You know what the trouble is with this country? We don’t make anything anymore. Now it’s just one guy with his hand in the other guy’s pocket.
The Wire
HBO

The Republicans are lucky that many Americans have very short memories. It was the policies and economic stewardship of the GOP that led the nation into the worst recession since the 1930s. The Democrats also inherited two costly wars. With significant deficit spending by the federal government and free money from the Fed as the substitute for private demand, the country is pulling itself slowly back from the economic cliff. The “carry trade” from zero interest rates is making loads of money for the banks and traders and inflating assets once again.

Democrats, obviously, cannot be seen as the defenders of the Wall Street status quo ante the meltdown. But the proposed reforms of the financial markets are tepid. The Treasury Department seems politically tone deaf. There is no political will in Congress for an internal Congressional “Pecora” investigation, which exposed Depression era stock manipulation and built the public support for meaningful reform. The “independent” Commission, headed by Phil Angelides, will hopefully overcome an effective GOP veto of subpoena power and uncover more of the black secrets of Wall Street. Allowing the “too big to fail” financial institutions to once again imperil the economy with leveraged gambling is not the road to sustainable economic growth. But this is what is going on today. As George Soros and Warren Buffet, who know something about financial markets, have argued, there should be a ban on “naked” credit default swaps.

The next financial shoe to drop will be the refinancing of some of the wilder commercial real estate loans made during the height of the bubble. This will batter more banks and there will be more bankruptcies. On Main Street, the economy remains stalled, in part by a lack of credit. The unemployment and underemployment nationwide is a profound waste of human talent. While factories sit idle and skilled workers are sidelined, the largest wind farm in the United States (in West Texas) just signed an exclusive contract to install wind turbines manufactured in China. It is great the Chinese are going green, but this is beyond shortsighted. Domestic manufacturing has to resume a significant role or broad based prosperity for more Americans will not occur. Unemployment is the number one issue in the country and it will remain so for the near future. The recent 9.3% productivity increase underscores that the employed public is working harder. Maybe business could start hiring again.

Further government spending to spur employment even at the cost of a rising deficit is needed. There is plenty of infrastructure work to be done. The Obama Administration has already had a number of successes, but the pall of rising unemployment and frozen wages will keep the country in a very unsettled state. The public is again growing more pessimistic as the “wrong track” number for the country is again growing.

The Republicans have no policy answers. But as the Obama Administration refrains from a clear narrative over the causes of this economic meltdown, the rightwing steps into the void. Pivoting from unabashed Big Business backers to defenders of Main Street conservatives, the right reinvents their particular form of “populism” marked by buzzwords (freedom!), xenophobia, and of course worship of the mythical “free market.”

Of course the Republicans, now railing against government spending, were mute during the Bush era. Then they listened to their esteemed leader, Dick Cheney, “Deficits don’t matter.” These temporary deficits are clearly necessary though politically unsettling. It is sobering that the Chinese now own 23% of our outstanding debt. Despite the “co-dependence,” depending on their benevolence and manipulated currency is certainly not in the nation’s long-term interest.

There are a number of “independents” deeply concerned about the deficits and the proper role in government. But their main concern is the economy and jobs. Political pundits routinely interchange the terms independents, moderates and centrists. Moderates can describe both political outlook and temperament. Centrists (people who are in the middle of the ideological divide on every issue) do not really exist. People have different views depending on the issue. In certain quarters of the D.C. establishment and the Washington Post editorial page, centrism means whatever John McCain and Joe Lieberman can agree upon. Independents do not register with a political party and again hold a wide variety of views and images. They “swing” between the parties but do not hold a uniform set of political principles.

In opinion polls a majority of the nation’s voters display generally progressive values. But they do not label themselves liberals. A majority of Americans (57%) also agree, “When something is run by the government, it is usually inefficient and wasteful.” Thus, a skeptical public needs to be convinced of the renewed competence of government. This is not an overnight task particularly in light of the massive failings of the Bush era. Activist government requires very good communication to the public. This is the President’s hallmark.

Polling from the Democracy Corps indicates that conservative opposition to Obama is more ideological (Obama is a Socialist) than it was for Clinton (who the Right personally hated). But there is a clear undercurrent of racism and nativism in the overwrought GOP opposition. Despite the economy, the President’s approval rating mirrors his 2008 vote percentage. It is important that for 2010 his numbers stay at or above this level.

House

The mid-term elections are generally a referendum of the party in the White House. If unemployment stays high and there is no wage growth, it could mean big losses for the Democrats. Right now, the losses appear to be in the historical range for midterms of 15 to 20 seats. The numbers are somewhat daunting as Democrats represent 49 seats that John McCain carried in 2008. The Democrats need their base voters (i.e., the 2008 base) to turnout in some large percentage. So they need to deliver on the 2008 promises. Instead some Democrats seem to be listening to David Broder and other paradigms of the usually wrong “conventional wisdom” and wringing their hands.

