How Could Kerry Lose? Jude Wanniski November 9, 2004

Memo To: Website Fans, Browsers, Clients
From: Jude Wanniski
Re: Gary North Tells Why

About twice a week, Gary North pounds out a few thousand words and sends them out to folks like me who like his quirky insights on what’s going on around us. He calls his essays the “Reality Check,” and I sometimes read them from start to finish. I was thinking about writing a memo on why I thought Senator Kerry lost, but Gary did such a good job in his essay today that I decided, what the heck, let him tell you. It’s mostly about what’s wrong with the Democrats, but as you will see, he is not very fond of the G.O.P. either. (I did pare a bit here and there where he digressed.)

 
THE WELL-GROUNDED PANIC OF THE MEDIA

Andy Rooney said it best on "60 Minutes" (Nov. 7):

"Television did a good job Tuesday night, I thought. I know a lot of you believe that most people in the news business are liberal. Let me tell you I know a lot of them, and they were almost evenly divided this time. Half of them liked Sen. Kerry; the other half hated President Bush."

He is old enough not to care what anyone thinks. He is too popular for CBS to fire him. So, he went public with the obvious.

Members of the American Establishment media are now panic-stricken because of "values voters," which to them means "far right evangelical Protestant" voters. They simply cannot believe that Catholics in Peoria, let alone Massachusetts, don't want the civil government to define homosexual unions as marriage.

The success of all eleven state propositions to define marriage as between a man and a woman was, in the eyes of the TV pundits, the mark of the evangelical beast. It does not seem to occur to them that most voters are married heterosexuals: Latinos, blacks, Catholics, and Protestants. It does not occur to them that these voters don't like it when a minority interest group of maybe 1% of the voters uses the courts to gain public acceptance against the beliefs of the vast majority of voters. The media's spokesmen are aghast.

The extent to which the media are outside the loop never ceases to amaze me. They are completely out of touch. It is not just that they are self-consciously out of touch. They are persuaded that most Americans share their core values. They are unable to understand the reasons behind the digital handwriting on the wall: "You have been weighed in the balance and found wanting." The free market keeps taking subscribers away from the newspapers and viewers away from the Big Three networks.

Why are they so blind? Because they are self-screened. Like the department of English at a local university, their tight little community is the product of decades of monopoly funding and ideological prejudice. Here is an example. Howard Phillips, who heads up the Constitution Party, used to be co-anchor of a political debate show with the "Crossfire" format. On one occasion, he launched into a critique of homosexuality. He was fired at the end of the show. The producer told him, "Take a look at who is on the other side of the cameras." The producer knew who buttered his bread.

Voters in the voting booths sent a message to people on both sides of the cameras. I call it Anita Bryant's revenge. Anita is no longer selling Florida orange juice for the stand she took, but people in voting booths don't face these sorts of career pressures. In effect, the voters were sticking it to the Supreme Court of Massachusetts. And, while they were at it, they stuck it to the junior Senator from Massachusetts. If the courts now reverse these votes, the media can get ready for a Constitutional Amendment.

The Presidential election was about the U.S. Supreme Court. It always is. That's because a 5-to-4 majority of the unelected Court is really the supreme legislature of the United States. The Left has used the Supreme Court to extend its political agenda ever since the 1950s. Voters know this. The Democrats are now facing a re-structuring of the Court, and the main political tool they possess is their ability to filibuster the Senate. This is risky. If they begin to be perceived by voters as being minority party obstructionists, they will face the Tom Daschle effect.

Kerry was a mush-mouth. He really is a flip-flopper. This is at the core of his being. "Newsweek" had assigned a reporter to each of the national campaign officers. The two could not say anything until after the election. The reporter assigned to Kerry's staff has now said that it was utter chaos. Kerry kept reversing himself. At one point, his staff took away his cell phone.

Kerry could not publicly oppose the legalization of homosexual marriage without alienating the media. The media are at the heart of the Democrats' power base. So, he had to avoid the issue. Bush did not face this constraint. The media hate him, so he can ignore them. This drives them into a fury.

The Federal Communications Commission can no longer guarantee a monopoly to the networks. New technologies are overcoming the value, both economic and political, of the networks' Federal licensure. Nielsen poll by Nielsen poll, the TV networks are losing market share. The power of the Democratic Party is dribbling away. The Democrats bet on the wrong communications pony, which is fading in the stretch.

BRING US TOGETHER!

Have you noticed how the main theme of the media is "bring us together"? This comes from the people who did their best to tear us apart. John Edwards' stump speech was about the two Americas: class warfare. He received no challenge from the networks.

"Bring us together" means "vote the Democrats' agenda." It means "don't take advantage of your majority." It means "lay off until we get the votes to stick it to you."

Well, just for the record, the two parties have been voting together since 1949 to stick it to the taxpayers. Both parties have invoked the idea of the State as the great healer, the lender of last resort, the safety net. The total tax burden is in the range of 40% of income -- local, state, and federal. The State's regulations are endless. The bureaucracies are permanent and growing. Roll back the system? Reagan talked the talk, but he vetoed few spending bills. Bush has vetoed none.

