Time of reckoning has come for Republicans – either do what the electorate wants or become irrelevant

Posted by Shyam Moondra

Republicans campaigned based on trickle-down economics and lost. Not only they failed to win the presidency, they also lost seats in the Senate and House of Representatives. Republicans pursued a policy agenda that defied voter preferences (e.g., voters overwhelmingly want rich people to pay higher taxes) and they paid a price. Now the “fiscal cliff” is looming on the horizon, which has the potential to crash the financial markets and decimate people’s 401(K) and IRA savings a second time in less than five years. If Republicans don’t change their strategy, they would lose big time in the 2014 Congressional elections. In 2014, Democrats will most likely control both the Senate and House, and President Barack Obama will be free to execute his agenda on taxes, deficit/debt, education, immigration, energy, health care, and entitlement programs in the final two years of his second-term. In a nutshell, Republican Party will become irrelevant. That means, Republicans are better off to negotiate the best deal they can get now. Obama won, so he deserves to have some leeway in executing his policies; that's what the voters said loudly in the election.

Republicans’ trickle-down economics favoring the rich is inconsistent with the evolving mix of the electorate in which non-whites, most of whom are low-income and middle-class families, are growing the fastest and have a big say in the final outcomes of democratic elections. Clearly, the Republicans need to be more inclusive, if they want to win elections; and that means, they need to modify their agenda and move away from the unproven assertions that what’s good for the rich is good for the country or that rich people are the job creators. The Republicans need to start becoming part of solutions rather than continue to boil the pot based on extreme ideologies that are not supported by the electorate. House Speaker John Boehner must work with Obama and Congressional Democrats to form a winning coalition of moderate Republicans and Democrats - that's the only viable way forward.

Effective January 1, 2013, all Bush tax cuts will expire, so will temporary payroll tax cuts that were advocated by Obama as a stimulus to the sagging economy, and there will be significant across-the-board spending cuts. These tax increases and spending cuts at a time when the economy is still trying to recover from the 2008 recession would decimate the economy and push it back into recession with unemployment rising to double-digits, again. This, so-called “fiscal cliff,” will crash the financial markets, wiping out the wealth created in the last few years. Also, if the country is pushed over the cliff, the debt rating of the U.S. government securities will be downgraded for the second time in a short period of two years, which will put the upward pressure on interest rates. Higher interest rates will increase the interest expense for the government, thereby widening the budget deficit even more. The costs of a “fiscal cliff” are too high to contemplate and both Republicans and Democrats owe it to the people to reach a compromise and avoid the catastrophe. Given that Republicans lost the election, they have the primary responsibility for reaching out to the Democrats and making the necessary compromises (especially on increasing revenues by making rich people pay higher taxes) well before the end of the year. The Democrats also bear the responsibility for reaching out to the Republicans in carving out compromises on reforming the entitlement programs.

The continuation of the present gridlock in Washington, DC would be very damaging to the people and to the national security. Obama and Congressional leaders need to resurrect Obama-Boehner’s grand plan of reducing the deficit by $4.5 trillion over ten years; they could use that as a starting point and make the necessary modifications to reflect today's political reality in the aftermath of the 2012 elections and get it passed by the Congress as soon as possible, preferably before the end of the year.

2012 election results show voters’ repudiation of Republican trickle-down economics

Posted by Shyam Moondra

President Barack Obama handily beat Republican opponent Gov. Mitt Romney and won a second four-year term as the 44th President of the United States. The long grueling campaign, which often involved nasty personal attacks from both sides, ended up with a divided government, again, but with a clear message from the electorate that they expect the opposing politicians to compromise and make the government work for the people. In modern history, no incumbent president has won a second-term with unemployment rate as high as the current 7.9%. Obama’s victory means that the voters have rejected Republicans’ trickle-down economics favoring the rich.

The following observations about the election results are worth noting:

• Obama methodically assembled the winning coalition consisting of white middle-class, women, blacks, Hispanics, young voters, and veterans. Obama used the power of incumbency in pushing through targeted policy agenda. For example, he issued a unilateral executive order suspending deportation procedures against undocumented young Hispanics. Obama’s unequivocal support for equal pay and abortion rights for women, tax cuts for the middle-class, student loan reforms, and various programs for veterans returning from combat duty in Afghanistan and Iraq was designed to put together the winning coalition.

• Romney suffered from his constant flip-flopping on a variety of issues (which made it difficult for the people to trust him), lack of a detailed plan on how he would create millions of new jobs, his perceived pro-rich positions (his comment that 47% of the low-income people were “victims” and “dependent” proved that he didn’t care much about the poor people), his changing views on immigration (which turned off many Hispanics), his hedging on saying affirmatively that he supported equal pay for equal work (which turned off many female voters), and his lack of well thought out positions on international issues (his such comments as “Russia is number one enemy,” “on day one, will declare China as currency manipulator,” and “Palestinians don’t want peace,” showed he was not ready for the top job). Romney’s comments on getting involved militarily in Syria and attacking Iran scared off many voters who are tired of fighting perpetual wars in Iraq and Afghanistan and have no appetite for starting new wars at a time when we are burdened with a huge pile of debt.

• Young voters, accounting for 18% of the electorate, seem to have actively participated in this election cycle as is evident from the large crowds of young voters that gathered at Times Square, New York and Lafayette Square across from the White House, as well as at the victory rally in Chicago to cheer Obama’s victory. The participation of young people, many of whom voted for the first time in their lives, in the democratic process is a positive development for the future.

• Hispanic voters, accounting for 15% of the electorate, played a decisive role in Obama’s victory in several battleground states. They soundly rejected Republicans’ conservative immigration policies. Given that Hispanics represent the fastest growing minority in the United States, Republicans must now re-calibrate their immigration policies to win the support of this powerful block of voters in the future.

• Obama won in Massachusetts/Michigan (home states of Romney), Ohio (home state of House Speaker John Boehner), Virginia (home state of House Majority Leader Eric Cantor), and Wisconsin (home state of Paul Ryan). The voters in these states seem to be sending an unmistakable message to Republican leaders that their refusal to compromise on the issues of deficit/debt and taxes is not appreciated.

• Many Tea Party candidates were defeated, demonstrating voters’ disapproval of their extreme tactics. The absence of Tea Party inspired extremism in the Congress would now make political compromises on deficit/debt and tax issues more likely.

• The Republican senatorial candidates, Todd Akin (Missouri) and Richard Mourdock (Indiana), who used offensive remarks such as "legitimate rape" and “rape is Gold’s will" to justify their anti-abortion position even in case of rape, were rejected by their respective constituents in conservative states.

• Republicans lost seats in Senate and House, which reflects the unhappiness of the voters over how Republicans behaved during the debt ceiling debate that resulted in rating agencies’ downgrading of  government securities from AAA to AA+, the first ever in the history of the U.S.

The larger message in the election results is that the people still favor a divided government (White House and Senate controlled by Democrats and House controlled by Republicans) but at the same time they want the Republicans and Democrats to work together and find common ground on the issues of budget deficit/debt, tax reforms, immigration, health care, energy, and education. Since Democrats had a net gain in the Congressional seats, it shows that voters blame Republicans for the gridlock in Washington, DC and they want Republicans to be more forthcoming in making compromises and solving problems. Clearly, Republicans find themselves in a weaker position. If they continue to take the “Do nothing” approach in the next Congress, they will be punished severely in the next mid-term Congressional elections to be held in November of 2014.