It's the Economy, Stupid Democrats

Growth in real disposable income leading up to an election is a near-perfect predictor of how the incumbent party will do, says Ezra Klein in a perceptive article. This close correlation should not be surprising. People judge the majority party based on how much their personal economic standing has improved or deteriorated, as well as their friends’ and family’s.

It is always the economy.

With this in mind, we can zero in on the true failure of the Obama Administration and Congressional Democrats from a political standpoint. The data Klein points to show how modest the impact of the actual campaign is on the election. The court intrigue of the Washington bubble, arguments about procedure, CBO price tags and tallies of highly compromised legislative “wins” will have a negligible impact on voters’ decisions.

Yet, despite how unimportant these things are to electoral outcomes, somehow they have become all-consuming priorities for the Administration and Congressional Democrats. Take, for example, the health care bill, which became dominated by one feature -- the CBO price tag -- at the expense of good policy or politics.

Democrats missed a perfect opportunity to focus on health care reform as a way to inject additional stimulus. Though the Affordable Care Act waits till 2014 to start many of the benefits, it delays implementing taxes or cuts to pay for them until several years beyond that. Without changing the general policy of what is now law, through a combination of Medicaid expansion, temporary COBRA subsidies, better funding of high-risk pools, dental care rebates, voluntary money to states that set up exchanges early and more, the health care bill could have been a way to inject roughly $100 billion of spending into the economy this year, helping people and encouraging start-up businesses. Instead, the new benefits won't really kick in until 2014.

The most egregious problem for Democrats is they have allowed Senate Republicans to destroy their election hopes in November. Democrats like Sen. Debbie Stabenow (D-MI) openly acknowledge that Senate Republicans are using the filibuster to block pro-growth legislation in order to keep the economy weak. As we can see from the data, it is a brilliant political strategy and is likely to pay off for the GOP in November. Yet, with their jobs on the line, Democrats have chosen to defend arcane Senate rules instead of playing procedural hardball to advance good policy and even better politics. The vast majority of Americans don't even understand the Senate rules that Democrats are defending at the cost of their majority. By not eliminating the filibuster, or at least threatening to as the GOP did to force compromise, Democrats have effectively committed political assisted suicide and taken the economy down with them.

Inside-the-Beltway arguments and deficit self-talk have doomed Democrats in November because they fail to see how important it is to address the immediate needs of regular Americans. Democrats have given up on even trying to improve voters’ economic well being before Election Day.

It brings to mind the probably false legend of Nero fiddling while Rome burned, but even that comparison is unfair. The story claims Nero at least purposely burned the city so he could build a new palace. Democrats are instead arguing about rules, Beltway squabbles and deficits while their own majority goes up in smoke around them.