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For Democrats willing to see what's before their eyes, the nightmare came into sharper focus over the last week. Another 1994 might be in the offing.
Back then, the beginning of the end came on a procedural vote. A Democratic majority that had held the House for four decades lost a routine party-line vote on a "rule," a basic measure allowing it to control the House floor.
The August vote hit like a neutron bomb. Superficially, nothing changed: The Democrats still had a majority; they quickly re-established control and passed the underlying legislation, a liberal crime bill. Yet Republicans exulted at the whiff of legislative revolution: The Democrats had begun to lose their grip.
Scott Brown's victory last week in Massachusetts is the equivalent of that momentous vote. Democrats still have an 18-seat advantage in the Senate and a nearly 80-seat edge in the House. But the Brown win ends the heroic phase of the Obama era, which lasted precisely a year.
It is still 10 months until the midterm elections, and no one can know how events will play out before then. Will the job market revive? Can President Obama find traction? Yet this much is clear: Obama and the Democrats have done their utmost to create the predicate for a historic wipeout in November. They have put the House in jeopardy, and the consuming question of American politics for the rest of the year is whether they can pull it back.
You could say that it's January 1994 all over again -- but the level of the Democratic peril didn't become clear until much later that year. When Rep. Dick Armey told the Capitol Hill newspaper Roll Call that spring that Republicans might take the majority in the fall, he was practically laughed out of the room. Democrats have entered the red zone this year much sooner, and much more obviously.
Forewarned by Clinton's nightmare, Obama set out to avoid his predecessor's mistakes, especially on health care: He'd be more deferential to Congress; he'd buy off the special interests, keeping Harry and Louise on his side. That is, he learned every lesson but the most important one: Don't support a radical overhaul of American health care as embodied in a sprawling monstrosity of a bill.
Obama's health-care bill has been at least as unpopular as Clinton's. For most of the year, the Democrats poured almost all their energy into it -- even though the economy is the top concern of voters. They kept at it even as public opinion put up a flashing red light. And they resorted to legislative sausage-making so rank it could have been a scene from a PETA anti-meat video.
In short, the push on health care has made the Democrats seem out of touch, imperious and gross -- a corrupt establishment ripe for the toppling after all of four years in power. An unemployment rate of 10 percent, well above the 5.6 percent rate of November 1994, only exacerbates their vulnerability.
All the key conditions are there for a debacle:
* Is the president down in the polls? Check. Obama is far above President Harry Truman's 33 percent approval rating when Democrats lost 55 seats in 1946. But he's been trending downward. President Bill Clinton was roughly even at 45 to 46 percent approval in November 1994. By the end of the weekend, Gallup had Obama roughly even, too, at 48 to 47, his highest disapproval rating yet.
* Has the majority picked up so many seats recently that a correction seems inevitable? Check. When a party has a big tide in congressional elections, it tends to recede. The GOP pickup of 47 seats in 1966 came after Dems swept to an overwhelming 295 seats in the House in 1964. Over the last two elections, Democrats have picked up 54 seats; their total of 257 after the 2008 election is well above their roughly 220-seat average over the last 10 years.
* Are there bunches of Democrats representing conservative districts? Check. The '94 GOP sweep was possible because so many Democrats held naturally Republican ground, particularly in the South. As a result of their big gains in 2006 and '08, Democrats hold nearly 50 seats won both by Bush in 2004 and McCain in 2008, and more than 80 that were won by one of them, reports electoral maven Charlie Cook.
More disturbing than all this for Democrats has to be their erosion among independents and the middle class: They've alienated the great, broad middle of American politics.
The Rasmussen poll had Scott Brown winning independents 73 to 25 percent, even better than the 2-1 GOP edge among independents in last fall's Virginia and New Jersey gubernatorial races. Republicans won't match those numbers nationally in November -- but if they basically reverse Obama's 52 percent to 44 percent win among independents from 2008, they'll make major gains.
As John Judis, the brilliant political writer for the liberal New Republic points out, Obama has seen his standing among people making $30,000 to $75,000 flop upside down over the last year, from 63 to 17 approval in Pew polls to 53 to 35 percent disapproval. His standing is roughly similar among people over 65 years old and working-class whites -- key constituencies in the midterms.
Mechanics will matter, of course: retirements, fund-raising, recruiting. But if the current environment holds, Democrats will be hard-pressed to hold back the tide no matter what their level of technical proficiency.
