The Legacy of the Crash

by Terrence Casey

  In the middle of the Vietnam War and a crisis of social change, Republicans came down on the side of ‘law and order’ and won the presidency in 1968 in a close race with a third-party candidate. Republicans controlled the White House from 1968 to 1976 and from 1980 to 1992. If not for Richard Nixon’s Watergate scandal in 1974, Republicans would likely have held on to the presidency for the entire 1968–92 time period. Curiously, from 1954 to 1994, and at exactly the same moment they were electing Republican presidents, Americans chose Democrats to control the US House of Representatives. Republicans in Congress had a highly conciliatory attitude toward their Democratic counterparts during much of this period, a stance that likely contributed to their seemingly persistent minority status (Jones, 1970).

  This anomaly of divided party control of government makes sense if we consider that social and foreign policy issues were not at the heart of the differences between the two major American parties until Ronald Reagan emerged on the national scene and won the 1980 election. From the New Deal to Reagan, the parties differed on the size and location of government in American society. Democrats favored a larger, universal state (though not on the same scale as the Labour Party) while Republicans favored a small, locally-controlled state. In this era, major progressive issues like the Civil Rights Act of 1964 passed due to the cooperation of liberal Democrats and moderate Republicans and the fact that the president who implemented and enforced affirmative action hiring policies for the benefit of African-Americans was Republican Richard Nixon. While 1968 set the stage for the divergence of the two parties on social issues, Reagan sealed it.

  In 1980, Democratic President Jimmy Carter faced a disastrous economy and an angry public watching helplessly as American embassy workers were held hostage for over a year in Iran. These feelings of ‘malaise’ created an opening for the conservative campaign of Ronald Reagan to take hold. Reagan Republicanism was different because of its open hostility to the state in economic regulation, taxation, and provision of services. It wasn’t governmental priorities that were of concern; it was government itself as enemy. On the other hand, government should be used to inject some old-fashioned moral values back into public life such as banning abortion and reintroducing prayer in schools (Evans and Novak, 1981). Reagan was also ready to ignore Cold War détente and argued for a massive defense buildup aimed at challenging the Soviet Union. Reagan’s victory in 1980 and landslide re-election in 1984 fundamentally changed the nature of debate over the role of the state in America. Still, throughout the Reagan revolution and first Bush administration, Americans selected a Democratic House and for half this period, a Democratic Senate as well.

  Bill Clinton’s plurality win in 1992 was due to the allure of independent candidate, H. Ross Perot, who criticized both major parties for not taking fiscal responsibility for the overgrown, ineffective administrative state. Indeed, Perot’s activist supporters are credited with making the Republican takeover of the Congress in 1994 possible (Rappoport and Stone, 2005). However, the geographical and ideological base of the Republican Party in Congress shifted significantly in the 1980s and 1990s, becoming more active in the southern and western regions and less conciliatory in their conservative ideas (Connelly and Pitney, 1994). The Republican-controlled Congress made budget balancing, term limits for national legislators, and opposition to unfunded mandates the cornerstone of their early agenda. Right after, they moved on to welfare reform, reflecting their belief in a Conservative Opportunity Society over a Liberal Welfare State, declaring that cash welfare benefits encouraged individual dependency on the state which was unhealthy.

  From 1995 to 2007, Republicans held majorities in both houses of Congress, though the size of these majorities fluctuated as Democratic fortunes increased and Republicans’ waned in this period (see Table 6.2). Why the country re-elected Democratic President Bill Clinton in 1996 (after seemingly sending him a ‘warning’ in the form of a Republican Congress in the 1994 midterm elections) and also another Republican Congress is a moot point. A variety of explanations have been suggested, including incumbency advantage, regional variation in party strength, and the simply strange tendency of Americans to be comfortable with divided government – this being a reversal of the Reagan and Bush years with Republican presidents and Democratic Congresses. In the famously close 2000 election, Republicans won the presidency and retained control of Congress. Republicans controlled national government for the next six years – which may have had more to do with the desire to rally around the president after 9/11 and the ensuing invasion of Iraq than any ‘natural’ preference for unified government. But in the 2006 midterm congressional elections, with Bush’s approval rating at a historic low, Democrats regained control of both Houses of Congress.

  Table 6.2 Percentage of votes and seats by party, US House of Representatives, 1980–2010

  Source: Calculated by authors from Election Information, Office of the Clerk, US House of Representatives at http://clerk.house.gov/member_info/electionInfo/index.aspx.

