Democrats Turn G.O.P. Mantra on Its Head

Democrats Turn G.O.P. Mantra on Its Head
By JOHN HARWOOD
Copyright by The New York Times
May 31, 2010, 11:10 AM
http://thecaucus.blogs.nytimes.com/2010/05/31/democrats-turn-g-o-p-mantra-on-its-head/?hpw


With the American Jobs and Closing Tax Loopholes Act, House Democratic leaders opened themselves up to both ends of Republicans’ familiar “tax and spend” barbs.

The bill, passed last week, would raise taxes on Wall Street executives and multinational corporations. And it would spend more than $100 billion in the name of creating jobs and extending federal benefits for the jobless.

To overcome opposition, Democrats were forced to make concessions by substantially trimming spending — not the higher taxes.

That points to a new reality as Republicans seek inroads against President Obama and his party in the midterm elections. If they changed the order of their slogan to reflect its current political throw-weight, Republicans would attack Democrats for “spend and tax,” not the other way around.

“The spending issue has supplanted taxes in the G.O.P. mantra,” said Neil Newhouse, a Republican pollster. Democrats acknowledge their vulnerability.

“As a metaphor, it is powerful,” said Mark Mellman, a strategist for Democratic leaders. Amid near double-digit unemployment and trillion-dollar deficits, Mr. Mellman said, Americans link spending with “long-term economic decline, lack of discipline, wasted money, money spent bailing out Wall Street instead of helping Main Street.”

The primacy of spending as a hot-button issue may fade if economic recovery continues and if Washington moves aggressively to shrink budget deficits. How much that will help Mr. Obama and his party is another question.

Cuts and Increases

In 1980, Ronald Reagan placed tax cuts at the center of his campaign to oust President
Jimmy Carter and make conservatism the ascendant political force.

In 1992, Ross Perot’s denunciation of deficits helped Bill Clinton wrest the White House from Republican control.

By 2000, economic boom times had eliminated the deficit issue and limited the drawing power of tax cuts. For his presidential victories, George W. Bush relied more on appeals to values and national security.

That spending has taken center stage now is no mystery. First, Mr. Bush guided the budget from surplus to deficit with two tax cuts, new prescription drug benefits under Medicare and increased security spending after Sept. 11, including the wars in Iraq and Afghanistan.

Then, Washington responded to economic crisis by writing two gargantuan checks. In the fall of 2008, Mr. Bush signed a $700 billion bailout for the financial system. In early 2009, Mr. Obama signed a $787 billion stimulus package in hopes of kick-starting the economy out of recession.

This year, Mr. Obama added a third mammoth expenditure: a health care overhaul priced at $938 billion over 10 years.

Never mind that the Congressional Budget Office says tax increases, spending cuts and cost savings associated with the health bill will actually reduce the deficit.

Nor does it matter, politically, that the Wall Street bailout will end up costing taxpayers a fraction of that $700 billion. Or that Democrats have revived “pay-go” procedures earlier abandoned by Republicans, under which Congress must offset most new entitlement spending or tax cuts with corresponding spending cuts or tax increases.

Mr. Obama’s party is in charge. And the juxtaposition of his activism with the specter of overreach, as dramatized lately by the debt crisis in Greece, has turned spending priorities Americans once valued into the political equivalent of toxic assets.

Arguing Austerity

For many voters, noted Stan Greenberg, a Democratic strategist, “spending is debt — seen as threatening to the long-term economic future.”

An argument now under way inside Mr. Obama’s economic team will settle how, and how quickly, Democrats answer that vulnerability.
Lawrence H. Summers, director of the National Economic Council, insisted last week that the recovery remained too fragile for an immediate turn toward austerity.

“I cannot agree with those who suggest that it somehow threatens the future to provide truly temporary, high-bang-for-the-buck jobs and growth measures,” Mr. Summers said in a speech. “Rather, assuring as rapid a recovery as possible strengthens our future economy, our future prosperity, with many benefits, including a greater ability to manage our debts.”

Peter R. Orszag, the White House budget director, favors a more aggressive approach to deficit reduction once a presidential commission reports in December. That could take some of the sting out of Republican attacks on spending.

Of course, that could also leave Democrats exposed once again on taxes, an issue that has been defused lately by Mr. Obama’s pledge to focus on only high-income Americans. Some Democratic economists insist taming long-term deficits will require setting that promise aside.

For now, Democrats must cope with a shift in attitudes they could not have imagined a few years ago, when they fretted over winning back so-called values voters.

While struggling to pass new spending for the unemployed, House Democrats last week voted to end the Pentagon’s “don’t ask, don’t tell” policy and clear the way for gay men and lesbians to serve openly in the military. That objective proved easier to achieve.