How does Obama recover? With the canary bedraggled and lifeless in the coal mine in January, he has ample notice of the danger. But he seems willing to do everything -- reconstitute his political team from 2008, adopt fighting rhetoric, vilify the banks -- except move to the center.
On health care, the ox is in the ditch, as LBJ might say. There's no good, easy way to revive the current bill and Republicans savor every day Democrats will spend trying to do it.
The GOP doesn't mind being called "the party of 'no' " -- in fact, it relishes the label, given the unpopularity of Obama's domestic policies. But that can't be its entire message: The party will need to sketch out a lowest-common-denominator affirmative agenda, in the spirit of 1994's "Contract with America."
The importance of the "Contract" can be exaggerated: It wasn't a detailed governing document. Instead, it promised simply to bring 10 popular initiatives to a vote. But it gave Republicans a dimension beyond mere anti-Clintonism.
Scott Brown and Bob McDonnell in Virginia proved such terrific candidates because they opposed Obama policies while cultivating an unthreatening, solution-oriented tone. They point the way for Republicans nationally.
For Republicans hoping for a repeat of their 1994 triumph, at this early juncture it's so far, so good -- and Thank you, Presi dent Obama.
Read the original here.
For Democrats willing to see what's before their eyes, the nightmare came into sharper focus over the last week. Another 1994 might be in the offing. Back then, the beginning of the end came on a procedural vote. A Democratic majority that had held the House for four decades lost a routine party-line vote on a "rule," a basic measure allowing it to control the House floor.
<p>Attempts to overturn portions of Sarbanes-Oxley may pick up steam this week after an April 4 report showed the value of European stock markets has overtaken U.S. markets for the first time since World War I. <br />
The seismic shift in the value of equity markets is a further blow to the New York Stock Exchange and other U.S. markets, which have seen some of the larger initial public offerings opt for overseas markets instead of their traditional NYSE home. </p>
<p>Critics of SarbOx blame the recent regulation for pushing the IPOs abroad. They claim the legislation makes compliance in the U.S. too costly. </p>
<p>"We do have deep capital markets. We do have a vibrant economy. But we have been sitting on our laurels thinking we are a country where people would invest," Wayne Brough, chief economist for Freedomworks, said in a report. </p>
<p>Europe's 24 stock markets had a market capitalization of $15.61 trillion on March 28, slipping past the $15.60 trillion value for U.S. markets, according to Thomson Financial, which tracks the valuations daily. </p>
<p>At the end of the first quarter a year earlier, the U.S. markets led their European rivals by 4.3 percent. In 2003, that lead was a robust 44.5 percent. </p>
<p>European shares have outperformed the U.S., with market capitalization rising 160 percent since the start of 2003, in dollar terms, Thomson said, versus a 70.5 percent rise for the U.S. market. </p>
<p>Over that time, the euro has risen 26 percent against the dollar. </p>
<p>Attempts to overturn portions of Sarbanes-Oxley may pick up steam this week after an April 4 report showed the value of European stock markets has overtaken U.S. markets for the first time since World War I. <br /> The seismic shift in the value of equity markets is a further blow to the New York Stock Exchange and other U.S. markets, which have seen some of the larger initial public offerings opt for overseas markets instead of their traditional NYSE home. </p>
<p>For a man who stood just five feet tall, Milton Friedman - who died Thursday at age 94 - cast a long shadow. </p>
<p>Brooklyn-born and New Jersey raised, Friedman graduated from Rutgers University before going on to found his own intellectual movement at the University of Chicago. </p>
<p>Friedman encouraged unconventional economic thinking at a time when America, in a post-Great Depression mode, viewed an activist government as the primary engine of progress. He argued that individuals, freed of government fetters, were the true sources of economic growth and social advancement. </p>
<p>Mired in Carter-era economic malaise, America brought Friedman-acolyte Ronald Reagan to office with a fresh perspective, one more skeptical of the government's ability to cure social ills. </p>
<p>Thence came the legendary Laffer Curve - and the notion that tax cuts pay for themselves through economic growth became national policy. </p>
<p>Taxes were cut. </p>
<p>Good-bye Carter malaise. </p>
<p>In an era when the world was split between two ideological superpowers, with Karl Marx providing the USSR's ideological foundation, Friedman supplied America's intellectual ballast. </p>
<p>Making the connection between political and economic liberty, Friedman noted how free markets enabled the accumulation of wealth whilst preserving individuality; statism attempted equality at the price of conformity. </p>
<p>After the Iron Curtain fell and prosperity flowered across Eastern European nations, then-Rep. Dick Armey asked one leader how his country had so quickly created a free-market society. The response: "We read Milton Friedman." </p>
<p>The immutability of Friedman's principles - that freedom wasn't for a favored few, but for all - was embodied in the work he shared with his wife Rose. </p>
<p>Seeking to break the education monopoly they saw as so destructive to the aspirations of inner-city residents, the Milton and Rose D. Friedman Foundation advocates new educational opportunities through school choice. </p>
<p>Few have done more to expand hope for so many.
