In the Watergate election of 1974, the Republicans lost 49 House seats to fall behind the Democrats by 291-144, more than 2 to 1. In the Senate, the Democrats won an edge of 61 to 37. In 1976, the Democrats held on to their 61 Senate seats, and added another one in the House to make 292. Yet, by 1980 Reagan won in a landslide, and the Republicans took control of the Senate 53-46, while gaining 33 seats in the House.
Even in 1982, the early Reagan years, the Democrats won 269 House seats, a 103-seat margin over the Republicans. Along with Clinton's victory in 1992, the Democrats won 57 Senate seats and a 258-176 margin in the House. Yet, just two years later, the Republicans gained control of the House with a 54-seat gain, winning the Senate as well.
So any political majority can soon fall in the face of the onslaught of better ideas.
The Democrats' Turn
The September financial crisis destroyed any chance John McCain had of winning this election. The fundamentals were bad enough for Republicans as it was. They had won 5 of the last 7 national elections. The 2 Democrat victories were won by a moderate who went along with the agenda of the 1990s Newt Gingrich Congressional majorities. There hasn't been a truly liberal President since Jimmy Carter was elected 32 years ago in 1976. Before that was another 8 years of Republicans. Voters were ripe for a change.
Moreover, voters had forgotten how crazy liberals can be, not to mention the left-wing extremism represented by Obama. When we tried to tell them, they thought we were lying. Nobody could be that nuts, they seemed to be thinking. I was writing a column a few weeks ago when it suddenly dawned on me, nobody even remembers any more how badly Jimmy Carter and his liberals had trashed America by 1980. Nor do they remember anymore how Reagan so drastically turned everything around, both foreign and domestic. That is all now a history lesson that has to be painstakingly taught over and over.
Another huge drag was the deep unpopularity of the incumbent Republican President. Let us not deal in cheap shots. George Bush is a good man who did a lot of good things. But he never seemed to understand that an essential role of leadership is communicating to the country and persuading it as to where we need to go and why.
Bush's popular downfall was rooted in Donald Rumsfeld's failure to commit enough troops early on to nail down the victory in Iraq quickly. The American people are not going to support a foreign war that drags on for years and years ultimately costing hundreds of billions of dollars and thousands of lives, all the more so when the President is not articulating on a regular basis what we are doing, where we are headed and why. Rumsfeld also failed the President in not committing enough troops to the early attack on Afghanistan to capture Bin Laden and the Taliban leadership. Just think how different the Bush Presidency would have been if Rumsfeld and Bush had handled these issues correctly.
Adding even more to the problem was the 2006 failure of the Republican Congressional majorities, which were thrown out because they stopped advancing still badly needed positive reforms that would further promote American prosperity, freedom, and strength. Instead they had given in to acting like liberal Democrats in trying to buy votes with government spending and maintain their incumbency with simple minded, low road buyoffs. Very difficult for the Republican Party to inspire followers with this record.
On top of all this, the McCain campaign then had to deal with what seemed to be a reenactment of the October 1929 stock market crash leading to the Great Depression. Everyone has been taught in grade school how to respond to that, however wrongly, which is to vote in liberal Democrat majorities for a generation. Note to the public: FDR and his New Deal did not solve the Great Depression. Rather, they trashed the economy over and over, burying it unnecessarily in a decade of deep suffering for the American people.
Bush tried to be responsive and responsible. But he and his transparently confused and panicked economic team of Bernanke and Paulson only served to inspire what has become an unnecessary global economic panic. The oversold $700 billion bailout package added greatly to the political disaster, while failing to stem the economic downturn. Read what economist Robert Higgs wrote for the Independent Institute on September 23 about the supposed credit freeze justifying the bailout which did so much to spread panic:
"In democratic societies, every great surge of the government's size, scope, and power rests on a foundation of fear….The president, the secretary of the treasury, congressional leaders, and the vultures now swarming Washington to pick the remaining flesh from the taxpayers' bones would have us believe that unless the colossal ripoff now being formulated in Congress is enacted, the future will be too horrible to contemplate. Reports characterize the bailout as ‘a bid to unlock the flow of credit' and make reference to ‘the frozen credit markets.' It's hyperbole, don't believe it."
Higgs shows that at the time Congress was voting on the bailout, commercial and industrial loans from all commercial banks had soared by 15.5% over the prior year, and by 30.8% over the prior two years, to an all-time high of $1,514 billion (or $1.5 trillion). Consumer loans at all commercial banks had grown 9.2% over the prior year and 16.2% over the prior two years to an all time high of $845 billion. Even real estate loans at all commercial banks, while not soaring, had grown 4.1% over the prior year, and 15.5% over the prior two years, to $3,642 billion ($3.6 trillion), just slightly below its all time high. What frozen credit were they talking about?
