This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
The furor over the Obama administration’s contraception coverage decision has generated a spate of articles proclaiming the return of the social issues in the 2012 campaign. But while they’re being discussed more, I doubt that they’ll prove decisive. Unless something drastic happens between now and November, trends in employment and real income will determine the result.
Now comes the traditional “to be sure” paragraph.
To be sure, it’s possible to sketch a scenario in which the social issues matter a lot. Imagine a very close election the outcome of which hangs on a handful of large states in the mid-Atlantic and Midwest. These states have high percentages of Catholics who favor government programs when they help the middle class, lean toward cultural traditionalism, and maintain a visceral loyalty to the Church even when they disagree with it on specific policies. It’s no accident that Pennsylvania’s Democratic senator is pro-life and served in the Jesuit Volunteer Corps after college.
Still, countless surveys have placed the social issues far down on the list of public concerns in an election cycle dominated by worries over growth, jobs, deficits, and debt. They are highly salient in the base of the Republican Party, but no one should confuse those voters with the national electorate. If the economy improves fast enough to allow abortion, gay marriage, and religious freedom to emerge from the shadows, Obama will win anyway.
That said, the contraception episode was what the tennis commentators call an unforced error. If recent reports are accurate, the president knew that his decision would create a firestorm. During the extensive deliberations that preceded it, Vice President Biden and many others counseled compromise. (Months ago, the White House was aware of the compromise the president eventually accepted.) Surely Obama knew that Catholics are a large and strategically located swing vote. And yet, despite well-received campaign speeches in favor of religious liberty (and against tone-deaf secularism), as president Obama chose to treat mandatory contraceptive coverage purely as a public health issue. That may indeed be his considered view.
It may also reflect election-year imperatives of base mobilization, especially women and pro-choice groups. And apparently it was bolstered by a political cost/benefit analysis. Politico reports that the president was encouraged by David Plouffe, who reviewed private polling data and concluded that “the vast majority of Catholic voters, who don’t adhere to the church’s dictates on birth control anyway, wouldn’t punish Obama for his decision.”
But when the backlash from supporters as well as adversaries escalated (even loyalist Tim Kaine, now running for Virginia’s open Senate seat, pleaded for a shift), Obama unceremoniously abandoned the position he had staked out just days earlier. I can imagine the advice he got before this reversal: “Mr. President, we have to get this behind us so we can get back to the issues that are working for us. It’s better to take the hit now than to let this controversy linger.” Whatever the motivation for the initial decision, the latest shift can only be interpreted as a response to intense political pressure.
I’m sure Obama meant what he was saying about religion’s role in public life during the years preceding his presidency. But when the crunch came, it took a back seat to other considerations. We reveal ourselves most clearly, not when we declare the things we deem worthy, but when we are compelled to choose among them. All things considered, this has been an instructive episode.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
Some time ago, I suggested that the 2012 election would hinge on three variables: the identity of the Republican nominee, the thrust of the Obama campaign’s reelection strategy, and the progress of the economy. While the first two have come into focus, the third presents a puzzle, because recent economic reports are not consistent with the forecasts for 2012. This is an analytical distinction that makes a political difference: If the forecasts are right, history suggests that the president’s reelection prospects are dicey at best. But if recent economic progress is sustained through the remainder of 2012, he’s an odds-on favorite to win a second term.
The January 2012 employment report highlighted this contradiction. Just last week, the Federal Reserve Board lowered its estimate of real GDP growth for 2012 to a range of 2.2 to 2.7 percent, and it raised its estimate of unemployment to a range of 8.2 to 8.5 percent. But according to the January BLS report, the economy generated 243,000 jobs last month alone, lowering the official unemployment rate to 8.3 percent.
A single month can be an aberration, of course. But the pace of job generation over the past few months is not consistent with the tepid growth the Fed is predicting. If the Fed turns out to be right, monthly job growth should fall below 150,000 and stay there, and unemployment will be no lower at the end of the year than it is today.
From one perspective, it’s not hard to understand the trend. As often happens, productivity rose sharply as soon as the Great Recession bottomed out–from 0.6 percent in 2008 to 2.3 percent in 2009 and 4.1 percent in 2010. But in the year just ended, productivity fell sharply, to only 0.7 percent. At that pace, even modest growth will generate substantial increases in total hours worked and net job creation. Still, productivity would have to fall even farther for the recent pace of employment growth to be sustained–that it, unless the Fed, the IMF, and the OECD are all too pessimistic about the next twelve months.