The Republicans want to cut taxes, but are unconcerned by the rising deficit. They spend with abandon. The Democrats cry crocodile tears about the huge deficit, but they want to expand spending by the federal government. They want to tax the rich. No national politician is calling for lower taxes to be matched by lower spending. No national politician is willing to tell the truth about Medicare.

"Bring us together" means "spend more money on the Democrats' special interest groups and raise taxes on Republican interest groups." This is unlikely to happen. Mr. Bush owes nothing to the media. The media understand this, and shudder.

CONFLICTING VALUES AND A GUN IN MY BELLY

The debate was about values: conflicting values. Bottom line: it was a really debate over the high moral ground of political wealth redistribution. Each party wants to stick a gun in my belly.

On the Sunday morning broadcast of "The Today Show," interviewer Campbell Brown -- who, unlike Katie Couric, is beautiful, self-controlled, and does not interrupt people -- asked two spokesmen about the values vote.

William "jackpot" Bennett discounted it. It doesn't mean "right wing evangelicals," he assured her.

Then she asked Jesse Jackson what the Democrats can do about losing the values vote. Jesse got right to the point: values are about feeding the poor. She tried again: What can the Democrats do to recover? Jesse droned on: help the helpless. She tried a third time. Same response. She gave up.

Jesse made it clear: Democratic values are about sticking a gun into a successful person's belly, taking his wallet, removing an unstated percentage of the money, and handing the wallet back. "See you at the next election."

I had heard another Democrat on TV make the same point immediately after the election. "We are for values: the value of helping the poor." In reality, this is the value of filling immense government bureaucracies with college-educated, mostly white, Civil-Service-protected, union-protected employees, who then extract money from taxpayers, absorbing at least half for administrative costs, and handing out most of the rest to middle-class voters. This procedure is whitewashed -- and I do mean WHITEwashed -- in the name of helping the poor. The middle classes feel good about their compassion, not to mention $270 billion a year to send their kids to college. Not many ghetto kids are in college.

The political problem that the Democrats face is that the official beneficiaries -- welfare State dependents -- tend not to vote. They also tend not to be able to read. The system's actual beneficiaries -- liberal college students -- also do not tend to vote. But they do enjoy free Bruce Springsteen concerts.

The vocal representatives of the Democrats, whose interests alienate married, income-earning, tax-burdened voters, are a liability. These spokesmen represent non-voters. The goal of politics is to represent voters.

The Democrats are now betting the farm on Hispanic voters. They will lose this bet. Hispanics are either illegal aliens who do not vote or else they are replacing African-Americans in the work force and home ownership. They are also pro-family, and so do not resonate to the social issues selected by the Democrats' spokesmen. They tend to move into the middle classes after two generations, and so will probably vote Republican in greater numbers. At some point, they are going to figure out that too large a percentage of their wages is being extracted to support a bunch of Anglo retirees. They will begin to ally themselves with younger Anglo workers who have figured out the same thing. When this happens, political defenders of the real welfare State -- the Social Security/Medicare boondoggle -- will come under attack in the voting booth. That will hurt the Democrats more than it will hurt the Republicans…

IT'S THE ECONOMY, STUPID

This phrase, attributed to Clinton's operative James Carville in 1992, is true most of the time. A war that goes sour can lose the Presidential election for the party of the Presidential incumbent, as it did for Harry Truman's party in 1952 and Gerald Ford in 1976. But, most of the time, American voters vote their pocketbooks. This means that a few voters at the margin switch to the party of the outsiders, on the assumption that a change will help the economy. The swings of the business cycle have more effect on politics than any other factor.

The voters assume that the President has a major effect on the economy. This is an illusion. The decisions of central bankers have far more effect on the economy than a President does. These days, the decisions of Japanese and Chinese central bankers have more effect on interest rates than Alan Greenspan does. But the complexity of cause and effect in the modern economy precludes this information from getting to the voters. In any case, what could they do about it? Central bankers are not up for election.

Kerry kept saying he would take steps to reduce the outsourcing of jobs. He never said what he would do, other than to reduce tax breaks for corporations hiring foreign workers. He never explained how the existing tax code promotes a significant movement of jobs off shore.

If a company wants to make a profit by reducing labor costs, and another company off shore can supply this labor cheaper than it can be supplied in America, the American company can simply buy the finished product of the foreign company and retail it here. It can buy the product abroad and put its own label on the box. This has nothing to do with the tax code. This is free trade in action. Other than imposing tariffs or import quotas, thereby reducing freedom of choice by consumers, what can any government do to reduce outsourcing? Nothing. But Kerry was not calling for tariffs or import quotas. Democrats at the highest levels are officially free trade advocates. They can safely ignore pro-tariff industrial trade unions, who are in the Democrats' hip pocket.

In any case, it is American consumers who are behind outsourcing, not American businesses. Consumers tell businesses, "Sell it to us cheaper." Businesses must respond or die. Consumers are saying, "I don't care where retailers buy it; just sell it to us cheaper." Consumers are therefore saying, "I'd rather buy from Wong than Jones." Businessmen follow orders.

