www.theatlantic.com/doc/200507/fallows
Printer Format January 20, 2016, Master Strategy Memo Subject: The Coming Year--and Beyond Sir: It is time to think carefully about the next year. Our position is uniquely promising--and uniquely difficult. The promise lies in the fact that you are going to win the election. Nothing is guaranteed in politics, but based on everything we know, and barring an act of God or a disastrous error on our side, one year from today you will be sworn in as the forty-sixth president of the United States.
The same circumstances that are bringing an end to 164 years of two-party rule have brought tremendous hardship to the country. This will be the first time since Franklin Roosevelt took office in 1933 that so much is demanded so quickly from a new administration. Our challenge is not just to win the election but to win in a way that gives us a chance to address economic failures that have been fifty years in the making. That is the purpose of this memo: to provide the economic background for the larger themes in our campaign. Although economic changes will be items one through ten on your urgent "to do" list a year from now, this is not the place to talk about them in detail. There will be plenty of time for that later, with the policy guys. Instead I want to speak here not just as your campaign manager but on the basis of our friendship and shared efforts these past twenty years. Being completely honest about the country's problems might not be necessary during the campaign--sounding pessimistic in speeches would hurt us. But we ourselves need to be clear about the challenge we face. Unless we understand how we got here, we won't be able to find the way out once you are in office. Politics is about stories--the personal story of how a leader was shaped, the national story of how America's long saga has led to today's dramas. Dwight Eisenhower was the last president to enter office with a worldwide image of competence, though obviously his achievements were military rather than technological. When it comes to the old parties, the story boils down to this: the Democrats can't win, and the Republicans can't govern. The past fifty years have shown that the Democrats can't win the presidency except when everything goes their way. Only three Democrats have reached the White House since Lyndon Johnson decided to leave. In 1976 they ran a pious-sounding candidate against the political ghost of the disgraced Richard Nixon--and against his corporeal successor, Gerald Ford, the only unelected incumbent in American history. In 1992 they ran their most talented campaigner since FDR, and even Bill Clinton would have lost if Ross Perot had not stayed in the race and siphoned away votes from the Republicans. And in 2008 they were unexpectedly saved by the death of Fidel Castro. This drained some of the pro-Republican passion of South Florida's Cuban immigrants, and the disastrous governmental bungling of the "Cuba Libre" influx that followed gave the Democrats their first win in Florida since 1996--along with the election. But that Democratic administration could turn out to have been America's last. The Electoral College map drawn up after the 2010 census removed votes from all the familiar blue states except California, giving the Republicans a bigger head start from the Sunbelt states and the South. As for the Republicans, fifty years have shown they can't govern without breaking the bank. Starting with Richard Nixon, every Republican president has left the dollar lower, the federal budget deficit higher, the American trade position weaker, and the US manufacturing work force smaller than when he took office. The story of the parties, then, is that the American people mistrust the Republicans' economic record, and don't trust the Democrats enough to let them try to do better. That is why--and it is the only reason why--they are giving us a chance. But we can move from electoral to governmental success only with a clear understanding of why so much has gone so wrong with the economy. Our internal polls show that nearly 90 percent of the public thinks the economy is "on the wrong track." Those readings should hold up, since that's roughly the percentage of Americans whose income has fallen in real terms in the past five years.
For public use we'll refer to them by the names of the respective administrations. But for our own purposes it will be clearer to think of the chapter titles as "Cocking the Gun," "Pulling the Trigger," and "Bleeding." Yes, the ramifications of 9/11 will be with us for decades, much as the aftereffects of Pearl Harbor explain the presence of thousands of US troops in Asia seventy-five years later. Before 2001 about 12,000 American troops were stationed in the Middle East--most of them in Kuwait and Saudi Arabia. Since 2003 we have never had fewer than 100,000 troops in CENTCOM's theater, most of them on active anti-insurgency duty. The locale of the most intense fighting keeps changing--first Afghanistan and Iraq, then Pakistan and Egypt, now Saudi Arabia and the frontier between Turkey and the Republic of Kurdistan--but the commitment goes on. For our purposes modern economic history began that day. On June 7 President George W Bush celebrated his first big legislative victory. Only two weeks earlier his new administration had suffered a terrible political blow, when a Republican senator left the party and gave Democrats a one-vote majority in the Senate. This was presented at the time as a way to avoid the "problem" of paying down the federal debt too fast.
The administration proposed to give slightly less than half of that back through tax cuts, saving the rest for Social Security and other obligations. Congress agreed, and it was this achievement that the president celebrated at the White House signing ceremony on June 7 "We recognize loud and clear the surplus is not the government's money," Bush said at the time. "The surplus is the people's money, and we ought to trust them with their own money." If the president or anyone else at that ceremony had had perfect foresight, he would have seen that no surpluses of any sort would materialize, either for the government to hoard or for taxpayers to get back. If those in the crowd had had that kind of foresight, they would have called their brokers the next day to unload all their stock holdings.
Through the rest of his presidency Bush contended that the reason was 9/11--that it had changed the budget as it changed everything else. It forced the government to spend more, for war and for homeland security, even as the economic dislocation it caused meant the government could collect less. Most people outside the administration considered this explanation misleading, or at least incomplete.
As late as 2008 the trend could have been altered, though the cuts of 2003 and 2005 had made things worse. But in the late summer of 2008 Senate Republicans once again demonstrated their mastery of the basic feints and dodges of politics. The tax cuts enacted during Bush's first term were in theory "temporary," and set to expire starting in 2010. But Congress didn't have to wait until 2010 to decide whether to make them permanent, so of course the Republican majority scheduled the vote at the most awkward moment possible for the Democrats: on the eve of a close presidential election. Either they voted for the tax cuts and looked like hypocrites for all their past complaints, or they voted against them and invited an onslaught of "tax and spend" attack ads in the campaign. They held their seats in the election, and the party took back the presidency.
Increased longevity is a tremendous human achievement but a fiscal challenge--as in any household where people outlive their savings. Late in 2003 Congress dramatically escalated the fiscal problem by adding prescription-drug coverage to Medicare, with barely any discussion of its long-term cost. David M Walker, the government's comptroller general at the time, said that the action was part of "the most reckless fiscal year in the history of the Republic," because that vote and a few other changes added roughly $13 trillion to the government's long-term commi...
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