The Legacy of the Crash

by Terrence Casey

  From May 2010, then, Britain has had a Coalition government but one that, to all intents and purposes, looks, sounds and behaves like a Conservative administration, and this is unlikely to change. The Lib Dems reacted to the crushing of their plans for voting reform and their disastrous results at the local elections held on the same day by promising to be more assertive. However, their plummeting public support, together with a determination on the part of Conservative MPs that they not be given an inch, make it unlikely that Cameron – even though he would prefer it if the Lib Dems fell apart later rather than sooner – will provide them with too many concessions. There is certainly no sense in which Cameron has felt obliged, like Obama, to be bipartisan or to place people outside his party in those portfolios where trust in its good faith or competence was lacking. Indeed, it is possible to argue, given its plans to reduce public spending so far and so fast, that it could be the most radically right-wing government the country has ever seen. True, Prime Minister Cameron seems intent on sticking to his promises to ring-fence health and (parts of) education spending. True, too, that the rhetoric on Europe, crime, and immigration has been turned down. However, while few doubt that the party leadership at least is indeed determined to shed its traditional ambivalence toward ethnic minorities and alternative lifestyles, it also seems determined not to appear soft on Europe, crime, and immigration. The program as a whole then looks very much like an attempt to take up where Thatcher and Major left off rather than the more ‘touchy-feely’ and centrist ‘one-nation’ Conservatism that Cameron first stressed when he took over in 2005.

  Republican takeover of US House – divided government, 2011–12

  The results on election night 2010 were truly stunning. Since discontent about economic conditions was rampant, Republicans were expected to do very well, but not quite this well. Several political scientists forecast a 52-seat gain for House Republicans (Campbell, 2010; Bafumi et al., 2011) in October of 2010. Nearly every other academic prediction called for significant Democratic losses, but short of loss of control of the chamber. Pundits did no better. A few did predict the Republican takeover of the House, but most also seemed not to believe the Republicans could prevail in so many local contests. In fact, the Republicans gained an unpredicted 63 seats in the US House. While they also gained six seats in the US Senate, it was not enough to give them majority control there. The White House, of course, remained in Democratic hands. Divided party control of government had returned. The reason why so few had foreseen the extent of the change had to do with the belief that committed Democrats would not so easily abandon their new president’s agenda in favor of the Republicans. In a sense they were correct. What they did not expect was very strong turnout by Republican voters and indifference, in the form of weak voter turnout, by Democratic voters. In 2008, Barack Obama had done an exemplary job of energizing critical constituencies – especially young voters – to become re-engaged. The lingering effects of Obama’s Organizing for America organization (which never actually shut down after 2008) should have kept the newly activated engaged. Instead, turnout levels retreated to pre-Obama levels or worse. Independent and weakly aligned voters who did vote had no problem giving the other side a try at taking on the economic problems; they had given Obama the same chance in 2008 and after two whole years, expressed their disappointment at his inability to turn things around swiftly.

  As is customary, the new legislative majorities began to organize themselves immediately after the election in preparation for their swearing in on 3 January 2011. The Republicans selected their minority leader, Representative John Boehner of Ohio, to be the new Speaker of the House in the 112th Congress. Boehner is a seasoned politician with a great deal of leadership experience. While he holds very conservative policy positions, Boehner is known for having an easygoing, pragmatic manner. On the other side of the aisle, former Speaker Nancy Pelosi very unusually chose to assume the role of minority party leader after the Democrats lost their majority. Complicating this process of leadership selection was the ‘lame duck’ session Congress (so-called because some portion of the members who would vote and conduct business were either just defeated or retiring) which reconvened in late November 2010 still under the control of the Democrats. More than 20 bills were on the agenda ranging from the tax cuts, immigration, environment, unemployment benefits, child nutrition and food safety, to foreign policy. Freed from the worries of the elections, members acted swiftly and decisively, earning them the label of the ‘Do-Something Congress’(Chaddock, 2010). However, the Congress still did not pass a permanent budget for the remainder of the 2011 fiscal year, leaving the country instead with a series of temporary budget provisions known as continuing resolutions. The budget was not fully approved until April of 2011. While this may seem to indicate compromise and reconciliation between the two parties, as of May 2011, the House Republicans are threatening to oppose an increase to the US debt ceiling even though most economic experts fear this would plunge the US into a deeper economic crisis if it must default on some of its debt obligations.