The most vulnerable incumbents are the Democrats swept into office by the 2008 Obama wave. These members have not had the time to cement ties to the district by constituent service. Some of the 30 Democrats in the 2006 class will have to work very hard. Finally, what really hurt Democrats in 1994 was retirements. To date this is not a major issue, and the Democrats also have an opportunity to pick up open seats (PA-6, IL-10, Del-- AL) where the Republicans are seeking higher office. There are 30 other seats currently represented by a Republican where Barack Obama won. These Republicans have shown no sign of moderation, so some could be vulnerable.

There is still a lifetime before the election, and politics is never static. There could be an even stronger anti-incumbent feeling than currently exists. Right now the default position for voters is “against.” The Democrats in Congress are less popular than in 2006 and 2008, but still more so than the Republicans. Though the “generic vote” looks somewhat troubling right now, the passage of the healthcare bill (as compromised as it is) and any ongoing improvement in the economy will help stabilize public sentiment. But Democrats in Congress have to work on behalf of the nation’s common good (granted a concept still poorly defined and communicated). In addition to healthcare, this means a financial reform package that works for the real not just the speculative economy, a new energy economy and a clear commitment to job creation.

Despite the overall decline in popularity of the GOP, the rightwing unfortunately is clearly energized. Recent polling has put Republican self-identification in the low 20s, not exactly a new majority in the making. Glen Beck and Rush Limbaugh, the nasty media clowns, seem as much in charge as the Congressional leadership. The GOP “noise machine” has gone beyond misrepresentation to blatant lies. Or as Digby notably put it, “the Republicans have managed to rebrand themselves from the epic screw up to the batshit crazy party.” Representative Michelle Bachman is the new face of this party.

The conservative “revolt” in New York’s 23rd Congressional resulted in withdrawal of the GOP candidate and the elevation of a true “conservative,” who happened not to live in the district. The result was handing the district to a Democrat for the first time since the Civil War. For the true right, it is “mission accomplished.” So the Democrats may benefit from this war on GOP “moderates” by the strange bedfellows in the religious right, libertarians and certain corporate front groups like Freedom Works and Americans for Prosperity. The Republicans may be the electoral gift that keeps on giving but this is nothing to count upon.

Senate

The Senate looked promising for the Democrats several months ago, but the situation is far more clouded today. There are an equal number of GOP and Democratic seats up in 2010 than (19-19). These numbers are reversed in 2012 and 2014 as the Democrats have more seats up. So, the Democrats cannot afford to lose seats in 2010. If 60 nominal Democrats is difficult for any meaningful policy change, then 57 or 58 will be that much worse. Changing some of the arcane antimajoritarian roles of the Senate would obviously help. In the meantime, the Republicans should at least be forced to mount an actual filibuster.

Overall the GOP has had a good recruiting year mounting credible candidates in the open seats in New Hampshire, Ohio, Florida, Missouri, Delaware and Illinois. There is clear opportunity to elect relative liberals to replace conservatives in at least three of these states (New Hampshire, Missouri and Ohio), but none of the races will be easy.

Democratic incumbents Harry Reid in Nevada and Chris Dodd in Connecticut face major challenges in their reelection bids. Colorado will also be a major fight. Democrats will have contested primaries in Illinois, Kentucky, Colorado and Ohio. Blanche Lincoln in Arkansas has some difficult polling numbers, but trying to appease Republicans is not a strategy to win reelection. Given her constituents, she should be a clear advocate for universal healthcare. Arlen Specter is looking over his shoulder at a very strong primary by Congressman Joe Sestak. Specter also does not poll very well in the general. Of course these races will ultimately be affected both by the national zeitgeist, local politics as well as the quality of the candidates and campaigns. The Republicans will attempt to “nationalize” the election.

After NY-23 the right wing’s next quest is to knock off the Republican Governor Charley Crist in the Florida Senate primary. His opponent, Marco Rubio, is backed by the Club for Growth, assorted “teabaggers”, and Jeb Bush’s money machine. Crist is in trouble and is now tilting unconvincingly to the right. If Rubio wins the primary, the Democrats have a better shot at this seat in the general. “Tea Party” candidates are also running hard against the Republicans in Illinois and California. In Illinois, Republican frontrunner Mark Kirk has already repudiated his own vote on the climate bill and is bending over backwards to appease conservatives. The Democrats have a good candidate in Iowa against Charles Grassley. The North Carolina race against the GOP incumbent, Richard Burr, is unclear as to the comprehensive list of Democratic challengers. In Louisiana, the scandal plagued Republican David Vitter has a primary that right now includes porn star Stormy Daniels. Pass the popcorn.