There’s something else going on: The labor force participation rate, which stood at 66.2 percent as the recession began four years ago, has declined by two and one half percentage points, to only 63.7 percent in the most recent report. If Americans were still working or looking for work at the rate of four years ago, 6 million more would be in the labor force, and unemployment would be much higher. Even a year ago, the rate was a point higher, suggesting that today’s labor force is about 750 thousand persons smaller than it would be if last year’s modest participation rate had remained unchanged.
Politically, though, these analytical details probably don’t make much difference. If the labor market continues to move forward at anything close to last month’s pace, the fourth quarter of 2011 may go down as the key inflection point of Obama’s presidency. If the Fed is right–if headwinds from housing, high debt, a weakened Europe, and slowdowns in the developing world restrain U.S. growth–it will turn out to be yet another false dawn. Either way, if the time you can devote to political news between now and November is limited, focus more on economic reports than on public opinion surveys.

Editor’s Note: As part of an ongoing effort to encourage broad discussion of 2012 election strategy, this item by Progressive Policy Institute President Will Marshall is crossposted from The Progressive Fix.
As the 2012 election gets underway, President Obama is still waiting to see who his opponent will be. Candidates and campaigns matter hugely, of course, but we should also pay attention to the field on which the match will be played–and at first glance, the lay of the political land doesn’t look so favorable to Obama and his party.
The lingering economic slump has demoralized voters and tilted the electorate rightward. With idle workers, underwater homeowners, exploding deficits and debts, growing inequality, and a bitter, broken political system, objective reality isn’t exactly working in incumbents’ favor. Upon closer inspection, however, the electoral landscape may not be as forbidding for progressives as it first appears.
For one thing, the recovery finally seems to be gaining momentum, complicating Republican attempts to cast Obama as a “failed president” who doesn’t have a clue about how the economy works. For another, Republicans are incumbents too, and their intransigence and obstructionism throughout 2011 will make many swing voters reluctant to entrust them with undivided control of the federal government. Finally, the fractious battle for the GOP nomination reveals a party at war with itself, while conservatives’ venomous attacks on Obama push Democrats toward unity.
But no matter whom the Republicans pick as their standard bearer, the tricky political terrain confronts Obama with three strategic imperatives: 1) roll up a big majority of moderate voters; 2) win back a good chunk of the independents who deserted his party in 2010; and 3) fashion a stronger economic message that combines jobs and fiscal responsibility.
Moderates Matter More Than Ever
Obama today faces an electorate that’s more conservative than the one that elected him in 2008. According to new polls by Gallup, 40 percent of the public identifies as conservative, while just 21 percent fess up to being liberals.
That’s up three points from 2008, and up significantly from the one-third share of the electorate that conservatives have averaged in polls going back three decades.
The recent uptick is most likely a reaction to an unusually severe economic downturn. The fact remains, however, that whereas there used to be 1.5 conservatives for every liberal in America, in 2012 the ratio is nearly 2-1. The new arithmetic doesn’t mean Democrats are doomed; it does mean they have to do exceptionally well among moderates to win.
That in fact is what Obama did in 2008, when he carried 60 percent of the moderate vote. But he’ll probably have to do even better this time to compensate both for the rise in self-identified conservatives and a likely falloff in support among his core 2008 constituencies: minorities, young voters, single women and highly educated professionals. Liberals consider themselves the Democratic “base,” but there just aren’t enough of them to deliver victory. In 2008, half of Obama’s vote came from moderates, while liberals accounted for 37 percent. Conversely, Republicans will need fewer moderates to build majorities because more voters now describe themselves as conservatives.
Of course, voters don’t define themselves exclusively by their political outlook, and things get more complicated for Republicans when we look at trends in partisan affiliation. Last year, according to Gallup, a record-high 40 percent of Americans described themselves as independents. In addition, more identified as Democrats (31 percent) than as Republicans (27 percent).