<p>For a man who stood just five feet tall, Milton Friedman - who died Thursday at age 94 - cast a long shadow. </p> <p>Brooklyn-born and New Jersey raised, Friedman graduated from Rutgers University before going on to found his own intellectual movement at the University of Chicago. </p> <p>Friedman encouraged unconventional economic thinking at a time when America, in a post-Great Depression mode, viewed an activist government as the primary engine of progress. He argued that individuals, freed of government fetters, were the true sources of economic growth and social advancement. </p>
<p>Democrats rode a huge wave of frustration over Washington scandals and anger at President Bush to sweep into control of the House and make gains in the Senate. </p>
<p>Democrats had picked up 20 GOP seats by midnight - five more than they needed to seize control - and they were poised to gobble up several more seats in late-closing districts. </p>
<p>"Let's give a big cheer to the American people," incoming House Speaker Nancy Pelosi (D-San Francisco) crowed to a Democratic rally in Washington. </p>
<p>"The campaign is over. Democrats are ready to lead," she added. "The American people voted to restore integrity and honest in Washington. And the Democrats intend to lead the most honest, the most open, and most ethical Congress in history." </p>
<p>President Bush monitored the returns from the White House as the voters picked a new Congress certain to complicate his final two years in office. He arranged to call Pelosi today, then hold an afternoon news conference. </p>
<p>"They have not gone the way he would have liked," press secretary Tony Snow said of the election returns. </p>
<p>In the Senate, Democrats picked up three seats, falling short of the six they needed to take to win control, although vote counting was continuing into this morning. </p>
<p>Democrats easily trounced incumbent GOP senators in Pennsylvania, Rhode Island and Ohio - and held the line in New Jersey, where appointed Sen. Robert Menendez dispatched rival Tom Kean Jr. </p>
<p>Charlie Crist was a rare bright spot for Republicans, winning the Florida governorship now held by the president's brother Jeb, and Gov. Arnold Schwarzenegger won a new term in California, the nation's most populous state. </p>
<p>But that was cold comfort for the Republicans, who have controlled the White House and both houses of Congress for most of the time since Bush took office and used their majority to pass large tax cuts and back the war in Iraq. </p>
<p>"It's very hard to watch," lamented Dick Armey, who was House majority leader in those heady GOP days. </p>
<p>All eyes last night shifted to the vote totals in crucial Senate contests in Virginia, Missouri and Montana - races Democrats need to sweep to win the majority in the 100-member chamber. </p>
<p>Connecticut voters cast anti-war Democrat Ned Lamont aside to punch Sen. Joe Lieberman's return ticket to Washington - redemption for his primary loss that prompted his independent re-election bid. </p>
<p>Democratic House hopefuls rolled through the Midwest and Northeast to grab control of the chamber - and also picked up normally conservative districts in Florida and North Carolina to pad their lead. </p>
<p>Democratic Rep. Charlie Rangel (N.Y.), who will grab the gavel as boss of the influential Way and Means Committee, said the takeover will force Bush "to cooperate with us." </p>
<p>"The president can't move beyond us. We will have the votes in the House," Rangel told NY1. </p>
<p>The Democratic takeover in the House severely hinders Bush's ability to press his domestic and foreign policy agenda in his final two years in the White House. </p>
<p>By nearly two to one, 62 percent to 33 percent, voters said they were motivated by national issues over local issues - a sentiment breaking in favor of the Democrats, who spent millions on TV ads trying to nationalize the election as a referendum on Bush and the war in Iraq. </p>
<p>Nearly six in 10 voters told exit pollsters they disapprove the way Bush is handling his job and the war in Iraq. </p>
<p>In the hot Senate races, Democratic anti-abortion candidate Bob Casey Jr. upended incumbent Rick Santorum in Pennsylvania; Sherrod Brown dispatched Ohio incumbent Mike DeWine; and Sheldon Whitehouse bounced moderate Senate veteran Lincoln Chafee in Rhode Island. </p>
<p>Democrats defended their Senate turf in New Jersey and Maryland, where Ben Cardin held off a strong charge from GOPer Michael Steele in an open seat race in the solidly blue state. </p>
<p>Republicans appeared poised to retain the seat of retiring Sen. Bill Frist in Tennessee, where Bob Corker was leading Democrat Harold Ford Jr. </p>