  The newly elected Republican House which began its session on 5 January 2011 immediately scheduled a vote to repeal the not-fully-implemented health care reform law referred to by them as ‘Obamacare’ – a symbolic act given the impossibility of getting the same measure passed in the Democratically-controlled Senate and signed into law by the Democratic president. The Republicans also dangled the possibility of shutting down the government as an inducement to Democrats to cooperate with the Tea Party-inspired deep spending cuts. This partially worked. Since a government shutdown is quite disruptive, all involved desire to avoid it, and since the assent of both chambers of the legislature and separately the executive are required, the House Republicans do have a blackmail power in the divided government scenario. However, with the next election less than two years away, the Republicans proceeded carefully, lest they appear to be the party of ‘no’ instead of a governing partner.

  Conclusion

  The American journalist, Michael Goldfarb (2010), writing around the same time as the conservative commentators referred to in our introduction, concluded that the Republicans (whom he described as zealots fighting Obamacare and the culture wars, determined to cut welfare but spending a fortune on defense) and the Conservatives (pragmatists intent on preserving the NHS, content to live and let live, cutting defense spending and putting a stop to Labour’s more authoritarian anti-terrorist measures), were ‘like Gondwana and Pangaea’, inexorably drifting apart. The metaphor is memorable but also misleading. The two parties, like the two nations in which they operate, have rarely walked in lockstep. Conversely, we can overstate the extent to which they are now sailing off in opposite directions.

  There are some obvious differences, but even these have to be qualified a little. Goldfarb (who is well acquainted with both countries) is right to point in particular to defense and health care. Although it is too early to tell whether they will survive the convulsions in the Middle East, the deep spending cuts forced on all three armed services by the Cameron government were not made at the behest of the Liberal Democrats in the coalition but done off the Conservatives’ own bat. Yet while defense reductions would be anathema to most in the Republican Party, it would be more than possible to find some conservatives who would be keen to reduce foreign aid and investment. As for health care, it is clear that as American conservatives continue to consider it their patriotic duty to do all they can to stymie the progress of what they see as socialized medicine, their British counterparts seem determined to preserve it. On the other hand, they have embarked on a radical (and, before the election, unannounced) shake-up of the NHS which will almost certainly introduce more private provision, albeit (at the moment anyway) paid for by the taxpayer rather than the individual. Nor can anyone be absolutely sure that the party’s commitment to one of Britain’s most popular institutions derives from a genuine belief in its ideals and its manifest efficiency or, instead, from fear of retribut
ion by voters were they to appear to place it at risk. Moreover, there are many Tories (for whom ‘going private’ is routine in their own lives) who believe that in the end the electorate will not stand for the level of taxation required to keep the NHS going strong and will eventually come round to the idea, at the very least, of an insurance-based system.

  On the other differences Goldfarb discerns, it is even easier to find common ground. Republicans may not advocate closing Guantánamo, but one would be hard pressed to find many who would have objected to the Conservatives’ decision to abandon Labour’s plans for ID cards and its insistence on long periods of detention of UK citizens without charge. Likewise, while it is undeniable that the majority of Republican politicians have to be seen to consider so-called alternative lifestyles and lifestyle choices as illegitimate, even immoral, a significant minority of them and their supporters (perhaps more so in private than in public) share the reluctance of British Conservatives to condemn. And some libertarians in America would probably go even further in their insistence that government has no right whatsoever to tell people what to do in their personal lives. On the other side of the ledger, there are plenty of Conservatives – politicians and voters – who are uneasy about what they think is the excessively liberal stance of their leaders on social issues, up to and (for some of them) including abortion. Certainly, one area in which the Cameron government has had to tread very carefully for fear of alienating its base is law and order, with suggestions that spending reductions may mean fewer prison places and concomitantly shorter, less punitive sentencing going down like the proverbial lead balloon. The other highly sensitive area is immigration: Cameron needs to be seen to deliver his promise to make major reductions in the numbers coming in, yet he cannot completely ignore the concerns of large and small businesses, and of the economically crucial higher education sector. Republicans are quite certain that hostile positions toward immigration work for them electorally – at least in the short run – but as long as they don’t have to implement or enforce the policies they champion. This allows them to mollify their base of nationalistic supporters (the same ones who doubt that Obama is a native-born American despite the repeated release of his valid birth certificate) while still running a guest worker program for immigrants to take seasonal jobs that are not attractive to most American citizens.

