Cracks in the Facade: It's The Unfair Economy, Stupid (The Hidden Krugman)

Paul Krugman turns the growing conservative Democrat meme on its head by looking at the economic populism of many of last week's winning candidates that definitely do not square with the Republican economic agenda (True Blue Populists fully available to Times Select subscribers -- yepp, the firewall is back in place). He starts out with the downfall of George Allen:

[I]t wasn’t just macaca, or even the war, that brought him down. Mr. Allen, a reliable defender of the interests of the economic elite, found himself facing an opponent who made a point of talking about the problem of rising inequality. And the tobacco-chewing, football-throwing, tax-cutting, Social Security-privatizing senator was only one of many faux populists defeated by real populists last Tuesday.

Ever since movement conservatives took over, the Republican Party has pushed for policies that benefit a small minority of wealthy Americans at the expense of the great majority of voters. To hide this reality, conservatives have relied on wagging the dog and wedge issues, but they’ve also relied on a brilliant marketing campaign that portrays Democrats as elitists and Republicans as representatives of the average American.

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This year, however, the American people wised up.

True to form, some reporters still seem to be falling for the conservative spin. “If it walks, talks like a conservative, can it be a Dem?” asked the headline on a CNN.com story featuring a photo of Senator-elect Jon Tester of Montana. In other words, if a Democrat doesn’t fit the right-wing caricature of a liberal, he must be a conservative.

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Look at Mr. Tester’s actual policy positions: yes to an increase in the minimum wage; no to Social Security privatization; we need to “stand up to big drug companies” and have Medicare negotiate for lower prices; we should “stand up to big insurance companies and support a health care plan that makes health care affordable for all Montanans.”

So what, aside from his flattop haircut, makes Mr. Tester a conservative? O.K., he supports gun rights. But on economic issues he’s clearly left of center, not just compared with the current Senate, but compared with current Democratic senators. The same can be said of many other victorious Democrats, including Bob Casey in Pennsylvania, Sheldon Whitehouse in Rhode Island, and Sherrod Brown in Ohio. All of these candidates ran on unabashedly populist platforms, and won.

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The first big test of the new Democratic populism will come over reform of the 2003 prescription drug law. Democrats have pledged to repeal the clause in that law preventing Medicare from negotiating lower drug prices. But the fine print of how they do that is crucial: Medicare reform could be a mere symbolic gesture, or it could be a real reform that eliminates the huge implicit subsidies the program currently gives drug and insurance companies.

David Sirota, continuing to comment on his NYTimes review of Lou Dobbs' new book War on the Middle Class, notes:

Dobbs-style populism, along with opposition to the Iraq War, was the overwhelming theme of the 2006 elections. There is no denying it. In the last few days, there have been a barrage of right-wingers and DLCers trying to hide this very simple fact. They have said the election was about Democrats pretending to be Republicans, citing people like Virginia Senator-elect Jim Webb - even as Webb himself has appeared on Dobbs’ show to give voice to the very kind of economic populism many of us have been pushing for years.

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To be sure, I go after Dobbs for his refusal to comprehensively address immigration in a way that actually deals honestly with the problem. He prefers to use the issue as a crude cultural bludgeon, instead of connecting it to all the other economic issues he focuses on. Similarly, I chide him for repeating some of the most tired right-wing stereotypes about the media.

But all in all, there is no denying that if Democrats want to hold a governing majority for the foreseeable future, they cannot continue to deny the populist outrage seething all over the country and highlighted by Dobbs book. They cannot continue to listen only to the former Clintonites now on K Street. They cannot continue to listen only to executives on Wall Street. They cannot continue to openly brag about how close they are to corporate lobbyists. They must see election 2006 for what it was: a mandate for economic populism and a battle cry against the hostile takeover of our government and against the War on the Middle Class.

And it looks like bigger newspapers like the Financial Times are starting to get it:

Punching the air and holding up the dusty boots of his son who is serving in Iraq, Mr Webb told cheering supporters in Arlington that his election was as much a vote for economic fairness as it was for a change of course in Iraq.

Although Mr Webb supports the right to bear arms – a virtual necessity for anyone wanting to represent the Commonwealth of Virginia – the Vietnam veteran is pro-abortion and only lukewarm in his opposition to homosexual marriage.

One or two of his colleagues, including Bob Casey, the new senator for Pennsylvania, and Heath Shuler, a Democratic representative for North Carolina, are “pro-life” but the large majority of new Democrat lawmakers support the woman’s right to choose.

More significantly a majority of the intake, including Mr Webb, are economic populists who are deeply suspicious of free trade and quick to blame China and other developing countries for the loss of US jobs. Some, such as Sherrod Brown, the new Democratic senator for the key Midwest state of Ohio, which has lost 200,000 manufacturing jobs since Mr Bush came to power, won the election virtually on that issue alone.

“We will focus on economic fairness in a country divided too much by class in an age of the internationalisation of American corporations,” said Mr Webb in a victory rally speech that devoted more to the economy than all other themes combined. “At a time when profits are at a record high and wages are at a low, we will focus on bridging the class divide.”

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Many leading Democrats, including Mr Brown and Mr Webb, campaigned for “fair trade” and “putting Americans first”, which is code for including labour standards in bilateral trade agreements and being more critical of companies that “outsource” manufacturing jobs to China and service sector jobs to India. They are likely to be aggressive in pushing for tougher scrutiny of explicit and hidden tax breaks for large energy and pharmaceutical companies – known as “corporate welfare”.