How the Democrats could win again, if they wanted
What makes 2016 a disaster for Democrats is not merely the party’s epic wipeout in Washington and the state capitals, but that the contest was fought out on a terrain that should have been favorable to them. This was an election about social class –about class-based grievances – and yet the Party of the People blew it. How that happened is the question of the year, just as it has been the question of other disastrous election years before. And just like before, I suspect the Democrats will find all manner of convenient reasons to take no corrective action.
But first let us focus on the good news. Donald Trump has smashed the consensus factions of both parties. Along the way, he has destroyed the core doctrine of Clintonism: that all elections are decided by money and that therefore Democrats must match Republican fundraising dollar for dollar. This is the doctrine on which progressive hopes have been sacrificed for decades, and now it is dead. Clinton outspent Trump two-to-one and it still wasn’t enough.
Neither were any of the other patented maneuvers of Clintonism. With Hillary carrying their banner, the Democrats triangulated themselves in every way imaginable. They partied with the Wall Street guys during the convention in Philadelphia, they got cozy with the national security set, they reached out to disaffected Republicans, they reminisced about the days of the balanced federal budget, they even encouraged Democratic delegates to take Ubers back and forth from the convention to show how strongly Democrats approved of what Silicon Valley was doing to America. And still they lost.
This is important because winning is supposed to be the raison d’etre of centrism. Over the years, the centrists have betrayed the Democratic party’s liberal base in all sorts of ways – deregulating banks, securing free trade deals, signing off on Wall Street bailouts and the Iraq war. Those who bridled at all this were instructed to sit down and shut up because the Clintons and their triangulating ilk were the practical ones who would bring us victory.
Except that they don’t. This year the Republicans chose an honest-to-god scary candidate, a man who really ought to have been kept out of the White House, and the party’s centrists choked. Instead of winning, the pragmatists delivered Democrats to the worst situation they’ve been in for many decades, with control of no branch of the federal government and only a handful of state legislatures. Over the years, and at the behest of this faction, Democrats gave up what they stood for piece by piece and what they have to show for it now is nothing.
Another shibboleth that went down with the Hillary Titanic is the myth of the moderate swing voter, the sensible suburbanite who stands somewhere between the two parties and whose views determine all elections. These swing voters are usually supposed to be liberal on social issues and conservative on economic ones, and their existence gives a kind of pseudoscientific imprimatur to Democratic centrism.
For years people have pointed out that this tidy geometry doesn’t really make sense, and today it is undeniable: the real swing voters are the working people who over the years have switched their loyalty from the Democrats to Trump’s Republicans. Their views are pretty much the reverse of the standard model. On certain matters they are open to conservative blandishments; on economic issues, however, they are pretty far to the left. They don’t admire free trade or balanced budgets or entitlement reform – the signature issues of centrism – they hate those things. And if Democrats want to reach them, they will have to turn away from the so-called center and back to the economic left.
There are some indications that Democrats have finally understood this. Elizabeth Warren’s star is on the rise. Bernie Sanders is touring the country and reminding people that class politics are back whether we like it or not. Keith Ellison is running for chairman of the Democratic National Committee.
But the media and political establishments, I suspect, will have none of it. They may hate Donald Trump, but they hate economic populism much more. If history is a guide, they will embrace any sophistry to ensure that the Democrats do not take the steps required to broaden their appeal to working-class voters. They will remind everyone that Clinton didn’t really lose. Alternately, they will blame Sanders for her loss. They will decide that working-class people cannot be reasoned with and so it is pointless to try. They will declare – are already declaring – that any Democratic effort to win over working-class voters is a capitulation to racism. Better to lose future elections than to compete for the votes of those who spurned their beloved Clinton.
I suspect this will happen because this has been happening for decades; because Democrats always find a reason to put off doing what they need to do to win back the white working class. The example that springs immediately to mind is the election of 2004, when the Bush-Rove team used a variety of ingenious culture-war offensives to beat a different centrist Democrat. For several months after that debacle, Democrats contorted themselves in self-examination. They wondered about what had happened with the white working class, how they had managed to lose so many of those voters, and so on. It was especially memorable for me because my book about blue-collar conservatism in Kansas was often part of the conversation.
But before very long, the self-examination ceased. Democrats were reassured by their friends in political science that they really had no problem with the working class and that they needn’t be concerned. With a few statistical sleights of hand and enormous heaps of professional contempt for the laity, academics helped to shut down that debate.
And here we are again. Today Democrats are wondering what went wrong, but before too many fundraising dinners have been digested they will have concluded they don’t need to worry, that demographics will bail them out sooner or later, and that the right and noble course of action is to proceed as before.