  More generally, it is clear that the response of the two parties to the budget deficits they face reflects their very similar instincts on public spending and the size of the state. True, there are differences of degree if not kind, but even these can be exaggerated. Cameron may not be a Tea Party Tory, but if his government sticks to its plans then – and this may come as a surprise to many – the British state is on course to consume a lesser proportion of GDP than its American counterpart for the first time that anyone can remember (see Taylor Gooby and Stoker, 2011). Meanwhile, there are obvious parallels between American practice and discourse and Cameron’s stated determination to reduce the welfare roll by reducing the incentives to people seemingly content to live on the taxpayer’s largesse – and his aspiration to shift some social provision from the state towards local providers and volunteers as part of his so-called ‘Big Society’. In promoting the latter, and in attempting to use the crisis to undertake a serious reappraisal of the role and extent of government, Cameron seems to be betting that Britain is (or can be made to be) ultimately more American than European. Americans, on the other hand, consistently demand to bake, box, and eat their cake by choosing divided government. They give the message that the state should be smaller – but not too much, especially for retirees; American foreign policy should be isolationist – unless it is focused on eliminating terrorism or high energy prices; and that market rationality should prevail – unless people are forced out of their homes en masse in which case the government should help them. Indeed, both parties champion views more conservative than the electorate will generally choose. Therefore, they follow similar paths to reconcile their policy beliefs with their political viability.

  Notes

  1. This and the sections that follow on the Conservative Party draw on Bale (2011) and Bale and Webb (2010).

  2. For details, see Thompson (1996).

  3. For example, Christine O’Donnell, a Tea Party-backed candidate in Delaware, won the Republican nomination for the US Senate but lost handily in the general election. In Alaska, Republican incumbent Senator Lisa Murkowski was defeated in her primary by Tea Party-backed Joe Miller. However, Murkowski decided to run in the general election as an independent write-in candidate, defeating both Republican Miller and Democrat Scott McAdams.

  Bibliography

  Ashbee, Edward (2003) ‘The US Republicans: Lessons for the Conservatives?’, in Mark Garnett and Philip Lynch (eds), The Conservatives in Crisis (Manchester: Manchester University Press).

  Bafumi, Joseph, Robert S. Erikson and Christopher Wlezien (2011) ‘Postmortems of the 2010 Midterm Election Forecasts: Forecasting House Seats from Generic Congressional Polls: A Post-Mortem’, PS: Political Science & Politics, 44(1), 2.

  Bale, Tim (2009) ‘The Conservatives: Trounced, Transfixed – and Transformed?’, in Terrence Casey (ed.), The Blair Legacy: Politics, Policy, Governance, and Foreign Affairs (Basingstoke: Palgrave Macmillan).

  Bale, Tim (2011)The Conservative Party from Thatcher to Cameron (Cambridge: Polity Press).

  Bale, Tim, and Paul Webb (2010) ‘The Conservative Party’, in Nicholas Allen and John Bartle (eds), Britain at the Polls (London: Sage).

  Buchanan, Patrick J. (2010) ‘Tea Party Tory’, American Conservative, 22 October, online edition.

  Campbell, James E. (2010) ‘The Midterm Landslide of 2010: A Triple Wave Election’, Forum, 8(4), Article 3, www.bepress.com/forum/.

  Chaddock, Gail Russell (2010) ‘Six Big Achievements of a Surprisingly “Do Something” Congress’, Christian Science Monitor, 23 December.

  Connelly, Jr, William F., and John J. Pitney, Jr (1994) Congress’ Permanent Minority? Republicans in the U.S. House (Lanham, MD: Rowman and Littlefield).