Does the much ballyhooed fact that independents are now the biggest “party” in America bode well for third-party challengers? Not necessarily. There may be more of them, but most independents continue to lean to one party or the other. As a group, they’ve grown more conservative in the last several years, and Gallup says more leaners incline today toward the Republicans than Democrats, resulting in an even, 45-45 partisan split. Genuinely unaffiliated voters make only about 10-15 percent of the electorate.

Read more…

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
There is good news and bad news for Mitt Romney out of New Hampshire. The good news is that he won an impressively broad-based victory that did nothing to slow his drive for the Republican presidential nomination. But it also exposed a vulnerability that could soon prove debilitating, if not fatal, to his candidacy.
While Romney is not yet a prohibitive favorite, he will be if he wins in South Carolina. And he will win, as John McCain did in 2008, if multiple candidates to his right divide the anybody-but-Mitt vote. Although emergency conservative conclaves are breaking out all over, none seems likely to lead to a unity not-Mitt candidate in time to make a difference. (If conservatives couldn’t even get Rick Perry to leave the race, how can they get either Rick Santorum or Newt Gingrich to stand down? And there’s nothing they or anyone else can do about Ron Paul.)
Also encouraging was the success of the campaign’s systematic effort to make its candidate broadly acceptable to most factions of the Republican Party. Romney won 39 percent of the moderate vote in New Hampshire (matching his overall share). He did even better (48 percent) among voters who regard themselves as somewhat conservative. He even commanded 33 percent of those who consider themselves very conservative, beating Rick Santorum by 7 points.
While it’s easy to downplay these results as evidence of Romney’s home-field advantage in the Granite State, it’s harder to dismiss a recent Gallup survey: 59 percent of moderate and liberal Republicans consider Romney to be an “acceptable” nominee … and so do 59 percent of conservatives. Indeed, he’s the only candidate that a majority of Republicans deems acceptable.
In short, Romney is well positioned to win the nomination and unite his party. Most of the conservatives who mistrust him are likely to fall into line, however grudgingly, once the general election contest begins and they confront the possibility of a second term for Barack Obama. And Romney is also well-positioned to run a strong race against the President: the country is in a somewhat conservative mood and in principle seems willing to accept a somewhat conservative candidate. Republicans lose favor when they go too far right, as Gov. Kasich did in Ohio and Gov. Scott continues to do in Florida. Romney has been pretty good at keeping his balance so far.
This brings us to the bad news: The waning hours of the New Hampshire contest saw the emergence of a critique that could severely damage Romney’s general election prospects unless he figures out how to handle effectively. I’m referring, of course, to Bain Capital, which has become the prosecution’s Exhibit A against the candidate.
Bain matters because it goes to the heart of the core case Romney is making: The economy is broken, Obama doesn’t know how to fix it, and I do. If his rivals can undermine his record as a job-creator and substitute the narrative of Romney as a “vulture capitalist” who makes money by looting firms and firing workers, his path to the presidency becomes a lot steeper.
The only thing surprising about this issue is how late in the day it took center-stage. After all, an increasing number of blue-collar workers have become Republicans or Republican-leaning independents. The Tea Party movement is hardly sympathetic to Wall Street and the financial sector. And a key element of the Republican base–small business–has long regarded the corporate/establishment wing of the party with suspicion. As a populist whipping-boy, Romney is straight out of central casting.
So what should Romney do? His initial response–claiming that an attack on private equity firms is an attack on capitalism–may get him through the Republican nominating contest, but it won’t serve him very well in the general election. Most citizens make an intuitive distinction between business activities that add value to workers and the economy (running an auto company, for example, as Romney’s father did) and those that shuffle paper to the advantage only of the shufflers. It would be costly–perhaps fatal–for Romney to end up on the wrong side of that divide.
His campaign is wrestling with (some reports suggest divided over) how best to respond. There’s an understandable reluctance to open up to public scrutiny the nearly one hundred deals in which he participated as the head of Bain Capital. But there’s really no choice. Romney has to present a counter-narrative, and he can’t do that without talking about individual cases. If he doesn’t release details on his own terms, they’ll dribble out anyway, prolonging the pain. And besides, in a public culture now suffused with anti-elite suspicion, a rich man running for president can’t just say “Trust me”–especially if the skills that enabled him to become rich are the heart of the case he’s making for replacing an incumbent president.