This will happen because what leading liberals cannot understand – what they are psychologically blocked from understanding – is that the problem isn’t really the white working class. The problem is them.
Let me explain what I mean by reminding you what this form of liberalism looks like. Somewhere in a sunny corner of the country, either right now or very shortly, a group of tech tycoons or well-meaning private equity investors will meet to discuss what went wrong in this election cycle. They will consider many things: the sexism and racism of Trump voters, the fundamental foreignness of the flyover, the problems one encounters when dealing with evangelicals. They will celebrate some activist they learned about from NPR, they will enjoy some certified artisanal cuisine, they will hand out prizes to the same people that got prizes at the last event they attended, and they will go back to their comfortable rooms at the resort and sleep ever so soundly.
These people think they know what liberalism includes and what it doesn’t include. And in the latter category fall the concerns that made up the heart and soul of liberal politics a few decades ago: labor and work and exploitation and economic equality.
To dedicate your life to concerns like these today is to sign up for obscurity and frustration. It’s to enter a world without foundation grants, without appearances on MSNBC, and without much job security. Nothing about this sphere of liberal activism is fashionable or attractive. Books on its subjects go unreviewed and unread. Strikes drag on for weeks before they are noticed by the national media. Labor organizers are some of the hardest-working but least-thanked people I know. Labor reporters are just about extinct. Promises to labor unions are voided almost as soon as they leave a politician’s lips.
If rich liberals had listened to such people, Donald Trump might not have been able to lure away so many millions of working-class voters. Maybe they will change their ways now? Perhaps the well-meaning folks at those Florida resorts will finally close ranks with working people and their representatives?
Put the question slightly differently: will the Washington Post or the New York Times take the sad fate of Democratic centrism as a signal to bring a whole new vision to their op-ed pages? Will NPR finally say to its cast of well-graduated tastemakers: you missed it just one time too many? Will the thinktanks and pressure groups of Washington finally be told by their donors: we’re shifting your grant money to people who care about deindustrialization?
I doubt it. Liberalism today is an expression of an enlightened professional class, and their core economic interests simply do not align with those of working people. One thing we know about professionalism is that it exists to shield insiders from public accountability. If coming up with a solution to what ails liberalism means listening to people who aren’t part of the existing nonprofit/journalistic in-group, then there will be no solution. Liberals would rather lose than do that.
If the unreconstructed Democratic party is to be saved, I suspect, what will save it is what always saves it: the colossal incompetence of the Republicans. This, too, we can already see coming down the rails. Donald Trump is getting the wrecking crew back together, and before too long, I suspect, he will have the country pining for Hillary Clinton.
How the Democrats could win again, if they wanted
Trump to Announce Carrier Plant Will Keep Jobs in U.S.
From the earliest days of his campaign, Donald J. Trump made keeping manufacturing jobs in the United States his signature economic issue, and the decision by Carrier, the big air-conditioner company, to move over 2,000 of them from Indiana to Mexico was a tailor-made talking point for him on the stump.
On Thursday, Mr. Trump and Mike Pence, Indiana’s governor and the vice president-elect, plan to appear at Carrier’s Indianapolis factory to announce a deal with the company to keep roughly 1,000 jobs in the state, according to officials with the transition team as well as Carrier.
Mr. Trump will be hard-pressed to alter the economic forces that have hammered the Rust Belt for decades, but forcing Carrier and its parent company, United Technologies, to reverse course is a powerful tactical strike that will hearten his followers even before he takes office.
“I’m ready for him to come,” said Robin Maynard, a 24-year veteran of Carrier who builds high-efficiency furnaces and earns almost $24 an hour. “Now I can put my daughter through college without having to look for another job.”
It also signals that Mr. Trump is a different kind of Republican, willing to take on big business, at least in individual cases.
And just as only a confirmed anti-Communist like Richard Nixon could go to China, so only a businessman like Mr. Trump could take on corporate America without being called a Bernie Sanders-style socialist. If Barack Obama had tried the same maneuver, he’d probably have drawn criticism for intervening in the free market.
In exchange for keeping the factory running in Indianapolis, Mr. Trump and Mr. Pence are expected to reiterate their campaign pledges to be friendlier to businesses by easing regulations and overhauling the corporate tax code, according to a spokeswoman for Mr. Trump.
The state of Indiana also plans to give economic incentives to Carrier as part of the deal to stay, according to local officials.
The message from Mr. Trump that captivated the Carrier workers — keeping manufacturing jobs in the United States after decades of losses to overseas factories and automation — resonated throughout the Rust Belt. That promise, plus his opposition to pacts like the North American Free Trade Agreement, were key reasons he was able to edge out Hillary Clinton in states like Pennsylvania, Michigan and Wisconsin.
