Republican Gov. Scott Walker of Wisconsin and the House Republicans, led by Paul Ryan, have done progressives and Democrats a huge favor. We are more unified than we have been since Election Day 2008, and it is a great feeling. Because Republicans want to destroy -- just utterly destroy -- unions, Medicare, Medicaid, and pretty much the entire safety net, the progressive movement and the vast majority of the Democratic Party leadership are on the same side. There are still differences, which I will talk about in a minute, but on the core issues, which Democrats and Republicans will be fighting over in the coming months, we are pretty unified. The president has picked a fight with Ryan and is getting into campaign mode, and progressives I have talked to are excited to be fighting on the same side about such fundamental issues as the future of Medicare and Medicaid in this country. The progressive movement is gearing up into full battle mode for an epic showdown with conservative Republicans who want roll back the progress of the last century.
This will be a very good fight for our side. Seniors are the most important swing bloc of voters in the election next year, and in 2010 they swung hard -- a 22-point margin -- against Democrats. The rest of the country doesn't want to be messing with Medicare or Medicaid either: They want it for their elders, and they want it for themselves when they retire.
Given the size and stakes of this budget battle and the favorable politics of it, and given the incredibly far-right positioning we will be seeing in Congress, among Republican governors, and in the Republican presidential primary, I would normally be feeling pretty confident right now about Democratic electoral chances next year. There is one pretty important thing holding me back, though, and that is the shape of this economy. The stock market has had a pretty good run, and both corporate profits and the GDP are growing nicely, but this economy is still beating on our country's working middle class like a drum. The unemployment rate is finally dropping, and new jobs are finally being created, thank God, but at a snail's pace -- and youth/Hispanic/black (Obama's core constituency) unemployment rates are still through the roof. There are still way too many people working at part-time or temp jobs for far below what they used to be paid, and there are several million still too discouraged to look for work. Gasoline prices, utility prices food prices, out-of-pocket health care costs, tuition costs -- the staples of middle-class existence -- all continue to soar, but wages are stagnant. Housing prices -- the main wealth asset for middle-class families, continue to drop -- which puts ever-increasing pressure on underwater mortgages.
Understandably that puts working middle-class voters in a pretty foul mood. And if you are in a foul mood, and you don't see either party delivering for you on the issues you face every day, you tend to dislike politicians from both sides. As Stan Greenberg wrote in a recent memo on the disappearing middle class, voters "believe both parties are complicit in strengthening the alliance of money and power." When voters are in a bad mood about the economy, especially if they perceive that no one in the establishment is on their side, they tend to want to throw the party in power out on their butt. That's why we have had three elections in a row where the president's party was overwhelmingly defeated. That's why Japan, whose economy has been weak for two decades, has been throwing incumbents out of office pretty much every election for 20 years. In this kind of environment, voters don't need to like, agree with, or have faith in the other party to elect them: they clearly didn't have warm feelings toward the Republicans in 2010, according to exit polls. This kind of dynamic has an impact on every sector of the electorate. The partisans of the anti-incumbent party get more fired up, because they know things are messed up and are motivated to kick the bum out. Swing voters want to send a message, so they want to kick the bum out, too. And the base voters of the incumbent feel less motivated to turn out to vote because their lives don't feel much better, and they have more mixed feelings about the incumbent.
There is one way around this dynamic if you are the incumbent party, which is to show that you are on those hard-pressed voters' side, and the other candidate isn't. That's how Nixon survived a so-so economy in 1972; that is how Rove engineered GOP victories in the weak economic years of 2002 and 2004. They created an election dynamic where both their base voters and working/middle-class swing voters felt like the president was on their side in tough times, and the other guys running didn't relate very well to them.
Republicans do this by stirring up ugly resentment against The Other: racial minorities, immigrants, Islamic terrorists, crazy drug-taking hippy students, whatever the bogeyman of the moment is. Democrats have to do it by good old-fashioned economic populism: the kind of fighting for the middle class populism that takes on the big banks and the outsourcing companies and the Republicans who want to take away your Grandma's Medicare. Picking the fight with the Ryan budget is a great first step in that strategy, and I am excited about making that unified Obama/progressive movement fight. But I am convinced the president needs to do more, especially in regard to the banks and the oil companies. (When these two industries can be combined as opponents, as they were in the president's attacks on Wall Street speculators driving up the price of oil, that is a beautiful thing.) When the president went after oil company subsidies in the State of the Union speech, it was by far his most popular line in the speech according to dial tests. He needs to do more of this kind of populism.
Here's the other thing about the big banks on Wall Street: They gauge people so many different ways, they make a great target all year around -- and when you do push back on them, it could have a huge impact on the economy. If the banks lose on this swipe fee issue I have been working on with retailer and consumer groups, it will mean $14 billion into the Main Street economy, helping both consumers and businesses. If the banks were to write down underwater mortgages, SEIU estimates that it would be a $73 billion boost directly into homeowners' pockets, a huge help to this weak economy. Given the damaging contraction of government spending on this economy right now, this would make a major difference in people's economic condition.
President Obama needs to shake off his Geithner-induced weakness in taking on the banks, and Democrats like Jon Tester needs to stop doing incredibly dumb things like selling out small businesses back home on the swipe fee issue for $60,000 in bank and credit card contributions. Elizabeth Warren needs to be appointed the CFPB head: go ahead and pick a populist fight with the Republicans, and let them defend bankers. A new head to the worst regulator in Washington, the Office of Comptroller of the Currency, needs to be finally picked so the OCC will stop doing one sweetheart deal after another with big bankers. Not being willing to pick these fights with Wall Street is not being a pro-business moderate, because most businesses get hurt by the Wall Street abuses on things like swipe fees. Not taking these bankers on makes Obama and other Democrats like Tester look like they are in the pocket of the banks, and that is a huge mistake if you are trying to appeal to working/middle-class swing voters as well as your base.
Picking fights with Republican extremists, big oil, and the big banks is good politics in these tough economic times. The middle class needs to know which side Democrats are on, and these are exactly the fights to help them do it.