Since his awkward run for the Republican nomination in 2008, Romney has shown an impressive ability to learn from his mistakes, and he has run a smart, disciplined campaign this time around. Now he faces what may be his toughest test. Can this proud and private man come to grips with the core of his public identity? Can he acknowledge the warts on his record? Can he level with the American people, or with himself? If he passes this test, he’ll be a formidable candidate. If not, he’ll end up on the defensive. If the economy doesn’t improve, it may not matter. If it does, how Romney handles his record at Bain–not in the fall, but in the next few weeks–could prove decisive.

As Republicans battle to determine who is the “true conservative” in their presidential field, and worry over the possibility of a third-party candidacy by Ron Paul, some of their old problems with the general electorate haven’t exactly gone away. Writing at Salon, Tom Schaller takes a look at recent public opinion surveys of Hispanics and talks to some of the experts, and concludes John McCain’s surprisingly poor performance in this demographic in 2008 could be tough for this year’s nominee to match:

“The GOP’s reputation among Latinos is as bad as it has ever been, driven primarily by statements and state legislation on immigration,” Gary Segura, a Stanford political scientist, co-investigator on the National Latino Survey, and president of Latino Decisions polling firm, told me. “Though President Obama’s early inaction on immigration reform and his record deportations significantly undercut his support within the community, there is not a single Republican presidential candidate willing or able to exploit that weakness; they are all too busy tacking to the right to please their base.”
Only 17 percent of Latinos say that the Republican Party is doing a “good job,” according to a Latino Decisions poll taken last month. Forty-six percent agreed that the GOP “doesn’t care too much” and another 27 percent described the party as “hostile” to Latino interests. With a combined 73 percent of Latinos expressing generally or strongly negative attitudes to the party, the Republican nominee is almost guaranteed to win a minority of Latino votes in 2012.

Schaller doesn’t specifically mention that likely GOP nominee Mitt Romney has positioned himself as an immigration hardliner in order to exploit nativist unhappiness with Rick Perry and Newt Gingrich’s positions. But it’s going to be an issue in the general election.
Some Republicans, as Schaller notes, look to a possible vice-presidential nomination for Florida Sen. Marco Rubio as a significant palliative for their Hispanic problem. But as The New Republic‘s Jonathan Cohn explained last September, the evidence of Rubio’s “pull” among non-Cuban Hispanics is very slim.
The Republicans’ strategy for appealing to Hispanics will become a very big deal as the general election cycle gets underway. But right now you get the sense such voters are far, far from their minds.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
The results of the Iowa caucuses illuminate the basic structure of today’s Republican Party and offer clues about what’s to come between now and the end of January.
Pew’s “political typology,” the latest iteration of which appeared last May, provides the best point of departure. That report used a statistical technique known as cluster analysis to identify four major pro-Republican groups: Staunch Conservatives (11 percent of registered voters), Main Street Conservatives (14 percent), Libertarians (10 percent), and “Disaffecteds” (11 percent). The Iowa entrance polls showed that Staunch Conservatives–the sorts of people most likely to identify with the Tea Party–preferred Santorum to any other candidate; Main Street Conservatives, who may be anything from Rotarians to country-clubbers, went for Romney; and of course Libertarians found a stalwart champion in Ron Paul.
But who are the Disaffecteds? According to Pew, they are both anti-government and anti-big business. They are social conservatives with a deep antipathy to illegal immigration. But they are also the most financially insecure of all the groups–among Democrats and Independents as well as Republicans–and perhaps for that reason, less averse to a government that extends a helping hand to the downtrodden. For the most part, they are whites with no more than a high school education. Many report personal or family struggles with unemployment.
The Disaffecteds are, in short, the kinds of blue-collar workers who became untethered from the Democratic Party during the 1970s and found a new, not wholly comfortable home among Republicans. While they form a relatively small share of the Iowa Republican electorate, Pennsylvania is full of them, as are industrial states throughout the Midwest, and Santorum did reasonably well with them in his two successful races for the Senate. They are not the kinds of people who tend to identify with the Mitt Romneys of this world.
