No Compromise: It's the Economy, Stupid

Compromise is not a terrible political strategy under most circumstances. But the current situation in the American economy and American politics makes compromise the worst possible alternative for Obama and the Democrats. The Republican Party has been taken over by the Rush Limbaugh wing, and none of its policies are good for America. And the economy is about to get substantially better, which would give Obama credit for economic success if he doesn't compromise.

The explanation for why the Democrats suffered severe losses in the 2010 midterm election can be summarized in four words: It's the economy, stupid.

Of course, other reasons will be offered in the battleground of punditry seeking to analyze the voting. Left-wingers will argue that Obama refused to pursue sufficiently progressive policies and therefore his centrist approach failed to activate his base of voters. Right-wingers will argue that Obama pushed far left-wing policies and therefore alienated independents while motivating conservative voters. Political experts will point out that the incumbent president often suffers heavy losses in the off-year election, especially when defending a large number of districts in hostile territory where Democratic numbers were inflated from 2006 and 2008. There's a small amount of truth in all of these statements.

But it was fundamentally the lousy economy that proved to be the downfall of Democrats in 2010, just as it was for Republicans in 2008. When the economy is in terrible shape and lots of people are unemployed, the public tends to blame the party in power. Of course, this is unfair. Obama and the Democrats didn't cause the Bush recession, and they accomplished much to offset its terrible impact. The much-maligned Obama stimulus plan was a tremendous boost to the economy, albeit too small to fix the badly weakened economy from the Bush recession. Fairness has nothing to do with politics, however.

Even a popular president can suffer badly when the economy sours. George Herbert Walker Bush had approval ratings near 90% at the start of 1991 after war with Iraq, but by 1992 when the unemployment rate hit 7.8%, his approval plummeted down below 40% and he lost re-election. And an unpopular president can see his fortunes turn thanks to the economy. Ronald Reagan's party suffered a thrashing in the 1982 mid-terms elections, and his approval rating dropped steadily below 40% in 1983 thanks to the recession his policies brought on. But the economy recovered, and so did Reagan's approval ratings, which jumped substantially and allowed him to win re-election in a landslide.

Obama has several advantages going into 2012. His approval ratings have never sunk to Reagan's lows, and unlike with Reagan, it is irrational for voters to blame Obama for a recession that began more than a year before he took office as president. Most polls indicate that Americans tend to blame Bush more than Obama for the recession, although Wall Street and Congress also take the blame.

Much like Reagan, Obama remains personally popular despite the economic mess he inherited. And even the high unemployment rate under Obama never reached the levels it did under Reagan, although the Bush recession was much more severe and long-lasting than Reagan's recession.

It is almost certain that the economy will improve by 2012, and it probably will improve a lot. Although some economists fear that we are in a period of long-term stagnation, the reality is that unemployment has already peaked, the GNP has been growing, albeit too slowly, for a year, and the economy is almost certain to get better. This is a natural consequence of what happens after a recession, but someone will get the credit for it. A compromise with the Republicans will mean that Republicans will be able to claim credit for economic growth. Keeping the course will mean Obama and the Democrats get the credit.

In 1996, Bill Clinton followed the guidance of his Machiavellian advisor Dick Morris and used a strategy of triangulation, shifting hard to the right on many policies and effectively abandoning many Democrats in Congress. But what ultimately succeeded for Clinton was not triangulation, but hardball politics. When Newt Gingrich and the Republicans sought to shut down the federal government, Clinton stood up against them rather than compromising. And what proved to be the most successful thing for Clinton (and is the main reason for Clinton's enduring popularity today despite various scandals) was the incredible growth of the economy in the 1990s.

The 2010 elections were far worse than I had expected a year ago, but that's solely because the Bush recession was worse than almost anyone had imagined. It's all about the economy.

Refusing to compromise on policy doesn't mean Obama should speak out publicly against the concept. Getting rid of earmarks, as Obama suggested in his press conference, is a great example of where Obama can push for progressive reform while appearing to compromise with the Republicans who pretend to oppose earmarks.

The reality is that nothing important will get done in the next two years under a Republican House and a Democratic Senate. Obama needs to get whatever important legislation he wants passed in December, including an extension of the tax cuts for the middle class. And then he needs to focus the next two years on using the power of the executive branch to get progressive reform put in place.

The big winner in the 2010 election was populism, and Obama's greatest failure as president has been his inability to adopt populist rhetoric against the faux-populism of the Tea Party movement. If Republicans want to run in 2012 on expanding the deficit with tax cuts for the very rich, Obama should welcome that as a huge winning issue. Policies like this will enable Obama to take a populist stand on an issue that polls well, establishing the fact that he's the champion of the middle class. Combined with an improving economy, a new populism and a refusal to compromise with the terrible policies of the Republican Party will enable Obama to win a Reagan-style landslide re-election and take back the House in 2012.

Crossposted at DailyKos.