Yes, there was real economic trouble, which is now only going to get worse. But to sell the splashy, spooky, $700 billion bailout, Paulson and Bernanke had to sell the country on the idea that we were on the verge of the Great Depression otherwise. That effectively trashed the McCain campaign and the rest of the GOP. Congress could have been asked only to replenish and slightly extend existing powers at the FDIC, the Fed, and the Treasury. The Bush team should then have interred with measured reserve those firms however large that had overexposed themselves to the risk of declining housing values, and called for pro-growth economic policies to revive the economy. But Paulson seemed focused like a laser beam on bailing out his buddies on Wall Street, heedless of the economic as well as political chaos he was causing.
McCain was not my ideal candidate and he did not run the best campaign. But with everything he had going against him, it is a wonder he kept it as close as he did.
In 1980, I had a vision of an American flag on a pole on top of a hill, starting to fall over. I was looking for a hand to reach out and grab it before it fell to the ground. I am having that same vision now.
The economy is weak and trending downward because of the bursting of the housing bubble. But the agenda of the ultraliberal new President and Congressional majorities is everything that could possibly be wrong for this new economic environment -- higher taxes, especially higher marginal tax rates, explosive increases in government spending, expensive new regulatory burdens for the economy, protectionism closing down free trade. These policies will not promote economic revival. They will only drag the economy farther and farther down.
Obama seems to think that the government can create new jobs based on new government spending. He is proposing a whole new industry of 5 million green jobs producing alternative energy based on billions in government subsidies. But taking money out of the economy through taxes or borrowing and spending it does not create any new jobs on net, more likely it would lose jobs on net. Yet reading his speeches and policy papers, this is the mistaken thinking behind Obama's whole economic plan.
The first fiasco Obama and his liberal Democrats will rapidly produce is their cap and trade global warming plan. They will sell a limited amount of permits for carbon dioxide emissions to business and industry for an estimated trillion dollars in new government revenue each year, which they will use for massively increased government spending. That will effectively impose a trillion dollars in new costs on the economy.
It will also shut down coal fired electricity plants, and soon the entire coal industry, which as Obama suggested would then be too expensive to operate. Obama and his Congressional liberals have also indicated they will quickly reenact the ban on offshore drilling, and don't expect the Obama Interior Department to authorize any new drilling anywhere else in the U.S. Don't expect these ultraliberals to allow any new nuclear power plants either.
The economy would then further suffer short, unreliable supplies of high cost energy, dragging it down even more. The price of gas and electricity will soar to new highs, as the new dream technologies of solar and wind power are not going to pick up the slack fast enough. Short supplies will eventually force gas rationing to fit the economy within the available energy output. Expect blackouts and brownouts as the energy industry deteriorates further.
In 2002, Californians reelected Democrat Gray Davis as Governor by a wide margin. A year later, electricity shortfalls and blackouts led to a recall election that replaced him with a Republican. When Obama and his new ultraliberal Democrat majorities do the same thing to the entire nation, you will see a quick political revolution which may not even wait until the next election. In states where recalls are allowed, you may see dreamy and foggy liberal Senators and Congressman quickly replaced with new Reaganites willing to promote new energy production to bring down prices and increase supplies.
Middle Class Tax Increases
One of the Republicans' big failures this year was their inability to respond to Obama's false claims that Republicans had focused their tax cuts on the rich and not the middle class and working people. As I have recounted, the Republicans over the past 30 years have abolished federal income taxes on the working class, and almost abolished them on the middle class. But Republicans lacked the intellectual depth to take credit for this and rebut Obama.
As Alan Reynolds has recently shown in a Wall Street Journal commentary, backed up by a brilliant longer paper, Obama has promised $4.3 trillion in new spending over the budget window of 10 years. His tax increases would raise only about a tenth of that at best. But the minute he proposes any sort of tax increase on anyone making less than $250,000 a year, you can expect a political revolution.
Terrorism and Nuclear War
George Bush has incredibly shut down any further terrorist attacks on America for the last 7 years. If Obama's dreamy, give peace a chance liberals don't maintain that same vigilance and terrorist attacks on American soil return, don't expect that middle class Obama promises to rebuild to be too tolerant of it.
Indeed, on our current course we are headed towards nuclear war in the Middle East. Iran is rapidly building a nuclear weapons capacity, and its leaders have openly said they will use the resulting weapons on Israel to "wipe it off the face of the earth." Israel has their own nuclear stockpile and can be expected to respond in kind. For Iran's governing fanatics, such a devastating war is part of their religious vision expected to usher in a new age of salvation.
So what are President Obama and our new ultraliberal leaders going to do to get us off this road to devastation? It would be foolish and irresponsible to just assume the Iranians could not possibly mean what they say, given the seriousness of the threat. And they have openly said they will not be deterred by the economic penalties of sanctions or the blandishments of economic rewards. If millions of Israelis are murdered by an Iranian nuclear attack under President Obama and his Congressional liberals, the political honeymoon will end quite abruptly.
Then there are the now often repeated statements of Iranian President Mahmoud Ahmadinejad saying, "Imagine a world without both Israel and the United States. I tell you this is now possible." What could he possibly mean by that?
I can think of scenarios where running for reelection will be far more difficult than with the threat of another Great Depression lurking in the background.
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