What does this typology portend for the next three contests? By and large, Santorum-style candidates don’t fare well in New Hampshire, in part because the state doesn’t have all that many religiously-based social conservatives. In 2008, Mike Huckabee came roaring out of Iowa with 34 percent of the vote (almost 10 points better than Santorum this year). When the dust settled, Huckabee finished a distant third in New Hampshire, with only 11 percent of the vote. I doubt that Santorum will do much better than Huckabee; indeed, he may finish fourth, behind Paul and Huntsman as well as Romney.
Santorum would seem to have a much better shot in South Carolina, as did Huckabee in 2008. But look at what happened: The strongly conservative anti-McCain vote split between Huckabee and Fred Thompson, allowing McCain to win the state with only 33 percent of the vote. History could end up repeating itself, with Rick Perry and Newt Gingrich dividing the anti-Romney vote with Santorum. (Perry’s surprising decision to continue his campaign in South Carolina despite his miserable showing in Iowa is good news for Romney and bad news for Santorum.)
Paul has no chance of becoming the Republican presidential nominee. More to the point, his influence on the process will wane once the race heads south. Libertarianism has never been an important element of southern conservatism, which embodies not only religiously-based cultural conservatism but also a strong pro-defense tradition that does not shy away from the use of force. In 2008, Paul received only 3.6 percent of the vote in South Carolina and 3.2 percent in Florida, versus 10 percent in Iowa and 7.7 percent in New Hampshire. Even if he doubles his support in the two early southern contests this year, he won’t be a large factor.
That leaves Gringrich. His brief surge reflected his appeal to both Staunch and Main Street Conservatives, but the orgy of negative advertising directed against him in Iowa severely damaged his standing, especially among the former group. Now Gingrich is returning the favor in New Hampshire with advertisements that challenge Romney’s conservative credentials–a charge that the pro-Gingrich Manchester Union-Leader will no doubt echo in its famous front-page editorials. It remains to be seen whether these tactics will help Gingrich refurbish his own credentials as a conservative champion. But unless they also wound Romney, their overall effect will be to strengthen the three-way split of the anti-Romney vote in South Carolina. (Recall that Romney and McCain received a combined 49 percent of the 2008 primary vote in that state.)
So there you have it. No wonder a group of movement conservatives has called an emergency meeting for next weekend in an attempt to find a “consensus” candidate. Many of this group’s leaders attended a similar meeting with Rick Perry last summer. This time around, they may try to pressure him to withdraw before it’s too late and divisions in the ranks of arch-conservatives end up easing Romney’s path to the nomination.
If the Staunch Conservative vote coalesces in time to keep Santorum alive after Florida, the tempo will slow considerably in February, and the race could take an interesting turn as the large Midwestern states begin to weigh in at the end of that month. In principle, anyway, Santorum appears well-positioned to unite anti-Romney conservatives and downscale “Disaffecteds.” But it’s still early, and we can’t yet know how well he’ll withstand the scrutiny and attacks that will inevitably come his way.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
President Obama’s much-heralded speech in Osawatomie, Kansas focused on inequality, which, he argued, is undermining our prosperity, weakening our democracy, and shrinking our middle class. While there’s a serious data-based argument to be made in favor of that view, recent surveys suggest that most Americans don’t share it. If the speech becomes the thematic template for his reelection campaign, it may well reduce his chances of prevailing in a close race.
Let me start with a Gallup survey released on December 15, which showed that the number of Americans who see American society as divided into haves and have-nots has decreased significantly since the 2008 election. Back then, 49 percent saw the country as divided along those lines, and 49 percent didn’t. As of this week, only 41 percent see the country as divided between haves and have-nots, while 58 percent do not. (The share of Americans who consider themselves to be “haves” hasn’t budged: 59 percent in 2008, 58 percent today.)
Significantly, most of the reduction in those seeing the country as economically divided has occurred in the middle of the political spectrum. In 2008, 48 percent of independents saw an economic divide; today it’s 37 percent. In 2008, 51 percent of moderates saw a divide, versus only 38 percent now. Liberals are the only group that has become more likely to see a divided society–63 percent in 2008, 66 percent today. While invoking sharpening divisions will thrill them, it may have the opposite effect on the moderates and independents without whose support national Democratic candidates will fail.
