After the Midterms

Yesterday, Americans voted to return leadership of the House to Republicans, put many more Republican governors in statehouses and trim the Democratic majority in the Senate. While a huge recession undoubtedly contributed to yesterday's results, there is no question that they reflect voter unhappiness with how the Democrats handled the last two years.

What did the Democrats do wrong?  Critically, they did not focus on the economy, the one issue that people cared about most.  Instead, after passing the ARRA act, they pursued a strategy of using the financial crisis to move other priorities.  Indeed, the tea party which provided most of the energy behind the Republican resurgence came into its own in the summer of '09 when it organized rallies at Town Hall meetings to lobby Congressman against Obamacare.  And polls turned sharply agains the President and the Democrats after the Senate passed Health care legislation on Christmas eve.  The problem with healthcare legislation was it did not deal with the economy and, it went against the preferences of a majority of the public.  Expect Republicans to continue to use this issue against the Democrats for some time.

Second, the Administration generally did not take ownership of policy.  Leaving the policy up to Congress highlighted the sausagemaking element always present in making law and it was process (ie proposals to deem and pass) as much as substance that soured many people on the Administration's agenda.  Energy legislation--central to the Administration's vision of a clean economy, languished in various Senate committees. (Of note, the financial services bill where the Treasuty did take leadership moved successfully.)

Thus, pre-occupied with non economic issues and ceding policy leadership to Congress, the Democrats failed to articulate a plan to solve the one problem that people are rightly focused on in the midst of 10% unemployment, how to right America's economic ship and recover what was once considered an American birthright, rising incomes and prosperity.

While yesterday's losses were steep, they do not spell the end of the Obama presidency.  In 1994, the Democrats lost both houses of Congress yet those elections are remembered primarily as a footnote in the Clinton Administration's successful tenure and prelude to the prosperity that followed.  How then should the Administration react to what happened?  Here are some ideas.

First polarization at this point in history works for Republicans and against Democrats, not the other way around.  The last thing the Administrations should allow is the return of old wedge and hot button issues.  The Administration though it may be tempted to double down on left leaning priorities should recognize that it will be judged on problem solving. Polarization will not only reduce the likelihood of victories, it will also lower business confidence which may slow economic recovery.  While it should stick to principles it should also go the extra mile in reaching out to the other side.  The flip side of this is that the other side may resist working together.  However, the Democrats must try.

Second, though Republicans may find it in their political interest to be a party of no, they will be hard pressed to vote against policies they support.  Thus, where there is common ground, the Administration needs to find it.  Cutting taxes on small business, lowering tarrifs, making government smarter, and eliminating red tape to make America more competitive are potential areas of common ground.  Once more, Democrats win through accomplishments.

With respect to accelerating the emergence of clean energy as a job creating machine, streamlining regulations and opening up energy markets to new participants, ideas and capital can prove popular with Democrats and Republicans alike.  Our Electricity 2.0 initiative is focused on tapping the billions in private capital now off limits to the electricity network--the network at the center of the electrity regulation--due to its 20th Century regulatory architecture.  There are currently a number of financing proposals as well to tap private capital for clean energy and infrastructure projects without imposing a fiscal burden on the federal government.

Finally, Democrats should remember that part of being the party closest to the people--besides trying to enact policies that benefit everyone--is reflecting the preferences of the majority of the people.   Big D Democrat has a lot in common--or should--with small d democrat.  Politically and philosophically, the Democrats win when they represent the people, not elites or special interests. 

Yesterday may have been a good day for Republicans and a bad one for Democrats.  What's important, though is that the parties make tomorrow a better day forAmericans.  They can if they work together.   For the Obama Administration reaching out to the other side should be a policy and political imperative.