A Party of Small Government No More

In my book, Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government, I argue that many voters no longer see the GOP as the party of small government. 

Now a new poll from the Club for Growth provides more quantitative backing to my narrative. It’s based on a survey taken in 15 congressional districts. Each of the districts was represented by an incumbent Republicans and each district was generally considered among the most competitive for the GOP this year. Neither were the Democratic or Republican candidates on the ballot in these districts suffering from a scandal that touched them directly.

Two damning results:

Q: “Now tell me whether you think the following phrase better describes the Republicans or the Democrats in Washington: “The Party of Big Government”

Republicans: 39.3%
Democrats: 27.9%
Both: 16.3%
Neither: 9.3%
Don’t know/Refused: 7.4%

Q: Would you agree or disagree with the following statement: “The Republicans used to be the party of economic growth, fiscal discipline, and limited government, but in recent years, too many Republicans in Washington have become just like the big spenders that they used to oppose.”

Agree: 65.8%
Disagree: 26.4%
Don’t know/Refused: 7.9%

Were Ousted Republicans Liberals or Conservatives?

Six Republicans in the Senate and 20 in the House were knocked off this election. In addition, eight open seats went to the Dems. (About 10 contests remain undecided.)

Were the the Republican losers economic conservatives or liberals?

My intern, Emmanuel Caudillo, compiled the scores calculated by National Journal for 2003 and 2004 on the economic conservative voting records of the ousted members. The scores are percentiles showing members relative to other members in the chambers. A score of 100 would indicate the most economically conservative voting record.

Here are the National Journal scores for the losers:

House Loser

2003

2004

Avg.

Jim Leach (IA 2)           46           49           48
Sue Kelly (NY 19)           50           48           49
Nancy Johnson (CT 5)           51           53           52
John Sweeney (NY 20)           53           52           53
Curt Weldon (PA 7)           55           54           55
Charles Bass (NH 2)           60           53           57
Jeb Bradley (NH 1)           60           55           58
John Hostettler (IN 8 )           51           64           58
Gil Gutknecht (MN 1)           49           70           60
Anne Northup (KY 3)           73           62           68
Charles Taylor (NC 11)           67           68           68
Jim Ryun (KS 2)           62           84           73
Clay Shaw (FL 22)           71           80           76
Melissa Hart (PA 4)           84           70           77
Don Sherwood (PA 10)           79           78           79
Chris Chocola (IN 2)           84           88           86
J.D. Hayworth (AZ 5)           91           88           90
Richard Pombo (CA 11)           91           92           92
Michael Fitzpatrick (PA 8 ) elected in 2004  
Mike Sodrel (IN 9) elected in 2004  
       
Open House Seats that Changed

2003

2004

Avg.

Sherwood Boehlert (NY 24)           47           49           48
Mark Green (WI 8 )           57           61           59
Jim Nussle (IA 1)           64           62           63
Bob Ney (OH 18 )           64           63           64
Mark Foley (FL 16)           71           65           68
Jim Kolbe (AZ 8 )           84           76           80
Bob Beauprez (CO 7)           91           88           90
Tom Delay (TX 22)           91           93           92
       
Senate Losers

2003

2004

Average

Lincoln Chafee (RI)           47           47           47
Mike DeWine (OH)           61           53           57
Jim Talent (MO)           62           58           60
George Allen (VA)           82           65           74
Rick Santorum (PA)           82           75           79
Conrad Burns (MT)           82           91           87

Conclusion: The great majority of losing Republicans were economic moderates or liberals. Few of the losers were above the 70th percentile in their votes on economic issues.

Don’t Panic

John Mueller’s new book is out; it’s called Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats, and Why We Believe Them. In it he expands on the argument he outlined in Cato’s Regulation Magazine two years ago [.pdf], namely that that, while the terrorist threat is real, “it has been systematically and very substantially exaggerated.” (For more, see the recent Mueller-led debate in Cato Unbound.)

This could be a very important book, with important implications for the way we discuss the terrorist threat and the right policies to respond to it. For one thing, if Mueller is right, and I think he is, it’s well past time to repudiate the idea that respecting constitutional limits is going to get us all killed (for example, the hoary soundbite “the Constitution is not a suicide pact”).

