Upon assuming office, President Bush promised to maintain the budget surplus that he had inherited, except in the event of recession, war or national emergency. ''Lucky me,'' he joked to his budget director Mitch Daniels shortly after 9/11, ''I hit the trifecta.''
The Democrats have the opportunity to hit a trifecta of their own this year, and a more positive one at that. US politics is roughly divided into three areas: domestic policy, fiscal policy and foreign policy. Democrats have traditionally been stronger on domestic policy and Republicans have owned foreign policy, with fiscal policy changing back and forth. But now the Democrats have a strong argument that the public trusts them more in all three dimensions. If they can state their case strongly, and more importantly follow through on it once they gain power, they can remake the face of American politics for the foreseeable future.
In domestic policy, it's not even close any more. The current administration has proven the folly of trying to make government work when you don't really believe in government to start with, when you think it's the problem, not the solution. Bush stocked administrative agencies with incompetent cronies and was then surprised when things went wrong, like with FEMA. The Republicans' idea of passing social legislation was the Medicare drug benefit (Medicare Part D), which has proven to be nothing more than a disastrous giveaway to the drug companies. If you recall, the bill featured a "donut hole" in seniors' insurance: a gap between basic coverage, which the legislation allows, and catastrophic insurance, also in the bill. But it prohibits beneficiaries from insuring themselves for medication expenses in between, on the hardly believable theory that it would give sick seniors bad incentives.
The Republican mantra that the only good regulation is no regulation has also cost them dearly in the one area of social policy they used to dominate: financial markets. The collapse of the housing market and subsequent series of meltdowns and bailouts that have been orchestrated since Bear Stearns went under in March have made the public wary of Republicans' ability to keep the economy from sinking into quicksand. The administration is finally learning - too late - that sometimes regulation and markets are not diametrical opposites: you need a certain amount of regulatory underpinnings for markets to operate at all. It is a lesson that a Democratic administration is ready to put into practice.
In fiscal policy, Democrats used to be unable to push back when Republicans chided them for being "tax-and-spend liberals," unable to resist the calls of their special interest groups for spending programs. It was on the basis of this rhetoric that the GOP branded itself the party of fiscal discipline for a generation or more. The situation, though, has reversed itself: Democrats are now the more fiscally conservative of the two parties, although leading Democrats seem not to have noticed or are for some reason embarrassed by their own success in balancing the budget.
But the numbers don't lie: Reagan and then Bush I ran up historic deficits on the back of large amounts of military spending and trickle-down economic theory. Clinton bit the bullet and convinced Congress to enact the 1993 budget, which contained $250 billion each of tax increases and spending cuts over a decade. The bill passed by one vote in the House and a tie vote in the Senate, with the Republicans, those supposed guardians of fiscal propriety, casting not a single vote for the bill, arguing that it would ruin the economy. In fact, the 1990's saw an economic boom that was not wholly created by, but was certainly abetted by, the lowering of government deficits, and Clinton left office with the largest budget surplus in history. Bush II promptly gave it all away in his first budget, and if estimates are correct the US will run its largest deficit in history next fiscal year. Bush's trifecta of disasters certainly contributed, but budget experts estimate that the turnaround in the nation's finances was roughly 1/3 due to war spending, 1/3 due to Bush's tax cuts, and 1/3 due to lower revenue because the economy slowed down (which is itself a result of larger macroeconomic mismanagement by the current administration).
In a reverse of the former refrain, now it is the Republicans who cannot resist calls from their wealthy right wing constituents for tax cuts, and they are going to lose office in no small part due to the fact that their policies have created a large increase in income inequality. Trickle down economics is now dead as a working theory, even among serious conservative economists; the last eight years have demonstrated that, given a large increase in their income, the richest 1% of the population will find plenty of ways to spend it that do not magically create jobs for middle and working class Americans.
Finally, the public is coming to distrust the Republican line on foreign policy as well. After the collapse of the Soviet Union and the end of the Cold War, there were two strategies the US could adopt. The first was to say, "We're now the only super-power: to heck with you. We will do what we want when we want. This may sometimes convene with your interests, and sometimes not. But we will act at every moment in accord with our own preferences, using force if and when necessary to achieve our goals." This is more or less the attitude taken by the Bush administration, and it's left us in a hugely expensive and unpopular war in Iraq, with our international reputation in shreds and forced to do nation building in places where we have neither the expertise nor the inclination to do so.
The other option is to say, "We're now the only super-power, but just because we can do anything we want doesn't mean that we should. In the long run it is cheaper and more effective to lead coalitions of countries in pursuit of our objectives. We will never compromise on fundamental issues of national security, but this approach may at times mean compromising and accepting outcomes that are not our first best, in order to win on other issues that matter to us more."
This is the vision that the Democrats are, implicitly, laying in front of the public, and with considerable success. Americans want the US to mean something again, to live up to its ideals and regain its status as world leader, relying more on soft power than military force. And it goes without saying that you can't be a leader if no one follows.
These, then, are the stakes in the current election. The Democrats seem poised to take the White House and increase their margins in the House and the Senate, possibly with a filibuster-proof majority in the latter. They will face a number of challenges, not the least of which will be the recession bequeathed to them by an outgoing administration bumbling toward the finish line. But if they can keep policy consistent with their basic principles and dare to challenge the Republicans on their home turf, Democrats can once again become the party of ideas and dominate politics for some time to come.