The Democrats’ perilous fall

By Max J. Castro
majcastro@gmail.com

When voters go to the polls this November for Congressional elections, one thing will be foremost in their minds: the state of the economy. The economy, especially jobs, is the most important variable in most U.S. elections. It will be true, with a vengeance, this time around.

That bodes ill for the Democrats this fall. The most recent economic data point to a weak and nearly jobless recovery. Most of the jobs created in the last few months have been temporary Census positions. Almost all of these jobs will vanish by September, just in time to increase the unemployment rate before the election. That is unless the private sector begins to create jobs at a vigorous pace, something that seems unlikely given the present conditions and the snail’s pace of private sector job creation since the current recovery began.

To make matters worse, the effect of Obama’s stimulus package — too small to kick-start the economy in the first place — will begin to wear off about that time. Perhaps more importantly, cash-starved state and local governments, forbidden to engage in deficit spending, will speed up the job cuts they are already undertaking.

Under these conditions, it is up to the federal government to step up and create demand and jobs. Alas, the Republicans and a few conservative Democrats are blocking even the most measly stimulus package being proposed in Congress. The pleas of President Obama not to abandon economic stimulus with the economy still in serious condition have fallen on deaf ears. Indeed, last week the Senate stalled a measure that, among other things, would have extended unemployment compensation for more than 300,000 workers who have lost their benefits. The longer Congress delays in passing the bill, the greater the number of workers whose unemployment benefits will be exhausted.

While many economists agree with this analysis, politicians on both sides of the Atlantic have turned into deficit hawks. From Greece to California, economic policies that will eliminate jobs and decrease demand are being put into effect. As Princeton economist and New York Times columnist Paul Krugman has written, there is that 1930s feeling in the air when wrong economic policies made a bad economy worse. While we may avoid a full blown 1930s style Depression, there is a serious risk of a second recession and a decade of economic misery for hundreds of millions of people around the world.

The political consequences also could be serious. Economic stagnation tends to create space for demagogic, nationalist, and racist movements, from the Tea Party in the United States to the nationalist party in the Flemish half of Belgium. When the economy is down, voters tend to punish incumbents and the majority party. That would be the Democrats. It doesn’t matter that the economic troubles we are currently enduring are the consequences of the failure of the ideology of unregulated markets peddled principally by Republicans. The voters will likely punish the party in power.

The economic climate not only presages losses for Democrats in November, it imperils the reelection of the president himself. If passing key elements of his agenda intact through Congress in 2008-2009 has been difficult, accomplishing anything with a majority or near majority of Republicans in Congress will be next to impossible.

The Republicans have a good, cynical trap going. First, they obstruct the president regarding his efforts to deal effectively with the economic problems that he inherited from his Republican predecessor. Next, in Nov. 2010 and 2012, they will run claiming that the Obama administration has been ineffective in handling the economy.

It would be a tragedy for the country if a Republican Party now more reactionary than ever were to return to power. To avoid this, the Democrats are trying to reconstruct the coalition of young voters, minorities, and educated urban voters that helped propel them to victory in 2008. It will take more than that. To avert disaster, Obama must recapture the magic that won him the presidency in 2008. This time the task will be even harder. A large majority of Americans think the country is going in the wrong direction. Obama was elected to right the ship of state. But circumstances that he could do little about, including a gigantic oil spill in the Gulf of Mexico, have made that exceedingly difficult.

The Obama administration has actually accomplished some very important things, starting with the health care law and, soon, financial reform. But people are still feeling that things are out of control. For the sake of the nation, in the next 36 months, Obama and the Democrats have to work very hard to make the American people feel they have things under control and that the Republican Party provides no credible alternatives except empty rhetoric and more tax cuts for the rich.