Where Does the GOP Go From Here? | Wall Street Journal | 09.04.08

When John McCain accepts the Republican nomination tonight, he will address a party that doubts itself. In the hall and around the nation Republicans are asking, why does every generic ballot show the GOP losing to the Democrats?

Is it just the normal public fatigue after eight years in control of the White House and, before the 2006 elections, 12 in control of Congress? Or is it more? What does the party stand for? What should it stand for?

For the last quarter century, the Republican Party has been a party of priorities. There has been implicit agreement among economic, social and foreign-policy conservatives. Those whose top concern was lower taxes, reduced government spending and less economic regulation would defer to social conservatives on abortion, judges and other questions — and the other way around. Both agreed on national security.

The coalition has proven tremendously productive, particularly in economics. Most tax rates dropped; even in the Clinton years, the GOP Congress forced cuts in the capital gains rate. Until the 2001 attack, overall federal spending growth was curtailed. Trade became freer. New Deal-style economic regulation declined.

The result was unprecedented growth. Over a quarter century, the U.S. economy expanded with only short pauses and continues this singular record today. Between 1981 and 2005, the proportion of families with total inflation-adjusted earnings at or above $75,000 grew 65%, to nearly 30% of the country. Meanwhile, on social policy, as Republican administrations worked harder on appointments to the Supreme Court and appellate courts, the imperial judiciary started to rein itself in. Welfare reform — forced by a Republican Congress on Bill Clinton — focused on work and responsibility to family in addressing persistent poverty. And finally, of course, the Soviet Union was pushed into the dustbin of history.

So it has been a stunning record of achievement. And yet, today the party finds itself with declining poll numbers and full of doubt.

In part, this is thanks to the failure of recent Republican Congresses to reduce spending and the administrative state. Earmarks became the symbol of spending excess, and with reason. Defending their behavior, GOP members of the House and Senate have argued with me in the past six months that earmarks enable Congress, not bureaucrats, to establish priorities. They dismiss earmarks as irrelevant given the size of the federal budget. Discretionary spending isn’t a problem, one senator said. Social Security and Medicare are where the spending is.

Well, yes, entitlements are certainly challenges. But there is no denying the lack of control in discretionary spending, or its dispiriting impact on the GOP faithful. John Cogan — a Reagan budget official now at the Hoover Institution — recently analyzed federal spending trends, and found domestic outlays in the Bush years rising to more than $100 billion a year over the pre-2001, long-term trend line. In mid-2005, Republican pollsters were warning that the party’s unprecedented support from self-identified Republicans in the prior fall’s balloting was rapidly eroding. Dismay over the budget was responsible.

Combine that dismay with the failure of GOP Congresses to enact permanent tax cuts, or even to hold hearings on Social Security reform, and by late 2005 many party activists were asking, have those we sent to Congress become no better than Democrats? Many began questioning their allegiance well before the pre-surge drift in Iraq added national-security disillusionment.

But the party’s problems are not confined to disaffected Republicans. The GOP has a problem with independent voters. As one analyst told me privately at the convention on Monday, in 2004 President Bush became the first president in the history of polling to win the White House without winning Independents. The bottom line is this: With the changes in party identification in the last few years, if Republicans, Democrats and Independents vote by party with 2004 proportions in 2008, Barack Obama will win.

There are two other, longer-term problems that Republicans must face. The first regards unstable alliances. The old Roosevelt coalition is usually said to have combined union members, big city ethnic groups and the South. Another characterization would be Southern Baptists, Catholics and Jews, with the GOP largely mainline Protestant.

Following World War II, Southern Baptists and Catholics began to change parties. Some of this followed from suburbanization among Northeastern and Midwestern Catholics. In the South, the end of segregation opened the way to electoral alliances with the northern and western Republicans. But it was not until a series of Supreme Court decisions created the social issues that Baptists and Catholics shifted sharply GOP.

For a long time this alliance with the more economic-policy-oriented, old-line Protestants worked. But it was an uneasy marriage. The old-line Protestants were far less intense about social issues. So as the party’s delivery on economic policy faltered in recent years, many stopped deferring to the new groups’ social-issue priorities and started leaving the party.

The second problem concerns global economics. Great shifts in American politics follow shifts in our place in the world economy. The McKinley coalition of the 1890s was a response to our capital-ravenous, industrializing economy’s need for investment from abroad. The tax, spending, regulatory and monetary policies of the Roosevelt coalition tended to stoke consumption in the U.S. while pushing capital to a Europe still struggling with the financial exhaustion of World War I. Though these policies failed to pull the country out of the Great Depression, they produced after World War II (particularly after they were modified by Eisenhower) a rapid rebuilding of Europe and Japan and economic growth at home. With Europe and Japan again vigorous, the Reagan coalition re-emphasized U.S. capital formation from both domestic and international investment.

The global economy has changed again. China, India and Brazil are rising. Manufacturing, services and financial markets are heavily transnational. How do we adjust? Certainly for an economy driven by entrepreneurship and world trade, the Democrats’ tax, spending, regulatory and protectionist policies are exactly wrong. But skyrocketing spending and allowing the continued deterioration of (in Mitt Romney’s term) the national balance sheet, as happened in recent Republican Congresses, is little better.

So the GOP needs to sharpen its message, particularly on economics and adopt a stance of no excuses for congressional inaction or bureaucratic obstruction. John McCain is the party’s nominee this year because on matters of national security he stood by principle and insisted on results. If principle with results become his watchwords, he might just give the party a good start towards a resurgent future.

Mr. Judge, a former special assistant to President Reagan, is head of the White House Writers Group in Washington.