Political symbolism aside, saving 1,000 Carrier jobs doesn’t loom so large in an economy that’s created an average of 181,000 jobs a month this year, noted Jared Bernstein, a liberal economist who served as adviser in the Obama administration from 2009 to 2011.
Still, he confessed a grudging admiration for Mr. Trump’s political jujitsu. “If I weren’t so scared of the damage a Trump administration might do, I’d find it refreshing to see an administration fighting for factory jobs like this,” he said. “That said, no one should confuse what Trump is doing here with sustainable economic policy.”
Over the long term, and for less prominent firms, the temptation to move to cheaper locales for manufacturing will stay great, said Robert Reich, a prominent liberal Democrat who served as secretary of labor in the Clinton administration.
“Memories are short but the economic fundamentals remain the same,” he said. “Wall Street is breathing down companies’ necks to cut costs, and the labor savings in Mexico is too great.”
Mr. Trump first announced he was talking to Carrier on Thanksgiving Day via Twitter, which the company quickly confirmed. The discussions have continued this week, and with a tentative deal in hand on Tuesday, transition officials scheduled Mr. Trump’s and Mr. Pence’s visit to Indianapolis.
“I didn’t think it would be this quick,” Mr. Maynard said.
While the standoff loomed large in the lives of its employees in Indiana, for United Technologies the forgone savings is tiny — equivalent to about 2 cents per share in earnings.
“Every penny counts, but if we step back and I’m looking at earnings of $6.60 per share this year, 2 cents is an easy concession if the president-elect listens to some of the company’s bigger concerns,” said Howard Rubel, a senior equity analyst with Jefferies, an investment banking firm in New York.
When Carrier announced in February that the two Indiana factories would be closing, it did offer benefits to employees facing layoffs, including paying for them to go back to school and retrain for other careers. Even with that, however, once the layoffs were to begin in mid-2017, most of the workers would have had a hard time finding jobs that paid anywhere near the $20 to $25 an hour that veteran line workers earn.
Carrier is best known for its air-conditioners, but it also sells a variety of other heating and cooling equipment for homes and businesses, like the gas furnaces and fan coils for electric furnaces made at the Indianapolis factory. The jobs in Indiana Mr. Trump has referred to are in two separate sites — the Carrier plant in Indianapolis, with 1,400 employees, and a United Technologies factory in Huntington, Ind., with 700.
While Carrier will forfeit some $65 million a year in savings the move was supposed to generate, that’s a small price to pay to avoid the public relations damage from moving the jobs as well as a possible threat to United Technologies’ far-larger military contracting business.
Roughly 10 percent of United Technologies’ $56 billion in revenue comes from the federal government; the Pentagon is its single largest customer. With $4 billion in profit last year, the company has the flexibility to find the savings elsewhere.
Members of Congress have been pressing to punish big military contractors if they move jobs outside the United States.
Many industrial companies face intense pressure from Wall Street to increase profits, even when the economy grows slowly — a major reason United Technologies decided to move.
That won’t change after Mr. Trump takes office — especially when hourly pay in the Indianapolis plant is equivalent to what workers in Mexico make in a day.
“This is a spot solution,” said Mohan Tatikonda, a professor at the Kelley School of Business at Indiana University. “If it goes through it helps some Carrier employees for a period of time, but it doesn’t address the loss of manufacturing jobs to technological change, which will continue.”
Trump to Announce Carrier Plant Will Keep Jobs in U.S.
Trump’s Showdown With Manufacturer Exposes Obama’s Weakness on Outsourcing
Donald Trump is in negotiations with Carrier to keep two Indiana air conditioning and furnace plants from moving to Mexico, eliminating 2,100 U.S. jobs. A video of executives informing workers of the plant closures went viral in February, leading Trump to vow to stop the outsourcing. Now president-elect, he is exerting his new leverage to make that a reality.
But someone else already holds that power. His name is Barack Obama. He just doesn’t seem to care.
The most Obama has said about Carrier, at a June town hall in Indiana, is that some jobs “are just not going to come back.” He cited automation in manufacturing, enabling many fewer workers to staff a production line than in previous decades, though that’s a separate issue from Carrier’s outsourcing.
Later in the discussion, Obama challenged Trump’s promises to keep Carrier’s plant open. “He’s going to bring these jobs back. Well, how are you exactly going to do that, what are you going to do? There’s no answer to it.”
In fact, every tool Trump could possibly use to persuade Carrier to keep operations in Indiana has been available to Obama since the day of the company’s announcement. He has just chosen not to use them.