No Presidential candidate is willing to say the following in public: "Don't blame big business. Blame yourself every time you buy an imported product just because it's cheaper, better, or more convenient. It's your decision. It's not the government's decision to tell you what to do." That's because politicians believe that it really is government's job to tell consumers what to do whenever there is significant political action committee (PAC) money available for telling consumers what to do. But pro-tariff special interest groups are growing weaker politically. This will continue as the international division of labor expands.

When the economy is expanding, as it was during Clinton's years, the incumbent President will be re-elected. When the economy is sputtering, as it was in 2000, the rival party's candidate can be elected. The economy today is slowly moving into expansion phase, so Bush was re-elected. The recovery is the slowest on record, but interest rates are low because of Asian central bank policies of buying U.S. Treasury debt, and also because most American businesses have hesitated to borrow in order to expand production.


ARE THE DEMOCRATS FINISHED?

The voters are clearly divided. They are closely divided. The two main issues are the economy and the war. Both have to do with rival values. Until voters feel pain from both of these sources, the Republicans will maintain their edge. But it is only an edge.

I don't think this pain can be deferred for another four years. The federal deficit is huge. The trade deficit is even more huge. Asian central banks will not fund both of these deficits forever, which they are now doing. Interest rates are today at historic lows. When Asian central banks cease funding the twin deficits, interest rates will rise.

It looked as though Republicans were forever condemned to minority status in the 1932-80 era. After Watergate, the Congress went even more Democrat. But Carter's defeat and the capture of the Senate by the Republicans in 1980 revealed the underlying economic shift. Americans were getting richer, and the rhetoric of the New Deal was losing support. This has continued. Jesse Jackson and Al Sharpton keep the faith, but they represent a constituency that does not vote. Meanwhile, Clinton gutted federal funding of urban welfare.

The Republicans will continue to win elections until the economy sags or the mess in Iraq escalates to the point where voters demand a pull-out. Then the Democrats will have another shot at the Presidency and maybe even the Senate. But the House looks safe until after the 2010 census, which will enable Democrats to gerrymander Republican districts at the state level if they win the 2010 elections.

THE MORE THINGS CHANGE. . . .

Income taxes will not be raised under Bush. Social Security and Medicare will extract ever-more money, but this has been the will of the people. Oldsters vote. They are also the winners in the "poor us" political sweepstakes. They, too, talk about values. But they have a stronger argument than Jesse and Al do. "We paid for our benefits." It's a self-serving myth, of course. The benefits received more than outweigh whatever funding today's retirees paid into the system. This has always been true, from the day that the first retiree, Ida Fuller, pulled $22,000 out of Social Security based on $22 in payments. But, when it comes to rhetoric, it's tough to argue against granny's political agents.

The Democrats defend values, which for them mean more welfare, more taxes, more money to their core constituencies. The Republicans also defend values, which for them mean more welfare, lower income taxes and corporate taxes, more federal debt, and more money to their core constituencies.

If the economy starts goring more oxen -- fatted calves, really -- the Democrats will win. If the elections in Iraq don't bring peace, and American troops are not allowed to come home, the Democrats will win.

The size of the existing federal debt now guarantees that there will be no major new welfare programs in the future. This will undermine the Democrats' vision of moral victory: no more fatted calves to sacrifice. Paying for the existing programs will absorb most tax revenues, plus even more debt. The great political debate will be over which party's subsidized constituencies will be led to the slaughter through concealed default. Inflation is the long-proven method for maximum concealment.

When a constituency is bipartisan, and when its members vote in large numbers, it will get the lion's share of the funding until such time as the taxpayers finally scrap the politics of wealth redistribution in the name of self-defense. This constituency today is obvious: people over age 64. Jesse and Al will have to live on the scraps that fall from the welfare State's table. (Personally, Jesse and Al will continue to do quite well. I mean their constituencies.)

I think we can safely conclude that over the next few years, the twin deficits will continue, Social Security/Medicare will continue, and the insurgency in Iraq will continue. What will not continue is low interest rates.

Asia is now the economic arena of American politics. Most voters are unaware of this fact. Asian central bankers and Iraqi insurgents have more say about which way American politics will go than the Democratic National Committee or the Republican National Committee.

Voters may think that one or another political party can reduce their pain, but they are misguided. Both political parties are committed to extending the taxpayers' pain, either directly (Democratic tax hikes) or indirectly (Republican deficits).

CONCLUSION

One thing is certain: Andy Rooney's peers are doomed to minority status. The Internet and cable TV are eroding their market share. This will not change.

The IQ scores of the networks' viewers are indirectly measured by the continuing popularity of "reality TV." This is World Wrestling Entertainment for the middle class. That's the available audience for Tom, Peter, and Dan. Every time I see a reality show promo spot featuring some scantily clad woman eating a handful of live maggots, I imagine a network anchorman doing the same thing. It helps make my day.

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