Now consider another Gallup survey, this one released on the 16th. Respondents were asked to categorize three economic objectives as extremely important, very important, somewhat important, or not important. “Grow and expand the economy” was rated as extremely or very important by a 82/18 margin, with “Increase equality of opportunity of people to get ahead” rating nearly as strongly (70% called that extremely or very important). But only 46% called “Reduce the income and wealth gap between the rich and the poor” extremely or very important, while 54% rated it “somewhat or not important.”
Regardless of partisanship, substantial majorities of Americans saw expanding the economy and increasing equality of opportunity as extremely or very important. Not so for reducing income and wealth gaps–21 percent of Republicans and 43 percent of independents. Only Democrats gave this goal a high priority, by a margin of 72 to 27.
When Gallup asked a sample of Americans in 1998 whether the gap between the rich and the poor was a problem that needed to be fixed, 52 percent said yes, while 45 percent regarded it as an acceptable part of the economic system. Today, those numbers are reversed: Only 45 percent see the gap as in need of fixing, while 52 percent don’t. Again, Democrats are the outliers: 62 percent of them want it fixed, versus 24 percent of Republicans and 47 percent of independents.
A third Gallup survey asked Americans to state whether they saw big business, big government, or big labor as the biggest threat to the country in the future. In March of 2009, 55 percent felt most threatened by big government, and 32 percent by big business. As of December 2011, a near-record 64 percent saw big government as the greatest threat, versus on 26 percent for big business. As Obama nears the end of his third year in office, the people are more likely to fear government, and less likely to fear business, than they were at the beginning of his administration.
The source of the change is surprising. Republican fear of government, already sky-high in 2009, hasn’t budged, while fear of government among independents has risen only modestly. The big change has occurred among Democrats. In 2009, only 32 percent feared big government the most, compared to 52 percent who feared big business. Today, fully 48 percent of Democrats (up 16 percentage points) cite government as their principal fear, while only 44 percent give business pride of place. In short, a 2008 election widely regarded as heralding a shift toward the more government-friendly public sentiment of the New Deal and Great Society eras seems to have yielded just the reverse.
None of this is to say that Obama can’t win next year. Indeed, if the economy grows a bit more quickly and unemployment falls farther than the standard forecasts predict, he may well prevail. It is to say that a campaign emphasizing growth and opportunity is more likely to yield a Democratic victory than is a campaign focused on inequality. While the latter will thrill the party’s base, only the former can forge a majority.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
Three questions emerge from the collapse of the super committee. First and least, what will be the immediate political fall-out? Second, will there be other occasions to put broad fiscal issues on the table, or are we condemned to inaction until 2013? And finally, how should President Obama respond?
On the first question, Americans were more inclined to blame Republicans than Democrats for this summer’s debt ceiling fiasco, and the early returns suggest that this trend is continuing with regard to the super committee. A Quinnipiac survey released November 21 showed than 44 percent of voters blamed Republicans for the super committee’s failure, versus 38 percent who blamed Obama and the Democrats. Independents broke along similar lines, 44 to 35 percent.
Not all the news was good for Democrats, however: 49 percent of voters favored an agreement based on spending cuts only (the Republican position) versus 39 percent who wanted some tax increases in the mix as well. Independents felt the same way, by a narrower 45 to 41 margin.
Voters with college degrees favored a mix of tax increases and spending cuts (52-41), as did voters from households with annual incomes of $100,000 or more (49-43). By contrast, voters without college degrees opposed tax increases by a margin of more than 20 points, as did more than 50 percent of all voters with household incomes under $100,000.
In short, the Democratic position is supported by upscale professionals, while the Republican position commands the lion’s share of a downscale, less educated populist coalition. This raises an intriguing question: What happens if the Republicans select as their presidential nominee a man without noticeable populist appeal to oppose an incumbent who has run poorly among them since the beginning of his quest for the presidency?
The failed budget negotiations may not be the end of the matter, however, because two scenarios could bring the parties back to the table. In the first place, the prospect of an additional $600 billion in defense cuts dismays many Republicans and not a few Democrats, including Obama’s outspoken Secretary of Defense. But the majority of congressional Democrats prefer sequestration to the alternatives, and Obama has strongly suggested that he won’t go along with the unraveling of automatic cuts. If the president is prepared to hang tough, in other words, he may spark a conflict between pro-defense and anti-tax Republicans. (Making matters even more interesting, many Republicans are both.) By using the defense cuts trigger as leverage, the president might be able to force budget negotiations involving a different, more flexible group of participants.
