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November 13 - 19, 2008
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It’s only been a week since the defeat, but the battle lines have already been drawn in the fight over the future of conservatism. In one camp, there are the Traditionalists, the people who believe that conservatives have lost elections because they have strayed from the true creed. George W. Bush was a big-government type who betrayed conservatism. John McCain was a Republican moderate, and his defeat discredits the moderate wing. To regain power, the Traditionalists argue, the GOP should return to its core ideas: Cut government, cut taxes, restrict immigration. Rally behind Sarah Palin. Rush Limbaugh and Sean Hannity are the most prominent voices in the Traditionalist camp, but there is also the alliance of Old Guard institutions. For example, a group of Traditionalists met in Virginia last weekend to plot strategy, including Grover Norquist of Americans for Tax Reform, Leonard Leo of the Federalist Society and Tony Perkins of the Family Research Council. According to reports, the attendees were pleased that the election wiped out some of the party’s remaining moderates. “There’s a sense that the Republicans on Capitol Hill are freer of wobblykneed Republicans than they were before the election,” the writer R. Emmett Tyrrell told a reporter. The other camp, the Reformers, argue that the old GOP priorities were fine for the 1970s but need to be modernized for new conditions. The reformers tend to believe that American voters will not support a party whose main idea is slashing government. The Reformers propose new policies to address inequality and middle-class economic anxiety. They tend to take global warming seriously. They tend to be intrigued by the way David Cameron has modernized the British Conservative Party. Moreover, the Reformers say, conservatives need to pay attention to the way the country has changed. Conservatives must appeal more to Hispanics, independents and younger voters. They cannot continue to insult the sensibilities of the educated class and the entire East and West coasts. The Reformist view is articulated most fully by books, such as “Comeback” by David Frum and “Grand New Party” by Ross Douthat and Reihan Salam, as well as the various writings of people like Ramesh Ponnuru, Yuval Levin, Jim Manzi, Rod Dreher, Peggy Noonan and, at the moder-
ate edge, me. The debate between the camps is heating up. Only one thing is for sure: In the near term, the Traditionalists are going to win the fight for supremacy in the GOP. They are going to win, first, because congressional Republicans are predominantly Traditionalists. Republicans from the coasts and the Upper Midwest are largely gone. Among the remaining members, the popular view is that Republicans have been losing because they haven’t been conservative enough. Second, Traditionalists have the institutions. Over the past 40 years, the Conservative Old Guard has built up a movement of activist groups, donor networks, think tanks and publicity arms. The reformists, on the other hand, have no institutions. There is not yet an effective Republican Leadership Council to nurture modernizing conservative ideas. There is no moderate Club for Growth, supporting centrist Republicans. The Public Interest, which used to publish an array of public policy ideas, has closed. Reformist Republican donors don’t seem to exist. Any publication or think tank that headed in an explicitly reformist direction would be pummeled by its financial backers. National candidates who begin with reformist records – Giuliani, Romney or McCain – immediately tack right to be acceptable to the power base. Finally, Traditionalists own the conservative mythology. Members of the conservative Old Guard see themselves as members of a small, heroic movement marching bravely from the Heartland into the belly of the liberal elite. In this narrative, anybody who deviates toward the center, who departs from established doctrine, is a coward and a sellout. This narrative happens to be mostly bogus at this point. Most professional conservatives are lifelong Washingtonians who live comfortably as organization heads, lobbyists and publicists. Their supposed heroism consists of living inside the large conservative cocoon and telling each other things they already agree with. But this embattled-movement mythology provides a rational for crushing dissent, purging deviationists and enforcing doctrinal purity. It has allowed the old leaders to define who is a true conservative and who is not. It has enabled them to maintain control of (an ever more rigid) movement. The Republican Party will probably veer right in the years ahead, and suffer more defeats. Then some new Reformist donors and organizers will emerge. They will build new institutions, new structures and new ideas, and the cycle of conservative ascendance will begin again.
WASHINGTON – President-elect Barack Obama is getting a lot of advice on how to govern when he takes office on Jan. 20. So I’ll add my two cents, for what it’s worth. He should move first to stop the painful housing foreclosures. Then he should bailout Detroit’s bankrupt auto industry. What’s good for the nation’s banks is good for General Motors and Ford Motor Co. The auto industry saved the country in World War II by re-gearing its assembly lines to the production of thousands of planes and tanks. President Bush is balking at helping the strapped auto industry unless the reluctant congressional Democrats approve a trade agreement with Colombia. Democrats are proposing a $25billion bailout for the automakers. Detroit has 9 percent unemployment. We have great expectations of the nation’s first black president in American history. Right now
he seems to be moving toward the comfortable center even when bold moves and compassion are required. Oddly, Sen. John McCain, the former Republican presidential candidate, and his former running mate have accused Obama of being a “socialist” who wanted “to spread the wealth around.” But the Republican ticket was silent when the Bush administration rushed government aid to Wall Street and ended up buying into some banks. Ironically, although Obama cut into line and pushed the heiress-apparent Hillary Clinton out of the presidential race, he has become heavily dependent on former President Bill Clinton’s White House staffers, naming Rahm Emanuel as chief of staff and John Podesta to head his transition team. Reaching out for a bipartisan look, there are reports that Obama may ask Robert Gates to stay on as secretary of defense for a year or so. Federal Reserve Board Chairman Ben Bernanke also may be tapped to continue at his post to provide continuity in the efforts to recover from the economic meltdown. Continued on Page 42
Suddenly, everything old is New Deal again. Reagan is out; FDR is in. Still, how much guidance does the Roosevelt era really offer for today’s world? The answer is, a lot. But Barack Obama should learn from FDR’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for FDR’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious. About the New Deal’s long-run achievements: the institutions FDR built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to dismantle Social Security. Can Obama achieve something comparable? Rahm Emanuel, Obama’s new chief of staff, has declared that “you don’t ever want a crisis to go to waste.” Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal health care system, that will change the shape of American society for generations to come. But the new administration should try not to emulate a less successful aspect of the New Deal: its inadequate response to the Great Depression itself. Now, there’s a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that FDR actually made the Depression worse. So it’s important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans. That said, FDR did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ‘30s, by the MIT economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.” This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on WPA-built roads and send our children to WPA-built schools. Didn’t all these public works amount to a major fiscal stimulus? Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level. And FDR wasn’t just reluctant to pursue an all-out fiscal expansion -- he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections. What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs. This history offers important lessons for the incoming administration. The political lesson is that economic missteps can quickly undermine an electoral mandate. Democrats won big last week – but they won even bigger in 1936, only to see their gains evaporate after the recession of 1937-38. Americans don’t expect instant economic results from the incoming administration, but they do expect results, and Democrats’ euphoria will be short-lived if they don’t deliver an economic recovery. The economic lesson is the importance of doing enough. FDR thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little. In short, Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.