<p>Both sides were anxiously awaiting the final returns in Sen. George Allen's tight race with rival Jim Webb in Virginia; incumbent Republican Jim Talent's Missouri fight with Claire McCaskill; and Montana Sen. Conrad Burns' battle with Democrat Jon Tester. </p>
<p>The GOP held onto Senate seats in Indiana, Maine, Mississippi, Utah and Texas. Democrats kept control of seats in Massachusetts, West Virginia, Florida, California, New Mexico, North Dakota and Vermont, which passed from one independent to another who caucuses with the Democrats. </p>
<p>Florida Democratic Sen. Bill Nelson delivered the sweetest victory for the party, finally slaying Katherine Harris, the former Florida secretary of state whom Democrats blame for handing Bush the presidency in 2000. </p>
<p>And Florida's Foley, whose name still appears on the ballot in his Palm Beach, Fla., area district, came within points of stunning Democrat Tim Mahoney.
<p>Democrats rode a huge wave of frustration over Washington scandals and anger at President Bush to sweep into control of the House and make gains in the Senate. </p> <p>Democrats had picked up 20 GOP seats by midnight - five more than they needed to seize control - and they were poised to gobble up several more seats in late-closing districts. </p> <p>"Let's give a big cheer to the American people," incoming House Speaker Nancy Pelosi (D-San Francisco) crowed to a Democratic rally in Washington. </p>
<p>WITH less than a month to go before Election Day, the last thing the Republican Party needs is major flare-up between its Evangelical wing and the rest of the party. But as the GOP's support sags, especially among churchgoers, that's just what's breaking out. </p>
<p>The gap between the Bible-thumpers and the tax-cutters is nothing new. Ever since the Religious Right hit the polls in the late 1970s and early 1980s, there's been a tension built into the Republican coalition. The party needs religious voters to win elections, but many in its establishment are embarrassed to be associated with, and annoyed to have to put up with, what they see as a bunch of fundamentalist rubes. In turn, those voters perpetually feel shortchanged and disrespected. </p>
<p>A quick look at the polls shows that religious voters are feeling especially left in the cold by the GOP this fall: Whereas weekly churchgoers favored President Bush over Democrat John Kerry by 58 percent to 41 percent in 2004, they're splitting dead-even right now as to which party they favor to win Congress. </p>
<p>Why the loss of confidence in the GOP? No doubt, part of it is the Mark Foley scandal. But, at a deeper level, tension looks to be growing between an increasingly pro-government Religious Right and the rest of the party. </p>
<p>Witness, for instance, the escalating war of words between former House Majority Leader Dick Armey and James Dobson, the president of Focus on the Family and the most politically influential Evangelical leader in America. </p>
<p>Armey retired from the House in 2003, but still serves as a regular adviser to House conservatives. I interviewed him late last year for my book on the party's problems - and he laid into the growing influence of the Religious Right in the GOP and how far he thinks it's brought the party from the limited-government ideals of the Reagan and Gingrich revolutions. </p>
<p>"Where in the hell did this Terri Schiavo thing come from?" Armey asked, referring to the extraordinary bill rushed into law by Republican congressional leaders in a (futile) bid to keep the vegetative woman on life support, against her husband's wishes. "There's not a conservative, Constitution-loving, separation-of-powers guy alive in the world that could have wanted that bill on the floor. . . . That was pure, blatant pandering to James Dobson." </p>
<p>"Dobson and his gang of thugs are real nasty bullies," he added. </p>
<p>When these quotes hit the press last month, Dobson's group issued a furious response, questioning Armey's status as a "champion of family values." But Armey only hit back harder, issuing an e-mail response Wednesday night, criticizing leaders of the Religious Right for supporting tax hikes at the state level and forming an alliance with the liberal group MoveOn.org in favor of greater government regulation of the Internet (the so-called "net neutrality" bill). </p>
