Checking under the hood

April 19, 2008

McCain should use the Democrats’ infighting to sort out his economic policy

A strong case can be made for arguing that the infighting among the Democrats is not as bad as the conventional wisdom believes it to be, especially if it tests whether Barack Obama can win the support of blue-collar voters in states like Pennsylvania. However, one area in which it is good for McCain is that is gives him a chance to overhaul his message on economic policy. McCain has three main problems; the perception that he knows nothing about economics, the general drift to the left in American opinion and the dominance of the Republican party by a coalition of special interest groups and libertarians. Although McCain’s supposed ignorance of economics is mostly illusionary since he has strong views on most aspects of economic policy, even if at times they have been contradictory. However, although his comments that, ‘the issue of economics is not something I’ve understood as well as I should’, may have been necessary to avoid alienating Republican voters in the primaries, they do leave him open to attack.

McCain has received a lot of contradictory advice. One perspective is that McCain needs to emphasise his conservative credentials to keep the base on board, especially after his ‘heresies’ in the past. The Republican consultant Mary Matalin famously suggested that McCain promise to appoint, if elected, the failed Senator George Allen as secretary of the Treasury and promise to take personal tuition from Newt Gingrich in economic policy. On the other hand the maverick political consultant Dick Morris suggested that McCain should adopt a more populist strategy stating, ‘what should be his message? Populism…Strong, vigorous, populist advocacy can bring the spotlight back to McCain’. Even Irwin Seltzer of the Hudson Institute has suggested that, ‘he will have to give vent to his populist, reforming instincts, and to the basic decency that prompted him to ignore the so-called Republican base, oppose the Bush tax cuts as excessively favourable to the already-comfortable, and support regularizing the status of immigrants’.

So what should McCain do? On the one hand, even I would suggest that it would be bad strategy, and bad politics, to pointlessly choose left wing policies just for the sake of it. After all he shouldn’t follow Clinton and Obama down the route of protectionism or support handouts for everyone who has lost out when they tried to play Donald Trump with borrowed money. He also needs to avoid engaging in the pseudo-populism that Mike Huckabee engaged in, which was typified by his horribly regressive tax plan and juvenile approach to economics in general. There is also something to be said for not making the housing crisis worse by Elliott Spitzer style witch hunts. However, McCain needs to recognise that inequality in America has increased while the social mobility that used to characterise America seems to disappearing. At the same McCain also has to convince Americans he can inject a sense of optimism into the body politic.

Although it would sadly be unrealistic to expect an immediate move to the centre, McCain should, at the very least, thinking about is moving his economic policy from the right to the centre-right, or as close to the centre ground as possible. No matter how convincing and principled a reformer he is, he needs to convince the voters that the philosophy that made the Republican party look like, what the National Review Online called, ‘no government anarchists’ is now dead. He also needs to send a signal that he will not be controlled or ‘managed’ by the economic conservatives who have dominated Bush’s two terms. Just as McCain’s campaign gained a lot of credibility when he had the guts to go after Huckabee over the disaster that was the National Sales Tax, McCain needs to convince the voters that extreme ideas, such as the flat tax, are dead. Although this might too radical for some in the Republican party, I believe that he should seriously consider selecting Joe Lieberman as his running mate. At the very least he should not consider Mitt Romney or even a generic Republican such as Pawlentry.

The next thing McCain needs to do is emphasise his reformist credentials. Although this may sound Clintonian, McCain needs to triangulate the debate over the size of the state by emphasising better (as opposed to bigger or smaller) government. For instance, McCain should promise an overhaul of regulation and put an end to the revolving door between regulators and the firms they oversee. It should be noted that a reformist programme doesn’t necessarily imply a programme that only emphasises government intervention. After all, earmarks, ethanol subsidies and bailouts of homeowners and banks damage the competitiveness of the economy in the same way that lax regulation does. McCain also needs to fully support those few progressive measures, such as immigration reform and standards setting in education, that George Bush made a half-hearted stab at with his No Child Left Behind programme.

The final, and most important thing, is for McCain to make sure his economic message remains upbeat by emphasising a more positive future. Although people are despondent, and some may indeed be bitter about the economy, they are willing to be led by someone who has a more positive outlook. As McCain’s former policy advisor Marshall Wittman once wrote, ‘In almost every election, the American people elect the most optimistic candidate. Even in the depths of the depression, they voted for the sunny FDR. As conditions worsen at home and abroad, there will be a tendency on the left and even the right to offer a bleak, narrow view of America’s future. Progressives should reject such a vision’. Of course this vision should not obscure the reality of some people’s lives, but McCain can remind people that there are solutions to many of America’s problems. McCain should therefore emphasise a future America which has its energy problems solved by Nuclear power, educational achievement raised by higher standards and discipline and where people can ascend the ladder of opportunity. In this McCain will be helped by the fact that the hysteria about the housing crisis has lowered the bar regarding future expectations.


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