Sunday, July 3, 2011

Time to Gerrymander, The Path to Success on the Debt Ceiling, Looking at the Party Factions, Reasons to Celebrate American Independence

43 States Full of Gerrymandering
In the early 1800s, Democratic-Republican Governor of Massachusetts Elbridge Gerry, working with allies in the state legislature, crafted a map of State Senate districts that was designed to thwart the Federalists by building as many majority Democratic-Republican districts as possible. The 12th District, designed in the Boston area, closely resembled a salamander. Hence, the terry Gerrymander was born as a symbol of designing districts not on the basis of any rational grouping of towns and neighborhoods, but with the specific intent of benefit the party in power.

And it has been thus for the past two centuries. It is a time-honored tradition, used by both Democrats and Republicans alike, to shape Congressional districts to benefit ones own party.

The 2012 Congressional elections will be the first with newly drawn districts based on the 2010 Census. All 50 states will have to redraw, including not only the ones that are gaining or losing seats, but also the ones where the seats are staying the same, as population shifts have still made current districts uneven.

Seven states have laws on the books to protect against Gerrymandering. These states use a bi-partisan commission to draw districts in logical ways to avoid this effect. Arizona, Hawaii, Idaho, New Jersey, California, Minnesota and Washington all fall into this category. For a 7 other states, Gerrymandering is irrelevant as they hold a single at-large seat. Delaware, Vermont, North Dakota, South Dakota, Montana, Wyoming and Alaska fall into this category.

In the remaining 36 states, however, it is open season. Of the largest of these redistricting prizes: Texas, New York, Florida, Pennsylvania, Ohio, Illinois, Michigan, Georgia, North Carolina and Virginia, only 1 (Illinois) is a Democratically-controlled legislature and only 2 others (New York and Virginia) have divided legislatures; 7 of these 10 states are firmly controlled by Republicans.

Whatever your personal views on Gerrymandering (I support the bi-partisan commissions, most partisans seem to favor those when they are out of power and oppose them when they are in power), the dynamics of this year show the huge intrinsic advantage that Republicans have in the House in the 2012 elections. Not only are Republican states by and large picking up seats: Democratic-leaning states are losing 7 seats, GOP-leaning states are gaining 6 (Nevada, a swing state, is gaining the 7th seat), but they will largely control the redistricting process, which could swing as many as a dozen seats to the advantage of the GOP.

So, any hope the Democrats had that higher turnout in 2012 will help them overcome 2010 GOP gains has to be blunted by a intrinsic GOP advantage of almost 20 seats going in.

How About This Compromise?
The impasse on raising the debt ceiling and the associated deficit reduction package that the Congressional GOP have demanded has come down to one basic issue: taxes.

At issue: Democrats want tax changes to be part of the deficit reduction package, namely the elimination or reduction of tax credits and exemptions for rich corporations and individuals. Republicans with a few exceptions (Sen. Tom Coburn (R-OK) and Sen. Lindsey Graham (R-SC) being the most notable) have stated opposition to any proposal that increases total tax revenues, even if they do not increase marginal rates. Democrats are loathe to support massive spending cuts without something on the tax side.

In the spirit of Grover Norquist (who I detest, but that's another discussion), how about this compromise? Put through the spending cuts (on discretionary spending, nothing significant is going to happen with entitlements, unfortunately), incorporate reductions of tax loopholes for the wealthy and corporations, but offset those with reductions to taxes for middle-income Americans. This holds to the GOP pledge of not increasing net taxes, but throws the Democrats a bone on income equality.

What do you say, Eric Cantor and Harry Reid?

Who Unites the Factions Best?
Ronald Reagan famously swept into office over incumbent Jimmy Carter by winning over moderates who came to be known as "Reagan Democrats". In every election, there is a core of support for each party which is complemented by how well the unite the factions that can go either way. In recent years, it seems party loyalties have become even more complex, so I thought it might make sense to take stock of the membership factions of each party to understand how each party might to try to build a winning coalition next November. I'll also assess the risk of each group dumping their home party in a given election.