There’s also another, grimmer route back to the bargaining table, of course: The market could force the hands of the politicians. The events of the past six months have further weakened international confidence in U.S. governing institutions. Political risk analysis is something Americans used to do about foreign countries; now it’s something foreign analysts do about ours. It’s not hard to imagine a sequence of downgrades and shifts by foreign investors away from the dollar that could make continued partisan gridlock appear increasingly unaffordable. To be sure, some Republicans might hold out in the belief that a collapsing economy would assure victory in November. But that’s risky and would prove counterproductive if persuadable voters came to believe that Republicans were rooting for economic failure.
So in the face of all this, what should Obama do? He will be tempted to put the fiscal debate in neutral and run his 2012 campaign against Republican obstructionism. No doubt his political advisors will be telling him to preserve bright lines and sharp contrasts between himself and his Republican opponent in key areas such as Social Security, Medicare, Medicaid, and taxes.
This is the default position, and it could help Obama narrowly prevail next November. But the president should ask himself what a victory gained on this basis would be worth: What would he be able to accomplish in a second term? After all, his first term has shown that neither political party can impose its will on the other. Unless he were to win a victory as large as FDR in 1936 or LBJ in 1964 (and there’s no prospect of that), his second-term choices reduce to two: continuing gridlock or a new formula for doing the people’s business across party lines.
To that end, the alternative–higher risk, higher reward–strategy is for Obama to offer a much more specific program than he has up to now, making clear how he would combine stimulus over the next year or two with a plan to place the budget on a sustainable course by the end of the decade. That would mean organizing his 2012 State of the Union and budget proposal around two issues–bold new measures to spur consumption and job creation, coupled with a long-term budget plan that combines the best features of the Bowles-Simpson and Domenici-Rivlin plans.
This may sound like unconvincing boiler-plate: What bold new growth measures? Well, here’s an idea ripped from an article by Adam Posen:

Central banks and governments can engage in forms of coordinated action that will target the burden of past debts that is hanging over the global economy. In the United States, that means resolving the distressed mortgage debt that is weakening our financial system and reducing labor mobility, thereby constraining not only our growth but also our ability to grow. It is time for the Federal Reserve and elected officials to jointly tackle that housing debt.

Posen is the latest in a lengthening list of leading economists across the ideological spectrum to finger mortgage debt as the core of our failure to recover and grow briskly enough to bring down unemployment. If elites can’t figure out how to fix this problem, average Americans will pay the price. Conversely, nothing would do more to benefit working Americans. Is the president prepared to take the lead? And if he does, will anyone follow?

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
Senior officials don’t define administrations; presidents do, by making the strategic decisions that reshape events. For the latest confirmation of this age-old truth, we need look no farther than Jackie Calmes’s excellent article on Tim Geithner, the one economic advisor Obama “fought to keep.” Toward the end of her piece, she reports the following, which occurred on a conference call shortly after the 2008 election:

Mr. Obama spoke of the transformative domestic policies he had promised and now would pursue. Mr. Geithner, say people familiar with the exchange, cautioned that the crisis Mr. Obama had inherited was so severe that it would constrain him.
“Your legacy is going to be preventing the second Great Depression,” Mr. Geithner said.
Vexed, Mr. Obama replied, “That’s not enough for me.”

And there you have it: an advisor giving the president-elect wise advice, which was instantly rejected as insufficiently transformative. The rest is history.
From the moment he was elected, Obama had two agendas–the agenda of choice, on which he had waged his campaign, and the agenda of necessity, forced upon him by events. In effect, Geithner was arguing that the latter would require the president-elect to defer much of the former. Obama responded by deciding to do both, simultaneously. That is the choice that led to a year spent on measures such as health insurance reform and cap-and-trade legislation. While the former was successful and the latter failed, both initiatives no doubt measurably contributed to the Democrats’ 2010 mid-term debacle.