Yet, strangely, not everyone appreciates Mueller’s good news. The first Amazon reader review of the book begins, “The problem with this book is its over-reliance on logic….”

The GOP’s Failed Anti-immigration Strategy

The Wall Street Journal published a great lead editorial this morning (subscription required) on the GOP House leadership’s losing campaign strategy of using immigration as a “wedge issue.” The strategy obviously failed.

As the Journal’s editorial staff observed:

Republicans on Tuesday managed both to lose their majority in Congress and alienate a fast-growing bloc of Latino swing voters. Other than that, the House GOP strategy of trying to save itself by bucking President Bush and using immigration as a wedge issue worked pretty well.

Republicans can’t say they weren’t warned. Like trade protectionism, the immigration issue is the fool’s gold of American politics. Voters like to sound off to pollsters about immigrants, yet they pull the lever with other matters foremost in mind. Elections seldom if ever turn on immigration, and the GOP restrictionist message so adored by talk radio, cable news and the nativist blogosphere once again failed to deliver the goods.

Such GOP anti-immigration crusaders as J.D. Hayworth of Arizona and John Hostettler of Indiana were tossed out of office by wide margins. Exit polls suggest that Republicans suffered a sizeable drop in support from Hispanic voters turned off by the harsh Republican rhetoric aimed at Hispanic immigrants.  

Of course, I call it a great editorial because it and this week’s election returns confirm my own warnings to Republicans about the dangers of running as the anti-immigration party (here and here).

Although the election results were not good news on free trade and other issues, the new Congress will probably be more open to the kind of real immigration reform the Cato Institute has been advocating.

Jeff Flake, Take (Another) Bow!

Further to Tom’s post on Monday, our friend Jeff Flake (R–AZ) has written an excellent op-ed in today’s Wall Street Journal (subscription required) on the need for Republicans to apologize for betraying their small-government principles. Mr. Flake points to the farm bill, up for renewal next year, as the best opportunity to ” hew back to our [i.e., Republicans’] first principles.”

Yes, please. And may I propose the dairy policy, one of the most egregious examples of Soviet-style intervention, as one of the first to be reformed? Here’s a study I released yesterday on that very topic.

Bravo, Mr. Flake. I wish you the best of luck.

America’s Record Capital Surplus

The Commerce Department announced the latest U.S. trade deficit figures on Thursday. Although the monthly deficit for September was down from previous months, Americans are still on track to run a record merchandise trade deficit for all of 2006 that will reach nearly $900 billion by the end of the year.

The trade deficit numbers are sure to provide fodder for the incoming 110th Congress, which because of Tuesday’s election will probably take a more belligerent tone toward global trade than the previous, Republican-controlled Congress.

How worried should we be about the large and growing trade deficit? I’ve written extensively about what the trade deficit means, and what it doesn’t mean. (See here and here for details.) One unappreciated aspect of the trade deficit is the offsetting capital surplus that flows into the U.S. economy year after year.

Think about it for a moment: What on earth are the Chinese, Japanese, Canadians, and Mexicans doing with those hundreds of billions of dollars they earn each year exporting into the American market? They are not stuffing them in cookie jars and under mattresses. Almost all those dollars come back to the United States to buy U.S. assets — real estate, stocks, corporate and Treasury bonds, and bank deposits. In other words, they invest those dollars in America.

According to the basic rules of supply and demand, the surplus of global savings flowing into the United States each year to finance the trade deficit puts downward pressure on U.S. interest rates. A new study from the National Bureau of Economic Research, “International Capital Flows and U.S. Interest Rates,” by Francis Warnock and Veronica Warnock, confirms the positive effect of international capital flows on long-term U.S. interest rates. “Large foreign purchases of U.S. government bonds have contributed importantly to the low levels of U.S. interest rates observed over the past few years,” the authors concluded. Specifically, they found that current inflows of foreign capital reduce long-term U.S. interest rates by about 100 basis points, or one percentage point.

If you are among the tens of millions of American families that are paying off a home mortgage, you can thank the trade deficit and the offsetting foreign capital surplus for saving you thousands of dollars a year in interest payments.