<p>"When it comes to James Dobson, my personal experience has been that the man is most interested in political power," Armey wrote. "America's Christian conservative movement is confronted with this divide: small-government advocates who want to practice their faith independent of heavy-handed government versus big-government sympathizers who want to impose their version of 'righteousness' on others through the hammer of law. . . . Our movement must avoid the temptations of power and those who would twist the good intentions of Christian voters to support policies that undermine freedom and grow government." </p>
<p>Armey's delineation of the divide is shrewd. And it is precisely the Christian conservatives who believed they could "get something" from an all-Republican federal government who've found themselves most disappointed. </p>
<p>One such soul, David Kuo, former second-in-command in Bush's Office of Faith-Based Initiatives, has a book out tomorrow, "Tempting Faith," that rails against the Bush administration for using that program as nothing more than a political ploy. </p>
<p>It's already well-documented how the administration has used ostensibly nonpartisan events related to the faith-based program to rally the GOP troops and court black churches in swing states. At the same, it failed to win significant funding for a program that was supposed to be the cornerstone of "compassionate conservatism." </p>
<p>During the 2004 election, Republican leaders promised "values voters" a constitutional ban on gay marriage. But President Bush immediately dropped the issue after he won re-election, preferring to make a go of reforming Social Security. </p>
<p>It must be hard for many Christian conservatives not to feel a little used - and quite a bit abused. But it's all the predictable outcome of a party whose elites cynically condescends to such voters, pressing their buttons over and over and hoping they never catch on. And, in turn, it's the predictable outcome of a base that's come to expect too much in terms of cultural salvation from a bunch of two-timing politicians. </p>
<p>The Evangelical political movement certainly isn't ready for a divorce from the Republican Party. But it's fair to say we might see the elephant sleeping on the couch come Election Day. </p>
<p>Ryan Sager (rhsager.com) is author of "The Elephant in the Room: Evangelicals, Libertarians, and the Battle to Control the Republican Party."</p>
<p>WITH less than a month to go before Election Day, the last thing the Republican Party needs is major flare-up between its Evangelical wing and the rest of the party. But as the GOP's support sags, especially among churchgoers, that's just what's breaking out. </p>
<p>September 2, 2004 -- WHILE the GOP's faithful were gathering at the Garden, a bunch of young Republican delegates visited a neighborhood not on their itinerary - the ultra-liberal Lower East Side.</p>
<p>In their clean-cut clothes and big red badges, they were like exotic animals to the local scenesters, who eyeballed them with a mix of confusion and fascination.</p>
<p>The young Republicans suffered some insults, but they also smoked illegally, ran up $400 in drinks - and made some unlikely friends.</p>
<p>"I haven't met one mean or inhospitable New Yorker!" exclaimed 19-year-old Florida delegate Casey Hampton, upon arriving on Ludlow Street Monday night.</p>
<p>It only took a few hours for that to change.</p>
<p>10 P.M.: MAX FISH</p>
<p>This low-key bar on Ludlow Street has pinball machines in front, a pool table in the back and a slew of anti-Bush, anti-GOP posters stuck to the walls.</p>
<p>A "Republicans: Go F--- Yourself" bumper sticker is slapped on the bathroom door.</p>
<p>Fresh-scrubbed Eric Omdahl, 21, and burly Casey Phillips, 23, - both alternates from South Dakota - are not impressed.</p>
<p>"I would be ashamed for my grandmother to come in here and see this," says Omdahl, who is scandalized by a sketch of a naked George Bush, "or even my mom! Not that they would have any reason to come in here."</p>
<p>Omdahl has already had two margaritas, a vodka sour, a White Russian and a mud slide. At Max Fish, he orders a margarita with rocks and salt.</p>
<p>"For a while, my dad thought I was a Democrat," says Omdahl, who blends in a bit more than Phillips, an ex-bull rider who usually carries a .44 in his boot and works on his family's cattle ranch.</p>
<p>Phillips, a barrel-chested bear with a huge brass belt buckle, is shocked by drink prices.</p>
<p>"In South Dakota, you can get a beer for $1," he says. "But I always drink whiskey."</p>
<p>Never mind the smoking ban. "In South Dakota, you walk into a bar, and it's just fog," he says.</p>
<p>A random Lower East Sider literally stops in his tracks and stares at Omdahl and Phillips like they're zoo animals.</p>
<p>"I'm just fascinated," he says. "I'm surprised to see them in here."</p>
<p>11 P.M.: PIANOS</p>