  In 2008, Democrats won both the presidency and the Congress, for the first moment of unified Democratic government since Bill Clinton and his first Congress in 1993–95. During this time, new president Barack Obama tried, and ultimately succeeded, at a domestic policy reform that eluded Clinton – health care reform. While the legislation started out with aspirations to emulate many aspects of the NHS in the UK, significant discontent from Republican leaders – and even independents and moderate Democrats – forced the Obama administration to scale back significantly their ambitions. Instead, the enacted reform bill largely preserves the status quo system while extending affordable private insurance options (potentially government-backed) to those whose employers do not provide it or who are not employed. The new law also regulates the private insurance industry more tightly so that it approximates universal care by forbidding companies from dropping customers with pre-existing or expensive medical conditions. This is a modest reform indeed by European standards of care. The Obama administration also inherited a large deficit from the Bush administration, including a substantial military presence in Iraq and Afghanistan that demanded a consistent financial commitment for the near term. The global financial crisis of 2008, while helping Obama get elected, also meant the income side of the budget equation was weak. Rising unemployment, bank foreclosures on home mortgages, and bank failures presented special challenges for the Democrats. Obama’s response was to offer additional government money to states to stimulate immediate job creation (mostly through public works programs already identified as high priority needs), and to continue a government-backed ‘bailout’ program to save large banks, insurance companies, and the US auto industry from failure. The justification for these actions was to prevent a bad situation from becoming much worse, but the Republicans began to respond that the administration’s actions were bankrupting the nation’s future. By the end of 2009, several highly publicized ‘town hall meetings’ on health care reform clearly indicated that Republicans intended to make health care a campaign issue in 2010. Once the bill was passed, it also became clear that the theme of runaway spending for economic stimulation – in the face of a continued recession and economic stagnation – would be a major enticement for business-affiliated candidates to run on and for frustrated voters to respond to.

  The 2010 campaigns

  Conservative campaigning in 2010

  Until the global financial crisis, the British Conservatives had assumed that the solid if not spectacular economic growth the country had experienced under Labour would continue. They therefore talked about ‘sharing the proceeds of growth’ between tax reductions and improvements to public services. But as the scale of the deficit became clear – a gap between revenues and outlays increased by Gordon Brown’s determination not to allow a serious recession to turn into a full blown depression – the Tories shifted gear. Insisting that they would protect the vulnerable, and vital (and electorally crucial) areas like health and education, Cameron and G
eorge Osborne, the Shadow Chancellor of the Exchequer, stressed the need to reduce the deficit as soon as possible and even talked about an ‘age of austerity’. Promises that ‘paying down our debt must not mean pushing down the poor’, that a Conservative government would pursue ‘fiscal responsibility with a social conscience’, that ‘we are all in this together’ failed to convince large numbers of voters that the party needed to win back, not least because there was a gap between the scale of the its aspiration to eliminate the deficit in the course of one parliament and its reluctance to spell out exactly what and how much it intended to cut back.

  Fortunately for the Tories, it was also clear that voters were similarly unimpressed with Labour’s plans. Once the election was called at the beginning of April 2010, the Conservatives did a good job of destroying the government’s alternative (taking more time to balance the books and doing it by raising taxes as much as by reducing spending) before it could get off the ground. On the other hand, it quickly became obvious that there was little public enthusiasm for the positive side to the Conservative message – that they would work towards creating a ‘Big Society’ in which local and voluntary initiatives would take responsibility for services currently provided by a supposedly centralized, top-down and unresponsive state. The policy was seen as ‘cover for cuts’ and confirmation that the Tories’ real agenda was to reduce the role of the state, especially in welfare, so that it more closely resembled the American rather than the European model. Or else voters, pollsters concluded, simply failed to understand what on earth the party was going on about – hardly surprising, the US consultants (Bill Knapp and Anita Dunn – both mainstream Democrats) that it brought on board during the campaign are said to have suggested, when the idea was sprung on the electorate without preparation or pre-testing. Cameron was also criticized on his own side for agreeing to participate in Britain’s first televised leaders’ debates without ensuring first that there would be no place in them for the leader of the UK’s third party, the Liberal Democrats, whose impressive performance knocked the Conservative campaign completely off course.

  The debates focused attention not just on the Lib Dems’ highly personable leader but also their immigration policy, which seemed to imply an amnesty for many of those who had originally entered the country illegally. This allowed the Conservatives to remind voters that it had by far the toughest position on such issues. Other ‘harder-edged’ (that is, more right-wing) Tory policies with voter appeal, like crime and a skeptical attitude to European integration, however, barely saw the light of day: it was thought unlikely, given the overwhelming importance of the economy, that they would shift votes and might actually put off some of the middle-class liberal voters Cameron’s decontamination strategy had been designed to attract. There was little attempt – unsurprisingly perhaps – on the Conservatives’ part to remind those voters about the party’s conversion to the environmental cause: earlier exhortations to ‘Vote Blue: Go Green’ were but a distant memory by May 2010.

