Now that the Fun is Over, the Real Work Can Start
November 13, 2006
by Irwin Stelzer
Elections are a distraction. Necessary to a democracy, but a distraction nevertheless. At least, that has been the case in America in recent months.
Instead of debating important questions such as how to get out of Iraq without leaving chaos in our wake, or how to finance the entitlements of the baby boomers, the candidates focused on their opponents' attendance at a Playboy Club convention (Tennessee), use of racy language when writing a novel, or failure to obtain a fishing licence many years ago (Virginia), and gay escapades (Florida). Now the politicians have been silenced by their strained vocal cords, their foot soldiers are catching up on lost sleep, and the cleaners are sweeping the confetti from the floors of campaign headquarters. And the serious business of governing the nation can resume. Perhaps the several composers of Ballad For Americans had it right when they wrote, albeit not in reference to the recent campaign, "Out of the cheating, out of the shouting ... Our song of hope is here again."Or not, depending on the willingness of a Republican president and a Democratic-controlled Congress to work together. The early signs are not promising. Yes, George Bush did offer to help Democrat Nancy Pelosi, the San Francisco congresswoman who will become speaker of the House of Representatives, to find a decorator for her new office. And, yes, Pelosi and other Democrats say they are willing to work with the White House on important issues.
But the political atmosphere is poisonous. Add to the bitter differences over Iraq lingering Democratic anger over the impeachment of Bill Clinton, and over the "stolen election" of 2000, and you don't have a prescription for harmonious rule.
Democratic control of all congressional committees means an endless round of investigations by sub-poena-wielding Democrats into everything from reconstruction contracts in Iraq to the planning for and execution of the war. Pelosi has promised to rein in the nastiest of the attack dogs, but the betting is that she will be unable to do so.
Still, there is reason to hope that some good may come out of divided government.The politicians face the electorate again in 2008, and that campaign for the presidency, all of the seats in the House, and about one-third of the seats in the Senate, is already under way. That's why both the president and Pelosi feel they have to make bipartisan noises: the country is thought to be sick of divisiveness.
Bush would like to leave office with more to his legacy than Iraq and Katrina, and the Democrats now have the burden of the responsibility that goes with power. They are familiar with the old Washington saying that it is easier to lob grenades than to catch them.
They will use their power to push through a rise in the minimum wage, from its current level of $5.15 (£ 2.70) per hour, set in 1997, to $7.25. My guess is that the president will not uncap his veto pen to kill a move so popular that several states have already raised the minimum wage.
Then the hard work begins. The White House has given Treasury secretary Hank Paulson the lead role in working with Congress on some of the issues that might, just might,be candidates for compromise. His first chore will be to ensure the future viability of the social-security (pension) system. That won't be easy.
Conservative Republicans are already making noises about being unwilling to cut the sort of deal that the president's father arranged with a commission headed by Alan Greenspan, since that compromise involved raising payroll taxes. And Democrats say they will insist on just such a tax increase. But a compromise is within reach. Republicans are hinting they can live with an increase in the social-security taxes paid by high earners, and a slight reduction in the benefits going to the well-off - means testing, in British terms. In return, Democrats might be willing to give the president a prize that has so far eluded him: an expansion of personal retirement accounts, which allow citizens to divert part of their social-security taxes to investments of their choosing.
Unlike voters in the UK, American voters do not seem especially disturbed by the recent spate of claims that the planet is warming at such a rate that catastrophe lurks. Here in America, the issues are the price of petrol and excessive dependence on unreliable sources of crude oil, some of it from countries that use the revenues from oil sales to finance terrorists and anti-western hate teachings.
The Republicans traditionally emphasise removing constraints on domestic production and supply; the Democrats prefer to call for restraints on demand. The battle will settle down into a fight over whether mandatory fuel-efficiency standards for automobiles should be tightened. The Republicans will probably have a powerful Democratic ally in John Dingell, the Michigan congressman who is sensitive to the economic plight of America's car companies. The result is likely to be no action, or at most action that allows the Democrats to claim victory, but is of little real consequence.As for Iraq, the heated debate obscures the fact that both parties want to restore a semblance of order before claiming victory and withdrawing before the 2008 elections. The Republicans don't want to face the voters with Americans still dying in Baghdad, and the Democrats don't want to be charged with forcing a premature retreat.
After all, it is in 2008 that there will be all to play for. Which is why the big winner last week was Arizona senator John McCain, whose above-the-partisan fray stance will make him an increasingly attractive presidential candidate in a country likely to have a lot of partisan bickering in its near-term future.
This article originally appeared in the November 12, 2006, Sunday Times (London).
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.