  Courser, Zachary (2010) ‘The Tea Party at the Election’, Forum, 8(4), Article 5, www.bepress.com/forum/.

  D’Ancona, Matthew (2010) ‘The Tories Need to be More Michael Palin than Sarah’, Sunday Telegraph, 7 November.

  Dumbrell, John (2006)A Special Relationship: Anglo-American Relations from the Cold War to Iraq. (Basingstoke: Palgrave Macmillan).

  Evans, Rowland, and Robert Novak (1981)The Reagan Revolution: An Inside Look at the Transformation of the U.S. Government (New York: E.P. Dutton).

  Goldfarb, Michael (2010) ‘Why Republicans and Tories No Longer See Eye-to-Eye’, BBC, 16 November, online edition, www.bbc.co.uk/news/.

  Jones, Charles O. (1970) The Minority Party in Congress (Boston: Little, Brown).

  Jones, Peter (1997) America and the British Labour Party: The Special Relationship at Work (London: I.B. Tauris).

  Rappoport, Ronald B., and Walter J. Stone, (2005) Three’s a Crowd: The Dynamic of Third Parties, Ross Perot, and Republican Resurgence (Ann Arbor: University of Michigan Press).

  Taylor Gooby, Peter, and Gerry Stoker (2011) ‘The Coalition Programme: A New Vision for Britain or Politics as Usual?’ Political Quarterly, 82(1), pp. 4–15.

  Thompson, Helen (1996) The British Conservative Government and the European Exchange Rate Mechanism, 1979–94 (London, Routledge).

  7

  The Crisis of Capitalism and the Downfall of the Left

  Graham Wilson

  The global financial crisis (GFC) that ended the first decade of the twenty-first century was the most severe crisis in the global financial and economic system since the Great Depression (Sorkin, 2009: Financial Crisis Inquiry Commission, 2010). Only extraordinary measures by central banks and governments prevented it from being a replay of the Great Depression. These extraordinary measures required politicians to renounce long-held beliefs to cope with the emergency; in the United States, for example, the administrati
on of George W. Bush took into public ownership or took extensive stock holdings in failing banks and the giant insurance company, AIG. Soon after, his successor, President Obama, effectively nationalized one of the three major US auto companies (General Motors) and arranged the sale of another, Chrysler, to the Italian auto company, Fiat. These were extraordinary steps for any US president to take, and that they were taken initially by a determinedly conservative Republican president was all the more startling. These measures might also prompt some re-thinking in the academic world. For example, these policy responses were scarcely compatible with the popular ‘Varieties of Capitalism’ (VoC) school which asserted the dominance of liberal economic beliefs and practices in the US (and UK) (Hall and Soskice, 2001).

  Although VoC approaches treat the US and UK as essentially the same in economic policy and practices, the UK had of course a much longer and extensive history of public ownership, and so at first glance the nationalization of failing banks by the Labour government was a less impressive policy change. However, the ‘New Labour’ project launched by Tony Blair and Gordon Brown in the 1990s had at its heart an acceptance of capitalist markets and resolve not to take back into public ownership any of the enterprises privatized by Mrs Thatcher (King, 1990; Blair, 2010). Indeed, the Blair government pressed ahead with further measures of privatization beyond those undertaken by the preceding Conservative governments, for example, in air traffic control. Labour also promoted the involvement of private finance in public projects such as the modernization of the London Underground through a public-private finance scheme (the Private Finance Initiative, or PFI) determinedly promoted by then Chancellor of the Exchequer Gordon Brown in the face of all obstacles and objections (Crewe and King, 2010).

  Arguably the policy changes made by central banks, particularly the taking over of banks’ worthless assets by the Fed or exchanging them for Treasury bonds and the adoption of ‘quantitative easing’ (loosely describable as printing extra money) by the Federal Reserve in the US, the Bank of England and others around the world were as dramatic as the steps taken by elected politicians. Pushing out money to inflate demand and providing credit for major companies – including in the case of the Fed, companies that were foreign-owned, such as Barclays – central banks accepted unprecedented responsibility for short-term management of the economy in contradiction of the monetarist nostrums that they should limit themselves to achieving a fixed and steady growth of the money supply.