Governors

In 2010, it likely will be a very rough year for both incumbent Governors as well as the party of incumbents. This was certainly true in New Jersey and Virginia. The local dynamics though were most relevant. Governor Corzine had an approval rating under 40% and ran a negative, though expensive campaign. The Goldman Sachs calling card proved not as helpful as it was in 2005. In Virginia, Mr. Deeds ran away from the President until the last minute and profoundly underestimated his appeal in Northern Virginia. He had a very conservative opponent who was savvy enough to don the trappings of a moderate. Many Obama supporters stayed home in both states.

Governors bear the political brunt of local economic conditions and there have not been a lot of good options. Raising taxes and cutting services are both unappealing options; but there has been little choice. If not for the federal stimulus, the budget problems in states would have been that much worse in 2009. Unless the economy grows rapidly, next year will be painful in many states.

In the largest states, where policy innovations are most important and are helpful to Barack Obama’s reelection in 2012, it is a mixed picture for the Democrats.

In the Midwest, Ohio’s incumbent Democrat Ted Strickland is currently in a toss up race. He has former House Budget Chair and Lehman Brothers rainmaker, John Kasich as an opponent. As it is, the open seat in Michigan will be difficult for the Democrats to hold but fortunately there is a divisive Republican primary. Democrats also have to defend an open seat in Pennsylvania. There is an open Democratic seat in Wisconsin, with the mayor of Milwaukee the leading candidate. The corrupt and clownish former Governor in Illinois casts a pall over the election hopes of current Democratic Governor Pat Quinn who is seeking a full term. Democrats do have pick up opportunity in Minnesota but have a very crowded primary. Iowa will be a challenge for Democratic Governor Culver, as former Republican Governor Branstead attempts a comeback.

In the East, Governor Patrick in Massachusetts is not popular, but he is benefiting because there is a three-way race. The Connecticut Governor’s race is open and Ned Lamont and the Secretary of State are Democrats in the race. In Rhode Island former GOP Senator Lincoln Chafee is leading in the polls as an Independent in a three-way race. Andrew Cuomo appears to be running in the Democratic primary and Governor David Patterson looks unelectable in the general in New York right now. Cuomo crushes him in Democratic primary polling. Rudy Giuliani is keeping his name alive for some office or for his name ID.

In the South, Florida Republicans have a primary and the Democrats an excellent candidate in Alex Sink, the state’s chief financial officer. Though the Republicans have a heated primary in Texas, a Democratic victory would be a long shot.

In the West, in a “Back to the Future” moment, Jerry Brown is the favorite to be next Governor of California. Ultra rich Meg Whitman who has already spent $20 million is leading in the GOP primary. The state is broke with dysfunctional governmental strictures and a pessimistic public. Democrats are favored to win in Arizona, retaking the Governor’s mansion, and to hold on in New Mexico with the current Lt. Governor. The Democrats defend an open seat in Oregon. Colorado looks like a tough reelection bid for Democratic Governor Ritter. Democrats have a good opportunity to win in Nevada and pick up a statehouse.

Ballot Initiatives/Legislatures

Redistricting will change both Congress and the state legislatures for the next decade after the 2011 or 2012 elections. So, there will be fierce contests in the legislative chambers. Where the control means drawing lines both for the legislature and Congress. Both parties and activists organizations will target the swing districts that can flip the chambers. There is no use pretending this is an exercise in good government; it is about incumbent protection and partisan advantage. In 2010, the GOP was particularly ruthless in purple states like Michigan, Pennsylvania and Florida. Of course the crowning achievement was the mid-decade reapportionment in Texas, which wiped out several Congressional Democrats. The only beneficial result was the end of its architect Tom DeLay’s career due to various campaign finance “irregularities.”

The Democrats picked up 396 seats in state legislative seats in the last two elections, so holding on to gains is critically important. The recent loss of 5 seats in the lower House in Virginia is not auspicious. But this was with a total collapse of the campaign of the Democratic nominee for Governor.

The rightwing will, of course, try to mount whatever initiatives will drive turnout of their base and force liberal groups to spend scarce resources to defeat them. If the resources are available to drive good policy outcome, progressive groups need to respond in kind. The 2009 results offer mixed messages as the rightwing lost two so-called TABOR initiatives to financially cripple the state government in Maine and Washington. But the Maine law allowing same sex marriage was repealed and the equal protection for Americans who are gay took another blow. As the nation’s young people are far more tolerant, it is inevitable that the arc of history on this issue is bending in the right direction, but it remains a shame.