  Republican campaigning in 2010

  The 2010 campaign in the US started with the passage of the Obama health care law, officially the US Affordable Care Act, in February 2010. The law has remained controversial since its passage; however, attention shifted once more onto the stagnant economy, government spending, and the federal budget deficit. And in the firing line were the politicians who had supposedly gotten the country into such a mess, the latter being a particular focus of the Tea Party movement which, outraged over the government bailout of Wall Street banks and the adoption of health care reform, championed a variety of conservative economic positions already favored by Republicans, only more so.

  According to Zachary Courser, ‘The Tea Party movement embraces protest over organization, and independence over party politics’(Courser, 2010). It has no central organization, clear leader, or clear political goals besides expressing outrage at incumbent politicians – and not just Democrats. Depending on the particular record of Republicans in their area, Tea Party groups might embrace or reject those Republican office-holders and candidates. For example, incumbent US House member Michele Bachman of Minnesota quickly claimed affinity with the Tea Party movement and declared she would form a caucus of like-minded members in the US House. She was embraced, but Republican establishment candidates in Utah, Kentucky, Alaska and Delaware were denied their party’s nomination in favor of Tea Party-sponsored candidates who could plausibly claim to be reflecting real concerns among their fellow Americans. The Gallup Poll found that since July of 2010, at least 64 percent of Americans identified the economy as the most important problem facing their country today. Consequently, campaign themes and advertisements nationwide hammered home the support or opposition candidates showed towards Obama administration programs meant to stimulate an economic recovery (‘the bailout’), the size of the deficit, job growth, and whether the candidate was responsible for ‘politics as usual’. While some Tea Party-backed candidates were successful, many were not after defeating establishment Republicans whose support among independents and Democrats was underestimated by Tea Party supporters in the general election.3 This put the Republican Party in the sometimes awkward position of rejecting a candidate they previously embraced (such as Senator Lisa Murkowski of Alaska) because of the elastic nature of party nominations in the US.

  The 2010 results – incomplete governing positions

  Conservative–Lib Dem Coalition, May 2010

  Anyone who ever thought that the British Conservative Party would coast to victory in May 2010 forgot the size of the task confronting it. Its barely perceptible ‘recovery’ in 2005 had still left it with less than a third of the seats in the House of Commons, while the fact that Labour’s vote was more efficiently concentrated in marginal constituencies meant that an overall Tory majority would require a Conservative lead in vote share at the general election of about ten percentage points. But once the Conservative leadership had taken the strategic decision to appeal to the electorate by stressing the party’s determination to cut the deficit at all costs, an outright victory was never on the cards. Election and post-election polling showed clearly that voters were not generally drawn to core Conservative values (individual opportunity over equality, reduction of the state in favor of greater reliance on markets, and so on). They were not decisively convinced by the party’s preference for an immediate program of debt reduction through spending cuts and they were not convinced that the party had changed its Thatcherite spots. Still, people were tired with the Labour government and Gordon Brown as premier, felt that the economy generally and the debt crisis in particular required a change at the helm, and figured that the Tory leader, David Cameron, was a competent and a credible candidate for the top job (see Bale and Webb, 2010, for more detail on pre- and post-election polling). Little wonder then, especially with support for the Liberal Democrats holding up (if not ballooning in the way they had hoped), that the election resulted in a ‘hung parliament’ – a situation in which the Conservatives were the largest party but without the overall majority that British governments habitually enjoy over their competitors.

  While there was clearly huge disappointment among Conservatives that they were unable to secure an outright majority, most were determined, come what may, to be back in Number Ten Downing Street after 13 long years out of power. Cameron and his team quickly rejected the idea of a minority government: they would not have been able to claim a mandate, nor muster the votes required, for their deficit reduction plans; nor could they guarantee that a second general election a few months later would have seen them triumphantly re-elected with a bigger majority. After all, Labour had tried that tactic back in 1974 only to find itself back in office but with such a small margin over its opponents that it returned to a minority situation within a year or so. The only sensible option was to make ‘a big, open, and comprehensive’ offer to the Lib Dems, who – with an alacrity that surprised many of their voters and some of their members – accepted. The coalition
agreement, hammered out in just a few days, appeared to give the Tories most of what they wanted, especially on economic policy, and (even more amazingly) left them in control of all the major ministries – not just the Treasury, but Foreign Affairs, the Home Office, Health, and Education. The Lib Dems, who hopelessly underplayed their hand, declared themselves content with the ill-defined (and traditionally fairly meaningless) post of deputy prime minister, a few minor departments, and a referendum on a reform of the voting system that might ensconce them as the kingmaker between Labour and the Tories in future elections – but only of course if it could be won. In the event, the referendum, which asked voters if they wanted to replace First Past the Post with the Alternative Vote (the system used to elect Australia’s lower house) was lost – and heavily. Even more worryingly for the Lib Dems at least, most commentators agreed that the 70–30 margin of victory for the ‘No2AV’ campaign was in large part down to the fact that they were the main advocates of change, as well as reflecting what became an all-out campaign on the part of their coalition partners, the Conservatives, to kill the proposal.