How the Democrats can stay relevant

November 4th, 2010

by and

ShareThis

This piece was originally published in Politico.

After sweeping to congressional majorities in 2006 and electing a president in 2008 with the largest Democratic percentage of the popular vote since Lyndon B. Johnson, Democrats are now in danger of becoming an irrelevant party.

With their control of the Senate and White House, of course they’ll remain central to the public debate over the next two years. But the liberal cognoscenti who dominate the Democratic Party have proclaimed that Tuesday’s debacle was caused by President Barack Obama and a Congress that didn’t move far enough left. If this argument prevails, it’s Mondale-vile for Democrats for a long time.

Returns show, once again, that the voters who drive elections are self-identified moderates and independents, and largely middle class. They ran for the hills this cycle.

The stampede was fueled not only by anxieties over a troubled economy but by independents’ continued search for a political party that governs from the center. After rejecting Sen. John McCain – and the Bush legacy – as too right wing, and supporting Obama by 8 points, these restless Independents voted against Democratic gubernatorial candidates by more than 30 points in 2009. And they continued to flee from Democrats yesterday.

To woo them back, reclaim the center and assure electoral and governing relevance in 2012 and beyond, Democrats must make a big change: become the economic growth party. They must shift from being a party that seeks an expanded safety net to one obsessed about increasing the economic pie.

This means ditching economic populism, offering robust pro-growth policies and embracing fiscal responsibility. It also means taking on some sacred cows – like downsizing federal employee pensions.

A fundamental re-thinking of the Democratic vision is required. Start by recognizing that after passing universal health care – a tremendous triumph – Democrats now must read the memo: the 80-year quest to weave the perfect safety net is over. We’ve reached the limits of what the U.S. middle class is willing to support through entitlements.

Democrats must now invest the same passion and intellectual rigor in economic growth – the new crisis for America’s middle and working classes.

For roughly 75 years, America dominated the world economy, taking robust economic expansion for granted. Those days are over. If the United States doesn’t attain growth far greater than what is projected for the next 20 years, we will never attain the middle class living standards we expect; claim the leadership role we need for a safer world, or pay for the entitlement state we’ve created.

This fear that America is slipping behind is at the heart of today’s middle class anxiety. The answer is not anti-business economic populism, which won’t propel growth — and, tellingly, landed like a lead balloon on Election Day.

The middle class is seeking a political party with constructive ideas that drive super-charged, private-sector economic growth.

Republicans have their ideas: Cut taxes and get government out of the way. If Democrats don’t succeed in creating their own growth agenda, Republicans win by default.

A Democratic growth agenda shouldn’t be tailored to answer the question: Who benefits from growth? Rather, it must focus on how growth is achieved.

This new growth agenda should expand effective public investments, broaden trade, cut un-needed federal red tape, provide greater support for college, reform our tort laws and incentivize private research and development.

Democrats should propose a “getting there first agenda” — to modernize infrastructure. A National Institutes of Energy could be created on the model of National Institutes of Health, to accelerate new technologies so we can win the global clean energy innovation race. An education agenda could focus as much on making average schools great, not just on making poor schools adequate.

Our immigration policy should be examined as well. It needs to be re-designed to make America the magnet for global talent, including awarding green cards to foreign students who earn advanced degrees here. We must look to countries like Germany to learn how America can again become an export giant, so that our global trade balance enhances growth rather than subtracts from it.

Democrats must also show they’re serious about fiscal responsibility – a crucial piece of the growth puzzle. By 2030, the Congressional Budget Office projects that 68-cents of every federal dollar will be spent on Social Security, Medicare, Medicaid and interest on the debt. That is the budget of an also-ran nation – and an also-ran party.

Yet the current denial among some leading liberal advocates and intellectuals is puzzling and dangerous. Without entitlement reform, which includes completing health care by implementing major cost containment policies, we will put an ever-increasing tax burden on the middle class, crowd out growth-inducing investments and put future health care and retirement benefits for the elderly at risk.

To prove that Democrats got the voters’ message about excessive government spending, the party must prove it is tough enough to take on the most sacred liberal programs: reforming federal pensions.

More than two million federal employees are now beneficiaries of a pension system that is far more generous than anything available to private sector workers with the same skills. Reforming the system so that federal employees contribute roughly the same amount that private employees contribute would save more than $250 billion dollars over the next two decades.

This gutsy move would show that Democrats are not beholden to any special interest group and are prepared to challenge their own orthodoxies as they seek to modernize programs they championed in the 20th century.

There are lessons to be learned from Tuesday’s election that go well beyond being in a recession and the fickleness of today’s swing voters. If Democrats don’t heed them – and promote a bold, forward-looking growth agenda that inspires centrists and the middle class – they may have to get used to minority status.

Jim Kessler, vice president of policy at Third Way, served as policy director for Sen. Chuck Schumer (D-N.Y.). Jon Cowan, president of Third Way, served as Chief of Staff of the Department of Housing and Urban Development under Secretary Andrew Cuomo.