We will never know what would have happened if Obama had taken his Treasury Secretary’s advice, any more than Stephen King knows what would have happened if JFK had lived. Still, the possibilities are intriguing. Would the president have insisted on tougher treatment for miscreant financial institutions, starting with Citigroup, despite his Treasury Secretary’s evident misgivings? Would he have demanded a serious response to the housing crisis, despite his National Economic Council director’s belief that all the policy options were counterproductive and stupid? Would he have pushed to redeem his campaign promise to create a national infrastructure bank? Would he have traded additional stimulus for a long-term agreement on fiscal stabilization? Would he have figured out how to end the Bush tax cuts as part of comprehensive tax reform? Would he have broken the logjam on trade much earlier in his term? Would he have exerted more pressure on the Chinese for a comprehensive rebalancing of our economic relationship?
Of course, many of these moves would have required a modicum of cooperation from Republicans, something that was evidently in short supply during Obama’s first term. But he might have gotten them to go along with a tougher stance toward the banks, as the nascent Tea Party revolt was demanding, and perhaps a firmer policy toward China, which even Mitt Romney is now advocating. Many liberals probably would be unwilling to trade the administration’s accomplishments in extending health insurance (however flawed they see it as being), for any of the economic options I’ve listed. But if growth doesn’t pick up over the next year and Obama ends up as a one-term president, his supporters will long ask themselves what might have been–if he had accepted the logic of his situation and played the hand he was dealt.

This item by TDS Co-Editor William Galston is cross-posted from The New Republic.
Tuesday night’s election results illuminate the terrain on which the 2012 election will be fought. The American people want government to address their problems, but not at the cost of excessive intrusion in their lives. They recoil from ideologically motivated attacks on workers and on women. While they are open to a moderate brand of conservatism, they will reject a harder-edge and more extreme version.
In Virginia, Republicans picked up at least half a dozen seats in the General Assembly and appear poised to take control of the senate, which would give them unified control of the state government. Governor Bob McDonnell’s low-key style has played well with the electorate, which regards him more as a pragmatic problem-solver than as a partisan ideologue. For example, while his approach to transportation left many Democrats and northern Virginians dissatisfied, he did not reject an expanded role for the public sector. He framed the state’s all-consuming transportation debate as a matter of means rather than ends–addressing the backlog with a long-term bond issue rather than immediate tax increases–a characterization that most Virginians seemed to accept. At least for now, his moderate conservatism defines the center of Virginia politics, which is good news for national Republicans such as Mitt Romney and not such good news for the Obama team.
In Ohio, the electorate delivered an instructive split decision. On the one hand, more than six in ten Ohio voters rebuked Republican governor Bob Kasich for attacking the state’s public employees. While surveys showed that voters favored proposals to make state workers contribute more for health care and retirement, they rejected moves to strip them of collective bargaining rights, a measure favored by hard-core conservatives but not more mainstream voters. Kasich, they judged, had gone too far, and they responded with a stunning reprimand.
But by an even larger margin, these same voters also endorsed a referendum that would block the state from implementing an individual mandate like the one contained in President Obama’s health reform bill. Every survey I’ve seen shows the same thing: While Americans endorse major provisions of the bill such as guaranteed issue of insurance regardless of preexisting conditions, they reject the individual mandate and want to see it repealed. The margin in favor of repealing the mandate was 67 to 27 in the March 2011 Kaiser Family Foundation poll (although additional facts and arguments did move respondents in a more favorable direction). An NBC/Wall Street Journal poll from June of this year showed that while 31 percent were more likely to vote in favor of a presidential candidate who supported requiring all Americans to have or purchase health insurance, 50 percent would be less likely. In 1996, Bill Clinton’s signature domestic policy achievement–welfare reform–was a large plus in his successful reelection campaign. The Affordable Care Act seems unlikely to play that role for Barack Obama next year.
So the message from two key states–one the symbol of Obama’s new majority, the other of the classic battleground–is much the same. While the voters are open to moderate conservatism, they won’t follow along if conservatives go too far. But when they think liberal governance goes too far in the other direction, they’ll reject that too. Despite the polarization of today’s party politics, there is still a center of gravity in the electorate that isn’t entirely comfortable with either party and wants to see less confrontation and more compromise. They’re seeking a point of equipoise, which today’s political system is poorly structured to provide.