elizabeth Dole, Lindsey Graham, John Sununu, and Pat Toomey--defended private accounts and rightly argued that the Democratic plan to save Social Security is nonexistent. True, many cowardly Republican candidates fled from the president's plan, but many of them lost--including Connie Morella and John Thune.

Indeed, many Republicans dared to touch the third rail of American politics and lived to tell about it.

The anti-tax-cut message had even more devastating consequences for the Democrats. The Democrats confronted giant hurdles in persuading voters to join in their obsessive loathing of the Bush tax cuts. One is that the public likes the tax cut. Two is that there is no semi-rational economic logic in the argument that canceling the Bush tax plan could possibly revive the economy. How in the world could a tax hike now incite more job creation, more investment, or more confidence?