1. The Democrats
Democrats rely on a number of different factions:
a. Social Justice Liberals
This group includes those whose primary issues are civil rights-related, including gay rights. This group has been around since at least the 60s and tend to be passionate voters with a strong moral bent to their voting.
Risk Level: Low

b. Socialists
Those seeking economic justice, they tend to have core issues such as universal health care, social assistance, education spending and income equality. These are not all full-blown socialists, but are generally people that admire the social safety net of large European countries.
Risk Level: Low

c. Feminists
This group tends to overlap heavily with the Social Justice Liberals, but they tend to have a single voting issue that overrides everything else: abortion-rights.
Risk Level: Low

d. Doves
This group is the anti-war gang. They strongly opposed Iraq and now want out quickly of Afghanistan and oppose involvement in the conflict in Libya. They turned out big for Obama in 2008
Risk Level: Medium (but only because the GOP isn't likely to run as the party of peace against President Obama)

e. Populist Hispanics
Hispanics in general, and Mexican-Americans specifically favored the Democrats heavily in the past on the basis of their economically liberal views and support for immigration reform. But Democrats part ways with this heavily Catholic group on social issues such as abortion and gay rights.
Risk Level: Medium (the economy hasn't improved and the President has largely ignored this Hispanic base, although he did nominate Sonia Sotomayor to the Supreme Court)

f. Social Libertarians
Those that favor not only abortion-rights but hate the Patriot Act, Gitmo, want to legalize Marijuana and prostitution and generally want the government completely out of social issues.
Risk Level: High (the President hasn't closed Gitmo, has extended the Patriot Act and the Tea Party seems to have co-opted the social libertarian message)

a. The Corporatists
The Goldman-Sachs, Exxon-Mobil wing of the GOP isn't as concerned with true free markets as they are with making the government business-friendly. They favor tax breaks and subsidies and limited government regulation.
Risk: Low (this group hates the President)

b. Christian Conservatives
The social-issue focused group opposes gay marriage, abortion rights and affirmative action and is far more interested in traditional values than economics.
Risk: Low

c. The Tea Party / Economic Libertarians
This group generally opposes government involvement in the economy and favors far lower government spending, lower taxes and less regulation.
Risk: Low-to-Medium (they won't support Obama, but they could stay home if a more Corporatist Republican takes office)

d. The Neo-Cons
Remember when the Neo-Cons were the big new thing? The first Republicans in ages to support such concepts of nation-building, this new way of Republican thinkers was prominent during the Bush Administration. They are a lot quieter these days after a decade of war, but they are still around.
Risk: Low

e. Northeastern Republicans
This socially liberal but economically conservative bunch, wants less government but things the Tea Party and the Christian Conservatives are a little out there. There are a lot less of these pragmatists than the used to be, but they are still around.
Risk: Medium-to-High

f. Establishment Republicans
This group likes Medicare, Medicaid and Social Security but opposes Universal Healthcare. A nuanced, but large group, they are resistant to change in general, they are the classic Reagan Democrats. They want our existing social programs maintained, but don't want new ones, and sure don't want their taxes going up.
Risk: Medium

There are many other groups (true Libertarians and all shades of moderates) out there, but each party is going to have to shore up a complex base to win.

Why America is Great
As we celebrate 235 years of the Untied States of America on July 4th, here are a few of the reasons why America is great:
1. The Best Capital Markets
Why are the most innovative companies in the world based in the US? Our innovative spirit, to be sure. But also, we have the best capital markets in the world. Venture Capital, Angel Investing and strong property rights all make the US one the best place in history to turn an idea into a business.

2. The Most Diverse, Integrated Population Ever
We are a truly diverse nation. Black, White, Hispanic, Asian, Native American, protestant, Catholic, Jewish, Muslim, gay, straight, bisexual, and on and on. Sure, other countries have elements of diversity -- there is a sizable Muslim population in France and lots of people from Fiji in Australia. But can you name anywhere else that has existed in history where the population is so well economically and socially integrated? Sure, we still have our problems, but can you imagine the election of a guy like Barack Obama in Europe?

3. The Bill of Rights
Nothing before or since anywhere in the world has established the rights of the citizenry so uniquely. Free speech? Good luck with that in Germany. Bearing arms? Have fun in Great Britain. We have the strongest spirit of individual rights of anywhere in the world and it leads to the most open dialogue about social and political issues of anywhere on Earth.

4. The University System
Sure, it's too expensive. Sure, the tenure system is broken. And yes, the funding system is unfair to middle-class savers. But there is a reason that people from all over the world come to our colleges and universities. Because they are the best.

5. Class Mobility
Maybe its less than it was for some a generation ago, but it isn't gone. But take a look at the stories of Chris Gardner (the subject of the book and film "The Pursuit of Happyness" who went from homeless to running an investment management group), Oprah Winfrey (who grew up poor in Chicago to build a media empire), Bill Clinton (born poor to a single-mother in rural Arkansas to become President of the United States) and David Geffen (who grew up in poverty in Brooklyn and rose to be the biggest name in the music business), rags-to-riches stories simply don't happen with the prevalence that they do in the United States anywhere else.

Happy Independence Day, everyone. I hope you get a long weekend.

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