US Politics Analysis: Obama and the Democrats Launch Their Populist Campaign

Once again, the United States faces the possibility of a government shutdown. With the rejection on Wednesday of a continuing resolution to fund operations from 30 September,  the start of the next fiscal year, until November 18, the House of Representatives signalled that partisan differences over budgetary issues will not be suspended, even as the "Super Committee" debates ways to cut the nation's deficits=.

In this case, the measure failed to pass because of issues relating to the amount of, and ways to pay for, disaster funding. But it also could have been rejected by Republicans, for exceeding the level of spending set out earlier in the year by the budget proposal of GOP Representative Paul Ryan, and/or by Democrats arguing it cut spending too much.

The two parties are now so divided on fiscal policy that nothing substantive looks likely to be achieved in this Congress. Some type of compromise deal on a continuing resolution will be reached soon, if only by members of Congress keen to rescue some of the recess time scheduled for next week  --- which begs the question of who slated a congressional break in the week leading to the end of the fiscal year --- but the acrimony generated in recent days merely adds to what is becoming a increasingly dysfunctional Washington.

It is no surprise to see that in this political climate Democrats have washed their hands of trying to reach any kind of long-term agreement with this current crop of Republicans, and have turned their attention instead to preparing for the 2012 elections. For the next 14 months, we will see one consistent populist campaign message coming from Democrats: “Don't blame us, blame them.”

Launching that campaign, Democrat politicians have employed the "fear-mongering" tactics which they have attributed to conservatives with using for decades. On Monday night, shortly after President Obama officially announced his plan to cut a further $3 trillion from the deficit over the next ten years, the Democratic Senatorial Campaign Committee sent out an “urgent” fundraising e-mail from Senate Majority Leader Harry Reid with the arresting subject line "Callous":

We are locked in a struggle for America’s soul. Our very values are at risk.

Rick Perry calls Social Security a “monstrous lie.” Paul Ryan dreams of ending Medicare forever. And the Republican response to the thought of an uninsured coma patient? Grisly, callous shouting from the audience.

They want to reverse the steps our country took to care for the sick and prevent our parents and grandparents from living in squalor.

Sen. Reid refers here to the exchange that took place between CNN's Wolf Blitzer and Rep. Ron Paul at a CNN Tea Party Presidential debate on 13 September, where Paul attempted to explain what he would do in a hypothetical situation when an uninsured patient was in a coma. The response was punctuated by two cries of “Yeah” from the audience when Blitzer asked if “society should just let him die". Hardly the proudest moment of the Tea Party's short history, but it led Paul Krugman at the New York Times to argue, in his piece "Free to Die", “So would people on the right be willing to let those who are uninsured through no fault of their own die from lack of care? The answer, based on recent history, is a resounding “Yeah!”

The day after Sen. Reid's e-mail, Rep. Stony Heyer, the Democratic Whip, told reporters at the Capitol that Republicans wanted to see the country fail if it meant they could defeat President Obama in 2012. There is nothing too startling in that statement itself, but the same night the DSCC sent another e-mail:

"This is not class warfare, it’s math," President Obama said yesterday. 
 
Exactly. Fair is fair. But Republicans don’t care about fair. They only care about winning. 
 
If our economy is destroyed, so be it. If the middle class withers, tough. If seniors are worried about their Social Security and Medicare, too bad. As long as Republicans control the White House and Congress, they couldn’t care less.

It is the consistency of this messages that bears watching. Democrats have staked out their ground for 2012, and it comprises the repeated refrain that Republicans are set on "destroying" America in the pursuit of a misguided – and self-interested – ideology. And, most importantly, it suggests Democrats are resigned to failing to achieve any long-term solutions to the country's debt problems.

Unfortunately, if the IMF's latest report on the global economy is to be believed, the US does not have the luxury of a 'do-nothing' Congress for the next fourteen months.

Written by Olivier Blanchard, an MIT economist on leave to serve as Director of the IMF's Research Department, "Strong Policy Action - The Essence of Restoring Global Economic  Hope" explains why the IMF was too optimistic about growth in the global economy for the past year. After noting the developments that have led to a global slowdown in growth – basically a lack of demand – Blanchard argues, in the section "Financial Worries":

By themselves, these developments would have led us to reduce our forecasts. But these problems have been compounded by a second major development, a sharp increase in financial volatility since the middle of the summer.

Markets have become more skeptical about the ability of governments to stabilize their public debt.

And in the section predicting "Growth Slows", Blanchard warns: "As usual—but it bears repeating here—the forecast assumes that policy commitments are met. Otherwise things could be worse. Low growth, fiscal, and financial weaknesses can easily feedback on each other.”

All of which leads Blanchard to conclude: "Only if governments move decisively on fiscal policy, financial repairs, and external rebalancing (removing the imbalances in foreign trade deficits, e.g. between China and the US), can we hope for stronger and more robust recovery.”

It is hard to blame President Obama for his recent turn to a populist message of "make the wealthy pay their fair share", or to criticise the general Democratic warning it is time to fear this new Republican party. The GOP have made it quite clear that they will not compromise on their core policy of not raising taxes, without which President Obama, as a politician with a constituency committed to their own particular core values, has little room to formulate the "strong policy action" that the IMF is pleading must happen to avoid another recession. But, like the recent (and next?) downgrade of America's credit rating, politicians cannot claim they were not warned of the consequences of their inaction.

What is especially intriguing about this shift in Democratic tone toward a more aggressive denunciation of their Republican opponents is that it may be the result of an article by an ex-Republican staffer from early September. In  "Goodbye to All That; Reflections of a GOP Operative Who Left the Cult", Mike Lofgren explains why he  had retired after 28 yearsworking for Republicans in Congress. While he is particularly incensed at the current Republicans, whom he compares to political terrorists (and an “apocalyptic cult...full of lunatics”), holding the country to hostage to further their chief design of protecting the wealth of the few, he is also “contemptuous of the feckless, craven incompetence of Democrats in their half-hearted attempts to stop them" and scathingly critical of their “rank capitulation to corporate interests".

Democrats appear to have taken (some of) Lofgren's sentiments to heart, and if they continue with their new rhetorical angle – remembering it is aimed at building a winning electoral mandate from Independent voters, who may well shun it – it makes the potential Senate race in Massachusetts the most intriguing non-presidential contest of 2012.

In that race, Elizabeth Warren, the 'darling' of the progressive left for her work in trying to establish an effective Consumer Financial Protection Bureau after the financial crisis (and here is her take on the debt crisis and 'class warfare') will face --- if she wins the Democratic primary --- incumbent Republican Scott Brown. It is this contest that will define the extent  to which Democrats across the nation pursue their populist call to defend middle-class America from the party of capitalist and corporate "greed". If they can't make it work in Massachusetts, then it has no chance in Ohio or any of the other swing states so crucial to winning the presidency.

There are still 14 months to go before that issue is decided. Right now, there is an even chance President Obama could become another Jimmy Carter-style loser, or another Bill Clinton-like resurgent winner, but there is little doubt he will be going before the electorate without the aid of any positive policy achievements in his final year, and, if the IMF is correct, with the country in another recession. No wonder he is taking the fight to Republicans.