For example, Carrier is a subsidiary of United Technologies, an aerospace and defense firm and one of the 10 biggest federal contractors as of 2014. The company had $56 billion in revenues last year, and over 10 percent came from the U.S. military.
Obama could have used those lucrative contracts as a condition of maintaining the Carrier plant, just as Trump is now being urged to do by Sen. Bernie Sanders. “I call on Mr. Trump to make it clear to the CEO of United Technologies that if his firm wants to receive another defense contract from the taxpayers of this country, it must not move these plants to Mexico,” Sanders said in a statement last week.
It’s precisely the kind of hardball Obama has consistently played with federal contractors in other contexts. He has signed executive orders to raise the minimum wage for federal contract workers to $10.10 an hour, ensure paid sick leave, and promote from within the company. He also signed an order to make companies ineligible for federal contracts if they violated employment and labor law over the past three years. He has no compunction against using the government’s leverage as a large purchaser of goods and services to get better outcomes for workers. But this power has been set aside with respect to Carrier — and outsourcing in general.
During the campaign, Trump vowed that he would slap a 35 percent tariff on any goods coming in from that Carrier plant in Mexico. Critics described this as the stirrings of a counterproductive trade war. But reducing the benefits of outsourcing is substantially similar to what President Obama tried to do to prevent corporate inversions, where companies merge with an overseas firm and shift their nominal headquarters to that country (though none of their workers) to avoid the higher U.S. tax rate.
Obama’s Treasury Department issued regulations to make inversions a less lucrative tax avoidance scheme. The main element seeks to prevent earnings-stripping, the shifting of income into low-tax countries through loans from the corporate parent. Other provisions nullified the tax benefits of inversions by cracking down on “serial inverters” and making the mergers unprofitable.
These rules stopped a merger between drugmaker Pfizer and Irish firm Allergan earlier this year, showing that the chief executive can intervene in corporate maneuvering. But Obama has shown more willingness to do so to protect U.S. tax revenues than U.S. jobs.
Labor unions have criticized Obama virtually his entire presidency for lax attention to outsourcing, citing actions he could have taken without congressional input. These include declaring China a currency manipulator to reduce the attractiveness of Chinese goods and ending trade deals that hurt American workers rather than promoting them. Critics point out that the head of Obama’s Jobs and Competitiveness Council was GE CEO Jeffrey Immelt, whose company has a legacy of outsourcing stretching back decades.
Some observers argue that a president of 320 million shouldn’t involve himself in individual situations involving just a couple thousand jobs. But the bully pulpit can have effects on other companies as well. And local politicians routinely work with companies in their backyards to encourage them to stay put, typically by offering them tax incentives. Trump appears to be doing something similar with Carrier, discussing a massive tax cut that would allow major corporations to bring back money held overseas at a low rate. Carrier’s has $6 billion stashed abroad.
Such a massive tax amnesty as a carrot for keeping a handful of jobs in America is obviously disproportionate.
But Obama has talked about using the tax code to entice companies to invest in American jobs repeatedly; it’s not unique to Trump. Obama promised to remove tax deductions for outsourcing and provide incentives for bringing manufacturing back home — a core Democratic promise since the 2004 John Kerry presidential campaign. It never got done.
Obama has also proposed to double tax incentives for advanced manufacturing, offer $5 billion in clean energy manufacturing tax credits, extend the 100 percent expensing on investment in plants and equipment, and creating a Manufacturing Communities Tax Credit specifically for places like Indianapolis that experience job loss from outsourcing. Some of these tax credits were part of the 2009 stimulus.
Sanders, who routinely criticizes the excess profits and corporate welfare earned by companies that ship jobs overseas, recently vowed to introduce the Outsourcing Prevention Act, which would prevent companies that outsource from receiving federal contracts, tax breaks, grants, or loans, and would claw back a decade’s worth of those federal benefits from any company that outsources more than 50 jobs in a given year. Sanders would also tax companies that move jobs offshore, and tax the bonuses, stock options, and golden parachutes of executives of outsourcing companies.
At that Indiana town hall, Obama did not show this kind of fight. “You cannot look backwards,” he said then. “And that doesn’t make folks feel good sometimes, especially if it was a town that’s reliant on a couple of big manufacturers. But they’re going to have to retrain for the jobs of the future, not the jobs of the past.”
Workers at the Carrier plant, while skeptical of Trump in other contexts, supported his presidential campaign because he signaled that he would at least fight for their livelihoods. Even if they don’t fully believe Trump can get it done, they at least found him willing to try.
Democrats lack an answer for these working-class manufacturing communities. Telling them to be realists certainly isn’t working.
Trump’s Showdown With Manufacturer Exposes Obama’s Weakness on Outsourcing