<p>"Let's do flaming sambuca shots!" Omdahl howls upon entering this spot down the street from Max Fish. "It'll get you totally wasted!"</p>
<p>Downstairs, the bar is largely empty, making Hampton's arrival - he shows up in belted khaki pants, a dark blue dress shirt and red tie - more conspicuous.</p>
<p>"I just met Jack Kemp!" says a fired-up Hampton, removing the big red "delegate" badge hanging from his neck.</p>
<p>"I sat right behind George Bush No. 1! Guiliani gave one of the best speeches I have ever seen!"</p>
<p>Omdahl wanders away in search of Phillips, who's in the back room listening to an Icelandic synth pop band.</p>
<p>He lets out a "YEE-HAW!!!!"</p>
<p>It's met with silence. "I guess no one really says 'yee-haw!' here," he whispers, before heading upstairs to find some girls.</p>
<p>He finds one - a cute blonde whose T-shirt reads, "I'm not down with the GOP!"</p>
<p>She is, however, clearly down with Phillips, and gives him her phone number - even though she's here with her boyfriend.</p>
<p>Back downstairs, 25-year-old Catherine Brinkman - the chair of the California Young Republicans - has just arrived with three friends. She's a little distraught.</p>
<p>"If I had known we were coming to a place like this," she says, "I wouldn't have worn my blazer!"</p>
<p>Outside, rancher Phillips and the crowd are about to head to the next spot. Just then, the girl in the anti-GOP shirt hurriedly catches up with him.</p>
<p>"There you are!" she exclaims. "I thought you left! Where are you going next? Can I come with you?"</p>
<p>1 A.M.: EAST VILLAGE DIVE BAR</p>
<p>This bar tends to ignore the smoking ban, and upon arrival, half of the Young Republicans light up.</p>
<p>Phillips has somehow lost the anti-GOP girl, but a tall brunette chats him up.</p>
<p>Catherine orders another Cosmo. She and her friend Diana, a 24-year-old delegate from San Francisco, are exceedingly well-groomed, with perfectly blow-dried straight hair and generous makeup. They look like preppy young professionals who work in Midtown and live on the Upper East Side.</p>
<p>"Sex and the City" is their reference point for New York.</p>
<p>"My dream guy is probably Aidan," Diana says. "Good-looking, but not so clean-cut."</p>
<p>How about the guys here?</p>
<p>"Uh, they have character," she says, straining to be diplomatic.</p>
<p>In the back room, an East Villager starts yelling.</p>
<p>"Get out of my city!" he shouts. "I don't want this bar associated with Republicans!"</p>
<p>Omdahl tries to calm him down: "We don't want any trouble," he says. "We're just trying to have a drink."</p>
<p>The scenester tells the Young Republicans to name what song the deejay is playing. "Uh, '80s new wave?" one guesses.</p>
<p>"It's New Order!" the agitated bar-goer rants. "Now go back to f---ing San Francisco."</p>
<p>At around 3 a.m., the conservatives stumble into cabs, smelling of booze and cigarettes, with only a vague idea of how to get back to their hotels.</p>
<p>Less than 24 hours later, our group had lost two wallets, three cell phones and one camera, all left in cabs. And Hampton - the one who had yet to meet a "mean New Yorker" - had been attacked by a protester who ripped off his George W. button and his delegate badge.</p>
<p>Two days later, Phillips had not ventured back downtown but attended parties and events in Midtown, where "people are dressed much nicer," he says.</p>
<p>Omdahl can't wait to get back to the Lower East Side.</p>
<p>"I'm not gonna lie. I was a little drunk," he says. He lost his wallet, but his dad wired him $600. "And there were some good-looking girls at that last bar."</p>
<p>He just wishes everyone were so welcoming. "A lot of the Republicans - we don't start fires, we don't spit on people,"he says. "We're just in chill mode."</p>
<p>- Additional reporting by Mary Huhn
<p>September 2, 2004 -- WHILE the GOP's faithful were gathering at the Garden, a bunch of young Republican delegates visited a neighborhood not on their itinerary - the ultra-liberal Lower East Side.</p> <p>In their clean-cut clothes and big red badges, they were like exotic animals to the local scenesters, who eyeballed them with a mix of confusion and fascination.</p> <p>The young Republicans suffered some insults, but they also smoked illegally, ran up $400 in drinks - and made some unlikely friends.</p>
<p>July 27, 2004 -- PETE Peterson may be the most qualified man to discuss the American economy.</p>
<p>Not only is Peterson a former U.S. Commerce Secretary and chairman of the New York Federal Reserve Bank, but he now chairs probably the most successful Wall Street investment banking firm, The Blackstone Group.</p>
