If there's any boon for Republicans from the government shutdown, it's this: the GOP's unprofitable alliance with big business may finally be over. Corporate leaders are reportedly at wit's end with conservatives over their recent display of brinksmanship, but the discord really should go the other way. There's nothing wrong with big business per se, but to win elections again, the Republican Party needs to respond to the economic concerns of workers rather than the bosses.
The GOP's 2012 defeat was the epitome of this disconnect. To quantify the economic issue mix of the Romney campaign, we analyzed in a recent white paper the content of over 120 television ads that Romney, the Republican National Committee and major allied Super PACs collectively spent $400 million to run. These commercials emphasized unemployment, debt, and Romney's background as a job creator.
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Despite the dismal economy and high jobless rate on Election Day, voters by a margin of 53 to 43 percent in the exit polls believed President Obama was "more in touch with people like them." The media describes this as a GOP "empathy gap" but we believe it is a policy gap. Republicans completely failed to pick up on the economic issue that ranked nearly tied with unemployment as voters' top economic concern: rising prices.
Rising prices — in everyday goods, transportation, education and healthcare, among other categories — reduces the standard of living if wages don't keep up. That's what happened during Obama's first term: the consumer-price index increased by 7 percent but nominal median weekly wages grew just 3.9 percent. Paychecks trailed price increases, but Republicans would have had to hear this from workers, not CEO's, to appreciate the impact.
Republicans' obsession with "job creators" also undermined their credibility to alleviate voters' economic concerns. Most voters work for a "job creator" they are more likely to know as their "boss," and drumming up sympathy for the economic plight of bosses is a lost cause. Moreover, most voters are not entrepreneurs and have no plans to be (who could blame them?). Yet the Republican National Convention came off at times like an Inc. magazine confab. There's already plenty in our culture that rightly celebrates entrepreneurship. The GOP needs to focus on answering the actual economic problems of most Americans, not its preferred set of heroes.
In addition, the 2012 election showed the limits for Republicans in capitalizing on the bread-and-butter fiscal issues of taxes and spending. The GOP has become something of a victim of its own success with three decades of results in cutting taxes. In 1990, Gallup reported that voters, by a 2-1 margin, said taxes were "too high" instead of "about right." The same survey in 2012 found it to be an even split, and just 14 percent of voters in the exit polls rated taxes as their top economic concern. Tax reform in the direction of lower rates is still a worthy and popular idea, but it doesn't hold the urgency Republicans have ascribed to it. They need to stop talking about it as one of the critical "fixes" for the economy. Leave that to CNBC.
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Government overspending and indebtedness, which Romney and running mate Paul Ryan spent much time condemning, hit a political ceiling in a different kind of way. This problem arguably peaked as an issue in 2012 because of the pace of government expansion under Obama and the first-ever U.S. credit downgrade occurring 15 months before the election. Yet the debt has proved resistant to being channeled into national outrage — just ask Alan Simpson or Erskine Bowles. In our view, that's not because voters don't care about the debt but because it doesn't connect with their present economic pain and suffering the way flat wages and rising prices do.
How can the GOP begin to make that connection? It should start by opposing any Democratic effort that would make current conditions worse for workers and families. Just as they have been decrying Obamacare's potential to skyrocket insurance premiums, Republicans should strenuously oppose Obama's nominee to lead the Federal Reserve, Janet Yellen. She is a pioneer of the notion that inflation can deliver job growth, an experiment that she and current Fed chairman Ben Bernanke have conducted over the last four years with dismal empirical results. Senate Republicans should make the Yellen nomination a referendum on quantitative easing, and put Democrats in a position of having to defend her policy goal of higher inflation.
If Republicans make a credible pitch to working-class voters, they'll have an advantage over a Democratic Party that prefers to divide them up into special interests and is too far to the left to have their trust on social issues. This competitive posture, rounded out by a comprehensive appeal to Hispanic voters, is the best hope for the GOP to win national elections again. Modern-day conservatives love to evoke Ronald Reagan, but they always forget his strategy to win the nomination in 1980: George Bush was the candidate of the CEO; Reagan made his pitch to the rank and file.
— By Rich Danker
— Rich Danker is economics project director at conservative-advocacy group American Principles in Action. Follow the group on Twitter @apaction.