Stimulus Politics Is Fleeting, the 2008 Realignment Isn’t

regansobs Stimulus Politics Is Fleeting, the 2008 Realignment IsntOn Sunday’s Meet the Press, David Gregory confronted David Axelrod, one of President Obama’s chief advisers, with a respected economist’s grim conclusion that the stimulus package Obama will sign on Tuesday simply isn’t big enough and that the unemployment rate will hover around 10 percent at the end of 2010.

"You heard people saying it was too small, you had people saying it was too large," Axelrod replied. "We believe it’s where it should be."

That might be wishful thinking. As Gregory pointed out, the economy is currently underperforming by nearly $3 trillion; a stimulus package worth one-quarter of that surely won’t hurt, but it raises the possibility that, when they focus on the ’10 midterm election 18 months or so from now, Americans will judge the stimulus plan a failure—and take out their frustration on Obama’s party.

But in a way, we’ve traveled this road before. The parallels between Ronald Reagan and Barack Obama—in terms of their appeal, their style and the circumstances under which they won office, not their ideologies—are many, and the example of Reagan’s first term offers a guide to the political roller coaster Obama may be in for.

Reagan, like Obama, rode to office on the strength of his personality (and with a devoted grass-roots following among his party’s true believers) at a time of economic gloom, international turmoil and sagging national confidence. And as with Obama, Reagan’s lopsided victory prompted forecasts of the other party’s long-term demise. Before the 1980 election, Republicans were seen as a permanent minority party, on Capitol Hill and across the country. After it, they controlled the White House and the Senate and had pulled within 26 seats of a House majority.

Reagan’s prescription for the country’s domestic woes involved massive tax cuts, which—aided by his surprisingly durable (Obama-like, it might be said) popularity—he pushed through Congress in the first half of 1981. Meanwhile, Democratic Congressional leaders fared miserably in polls and, for the first time ever, surveys showed as many voters calling themselves Republicans as Democrats.

By the summer of ’81, Republicans were openly forecasting even bigger gains for their party in the 1982 midterm elections. A swing of just 26 House seats would put the G.O.P. in charge, and with redistricting shifting 17 Northeast seats to the G.O.P.-friendly Sun Belt, Republicans figured they were already at least halfway there. And in the Senate, where Republicans already held a 54-46 advantage, Democrats would have to defend 19 seats in ’82, compared to only 13 for Republicans, numbers that made Republican gains almost inevitable.

Roughly speaking, Democrats are in the same spot right now. Their president’s popularity seems invulnerable, while Congressional Republicans struggle to amass a 30 percent approval rating. Voters are abandoning the G.O.P. in droves. And the midterm election outlook is awfully rosy for Democrats, who, like Republicans 28 years ago, are already forecasting unprecedented gains.

It would be wise, then, for Democrats to remember what happened after Reagan won passage of his signature economic program: Things got worse—much worse—and the G.O.P. paid dearly for it.

In the fall of 1981, a few months after Reagan’s tax cut program became law, the country plunged into an ugly recession. Unemployment, high to begin with, began climbing. Reagan pointed to some encouraging signs, like a dip in inflation and growth in the stock market, but his words fell on deaf ears. Americans were losing their jobs and there seemed to be no end in sight. So much for those tax cuts.

In the first week of October 1982, just a month before the midterm elections, the unemployment rate surpassed the 10 percent mark. Charles Manatt, then the Democratic national chairman, called it "a new threshold of disaster" that would end whatever remained of the public’s patience with Reagan’s program. The working-class "Reagan Democrats" who had keyed the president’s ’80 triumph were in open revolt.

"The blue-collar worker is what Reagan was talking about, and a lot of them were still working when he was here," one Michigan worker told The Washington Post that October. "But he would get a different reception today. He promised more work, and look what’s happened."

Edgar Fiedler, an economist who had previously served Presidents Ford and Nixon, offered this assessment: "There is little doubt that the public Reaganomics has failed."

In that climate, the task for Congressional Democrats was easy. They embraced their opposition status and framed the ’82 election on the new president and his policies. On Election Day, Democrats picked up 27 House seats and, despite having to defend far more turf, held Republicans to no gains in the Senate. They also radically expanded their control of State Houses across the country. Exit polls found that one-third of Reagan’s voters from 1980 cast ballots for Democrats in the ’82 midterms. And of the 40 percent of the ’82 electorate that cited unemployment as their top issues, 68 percent voted Democratic.

What’s interesting is that, even as the economy and his job performance ratings tanked in 1982, Reagan was still viewed warmly by voters on a personal level. It’s not hard to imagine something similar happening with Obama next year, should his stimulus package—and any subsequent recovery efforts—not produce an obvious payoff.

But there’s another political lesson in Reagan’s first-term story, one that is generally lost in the hagiography that surrounds his legacy.

Initially, the ’82 election results were thought to represent a resurgence of the New Deal and Great Society liberalism that had been declared dead in the wake of Reagan’s ’80 victory. The Democratic establishment latched on to this theory, stifling reform voices within the party and behaving as if the old way of doing things was back in vogue. It was in this climate that Walter Mondale emerged as the party’s 1984 presidential nominee.

But they were very, very wrong. Unemployment began to drop in 1983 and Reagan’s poll numbers began to rise. How much credit Reagan actually deserved for this recovery can be debated, but is irrelevant here; people had always wanted to like him, so it was easy for them to give him all the credit. By the time the ’84 election rolled around, it was an epic mismatch, a beloved president whose bold policies had (supposedly) triggered a stunning recovery running against a tired product of the Democratic machine that had been repudiated four years earlier. Reagan’s 49-state landslide was thusly born.

In the end, 1980 was every bit the transformational election that it was labeled at the time. For the next three decades, Reagan’s small-government philosophy retained broad popular support. The ’82 election was merely a hiccup. But not until Bill Clinton came along in 1992 did Democrats seem to appreciate the political significance of this.

Something similar may be at work now. There’s every reason to believe that last year’s election represents the end of the Reagan consensus, the moment when the government-is-our-enemy mantra became, once again, a fringe property. But Republicans, like the Democrats of the early ’80s, show no signs of recognizing the transformation that’s taking place. If they end up faring well next year, they’re likely to misinterpret the results just as profoundly as Democrats did in 1982. And that is the recipe for a drubbing in 2012.