<p>Peterson has been called many things but when it comes to the long-term future of the U.S. economy — which he sees as confronting some serious issues — Peterson can best be described as persistent.</p>
<p>I sat down with Peterson the other day to discuss his recently published best-selling book, "Running On Empty" (Farrar, Straus and Giroux).</p>
<p>Me: Pete, I've known you for a good while. You are a very accomplished, very rich man.</p>
<p>Now you've written, what, another book that raises serious questions about the future of the U.S. economy.</p>
<p>Why trouble yourself with this?</p>
<p>Peterson: This is going to sound a bit sanctimonious and maybe self-righteous, but I've got five children and nine grandchildren, and I spend a lot of time thinking about them. I've been deeply moved by the German philosopher, Banhoeffer, who once said, "The ultimate test of a moral society is the kind of world it leaves to its children." I think we're failing that test.</p>
<p>Me: Do Americans care about these problems — Social Security and the federal budget, the so-called twin deficits? Do they even know about the problems?</p>
<p>Peterson: The American people have been badly served and deceived by not only our political leaders but the media in the sense of being so dominated by the short term.</p>
<p>I know the vast majority of parents and grandparents are not coldhearted about their kids and their grandkids. They have simply been badly misled.</p>
<p>For example, I consider the Social Security trust fund an oxymoron.</p>
<p>It shouldn't be trusted, and it's not funded. Our own Treasury Department reports we have $44 trillion in unfunded liabilities in our entitlement programs.</p>
<p>That's more than all the net worth in the country.</p>
<p>Me: You say in the book that the cost of Social Security and Medicare will require 56.7 percent of workers' taxable payroll in about 36 years. You think people will care then?</p>
<p>Peterson: This is my point. We keep talking, John, about the social contract, the presumed obligation of the young to keep paying for the rising cost of these unfunded benefits. A contract when I went to college required a meeting of the minds of both parties.</p>
<p>I've wanted to ask my five-year-old grandson whether he's fully aware of his projected future taxes.</p>
<p>I'm not saying taxes would actually rise that far. The economy would break first, and with that would come profound political and social unrest. But why should we put this economy and our children through that kind of wrenching trauma when we could reform these programs now.</p>
<p>Me: In your book, you blame the Republicans, as well as the Democrats. You're a Republican. Can your party be brought back to fiscal responsibility?</p>
<p>Peterson: I always thought my party was about fiscal conservatism. We have morphed into a kind of any-tax-cut-anytime mentality. And some big spenders have joined us in the Republican Party.</p>
<p>Now we have the worst of both worlds fiscally — the biggest tax cuts and the big spending increases. What's ironic about this is that the most conservative sectors of the Republican Party agree. The Cato Institute refers to this as a "spending explosion."</p>
<p>Dick Armey says we can't pin this one on the Democrats. We're in charge of both the Houses and the White House.</p>
<p>Chuck Hagel, a conservative, says this [Republican] party has lost its moorings.</p>
<p>The Democrats, on the other hand, have never met an entitlement they didn't like. Even though many of them will privately admit that Medicare as now constituted is unsustainable, their principal complaint about the Medicare drug bill is that it doesn't go nearly far enough.</p>
<p>The question is: What can we do about it?</p>
<p>There are two approaches, one far more constructive than the other. First, have a massive truth-telling effort, where the American people really understand what we are inflicting on the future and their kids. Then, bold action by a president who is willing to show leadership.</p>
<p>Both the current and the previous presidents set up Social Security commissions and then proceeded to flush them.</p>
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<p>July 27, 2004 -- PETE Peterson may be the most qualified man to discuss the American economy.</p> <p>Not only is Peterson a former U.S. Commerce Secretary and chairman of the New York Federal Reserve Bank, but he now chairs probably the most successful Wall Street investment banking firm, The Blackstone Group.</p> <p>Peterson has been called many things but when it comes to the long-term future of the U.S. economy — which he sees as confronting some serious issues — Peterson can best be described as persistent.</p>