By Lawrence Summers Tuesday’s mid-term elections, with its victory for the Democrats in the House and the Senate, was a striking but not historically extraordinary event. Of the 16 mid-term elections since the second world war, Tuesday’s was the seventh that could be classified as a “repudiation election”, in which voting revealed widespread dissatisfaction with the policies of the president and his party. The varied aftermaths of past repudiation, elections show the difficulty of forecasting what will follow the Democrats’ victory. After the 1946 election, Harry Truman worked with the Republican Congress on big measures such as the Marshall Plan and won the 1948 election. The Eisenhower administration limped to its conclusion after the 1958 poll and the Democratic congressional victory that year paved the way for John F. Kennedy’s election in 1960. Lyndon Johnson’s big legislative accomplishments occurred before the election of 1966; Democrats lost the White House to Richard Nixon two years later. The post-Watergate election of 1974 was followed by the recession of 1975 and the election of Jimmy Carter in 1976. Ronald Reagan recovered from his 1986 loss of the Senate and the Iran-Contra scandals, and his vice-president George H.W. Bush won the presidency in 1988. After the Republicans took over the House and Senate in 1994, Bill Clinton was re-elected easily two years later after the passage of a bipartisan welfare reform bill, in part because of overreaching by the Republican Congress when they shut down the government for more than a month. If history does not provide an unambiguous verdict on the aftermath of a repudiation election, it does suggest the political imperatives for the two parties. For the Republicans, the challenge will be to generate bipartisan accomplishments while luring Democrats into overreaching and appearing unreasonable and out of touch. For the Democrats, the challenge will be to establish credibility as a governing party. Their campaign was about the incompetence and corruption of the Republicans – it was not a referendum on a Democratic ideology. Electoral success two years from now will require the articulation of a broad vision for where the country needs to go and a comprehensive legislative programme. What does this suggest about likely policy outcomes? Domestically, the Democrats’ mandate and the Republicans’ fear of political embarrassment will combine to yield an increase in the minimum wage and pro-consumer reforms in policies towards oil and pharmaceutical companies. Indigestion caused by the massive pork consumption of the past six years and recognition by Democrats that Republicans will derive much of the political benefit from increased spending will lead to restraint in spending growth. The large and regressive Bush tax cuts are neither likely to be made permanent, as the president wishes, nor completely repealed, as many Democrats would like. Big structural tax reform or action on entitlements is almost inconceivable. The challenge for trade policy in the next two years will be more to resist protection than to further liberalisation, since both parties want to respond to the economically anxious middle class that disproportionately projects its anxieties on trade agreements. Predictions are more difficult in the international arena, which is likely to be more important. Americans have rejected a foreign policy that has projected a dangerous combination of bellicosity and futility. Donald Rumsfeld’s resignation as defence secretary suggests the president has received the message. There will be enormous pressure domestically and internationally to curb the Bush administration’s “stay the course” policy with a managed withdrawal from Iraq, together with an acceptance of other countries’ views towards Iran, North Korea and Russia. Yet, it is imperative to restore America’s credibility as a nation that can align its goals and results, and to convey that, while the US has learned from events of the past six years, it has not been cowed by them. Forming an effective strategy for Iraq, much less addressing the troubled world, is not achievable without bipartisanship. Here, the history of past repudiation elections provides grounds for cautious optimism. The passage of the Marshall Plan in 1948, President Reagan’s dialogue with Mikhail Gorbachev in the last two years of his term, and President Clinton’s co-operation with congressional leaders to extend financial support to Mexico after the 1994 elections, provide examples of where the long view prevailed over short-term advantage. This is as dangerous a moment in the world as after any mid-term election since 1946. Whatever else happens, we can hope that a transformed Congress and a chastened president will, in the future as often in the past, find an effective way forward.

November 10th, 2006 in US policy | Permalink