The days when I write my big checks and then weigh in on what the Democratic Party should do are now past, a consequence of my decision to co-host a nightly talk show on CNBC, Kudlow & Cramer. Which is too bad, because the Democratic Party is missing an opportunity to crush the Republicans – just lay them to waste – in next month’s elections. The blockheads who are putatively leading the party, Senator Tom Daschle and former presidential nominee Al Gore, seem to have lost their eyesight, if not their minds; they can’t recognize the economic Achilles’ heel, or more accurately Achilles’ heel, foot, calf, and thigh, that President Bush has flashed at them repeatedly this past year. Instead, they are frittering away whatever support they may have with an untenable position on preemptive war.
First, let’s examine the Democratic position as it currently stands. On foreign policy, the Dems are anti-terror but antiwar. On domestic policy, they are anti-growth and pro–balanced budget, with no desire to benefit the investor class because such breaks allegedly favor the rich.
Or, to put it in terms of presidential politics, the party’s combining a George McGovern take on foreign policy with a Herbert Hoover take on the economy, a lethal prescription for the fall elections and a cataclysmic strategy for 2004.
If I could write the check and get back in the room, here’s the simple plan I would lay out to get control of both the White House and Congress: Follow the path taken by Jack Kennedy – go hawk on foreign policy with a promise to overthrow repressive regimes and launch a vigorous pro-growth domestic policy to stimulate the economy.
It’s amazing to me how JFK’s own party has squandered his legacy. Consider this: The only candidate in the past twenty years who appropriated Kennedy’s vision was Ronald Reagan. It was Reagan who frequently cited JFK’s devotion to a strong military and tax cuts to stimulate the economy, and it was Reagan who drew more Democratic voters to the GOP’s cause than anyone in history. If the Democrats would adopt a JFK stance on defense, then the national debate would shift squarely to the piss-poor job this administration’s doing with the economy. With the nasdaq cut by four fifths, the Dow down 5,000 points, and 50 million 401(k)s getting annihilated, the only issue that will resonate with voters is corporate corruption and the attendant decline of the stock market.
Amazingly, despite Middle America’s overwhelming adoption of stocks as the only asset class worth owning, the Democratic Party still acts as if only the rich own them. That myopic view is keeping the party from capturing millions of voters who are totally up for grabs and feel alienated by this CEO president’s inability to get the economy growing again.
Instead of balanced-budget rhetoric that makes no more sense than it did when Hoover argued for it in 1932, the Democrats should be talking about putting more money into the pockets of the middle class through simple means: a tax exemption for the first $1,000 of dividends and an expanded tax-loss exemption for long-term capital gains. A balanced budget is a noble goal, but not when the economy’s stalling out and the only measures keeping things aloft are 0 percent financing for cars and 5 percent financing for homes. That just gives the auto industry profitless prosperity and creates a housing bubble that makes homes unaffordable for the constituents of the Democratic Party. If anything, the bond market, with the lowest rates in decades, is screaming that the government should be spending, and spending more aggressively than it is, just to stimulate an economy that has maxed out on consumer spending. Tax cuts aren’t the source of evil when the economy is in the doldrums – they’re the source of potential growth. You just have to know whose taxes to cut: the middle class’s and the lower class’s.
Those cuts aren’t enough, though, to bolster the one sector of the economy that’s completely in the tank: technology. Instead of fretting that spending will drive up interest rates, the Democrats should insist on massive new spending programs on security, both at home and abroad, that would put money where it is most needed: in the hands of information-technology companies that are suffering from the worst IT-spending market since tech first began to dominate the economy.
I would call in the heads of Cisco, Intel, IBM, Microsoft, Motorola, Sun Micro, Dell, and EMC and ask them how can we link all of our domestic and international intelligence together immediately. How can we plug a Montana state trooper in to the FBI’s counterterrorist computers in Washington? How can we develop a fair, fail-safe computerized identity system that will keep more bad guys off our planes and out of our container ships and away from our landmarks, reservoirs, and power plants, without trampling on civil liberties? How can we remake our military so that heavy equipment can be deployed faster and more effectively wherever and whenever it is needed? These initiatives, the equivalent of putting a man on the moon in another generation, would reenergize the portion of the economy that’s just being crushed before our eyes.
A change in dividend policy, meanwhile, would reinvigorate the financial system and force companies to pay out more dividends rather than add debt to buy back stock, the current obsession in the corporate world that has led to tattered balance sheets in every industry.
Right now, the Bush administration’s only major contribution to the economy is tariffs on the steel industry. That ridiculous decision has caused a worldwide trade war for what? So the GOP can win West Virginia?
As for corporate corruption, the Democrats seem totally oblivious to the fantastic hand they’ve been dealt: The most crooked of all companies, Enron, was a total creature of the massive deregulation that the GOP has pushed for these past twenty years. You could never have had an Enron without the gutting of all the safeguards the Democrats had put in over the past 70 years, but not a single Democrat has even raised the issue of the critical need to re-regulate. Nor has any Democrat, save Eliot Spitzer, realized that the Republicans have fought every effort to clean up the securities markets. The GOP stance on corporate chicanery – the “just a few bad apples” defense – has been so thoroughly discredited by the gargantuan amount of fraud that Democrats should be jumping up and down about it. And even as the fraud continued to wipe out millions of 401(k)s, the Bushies remained cozy with the executives at the top, declining to pursue the corrupt directors on the board of Enron until a reporter for the Wall Street Journal recently shamed them into doing so.
The multiple Republican failures on the economic front should be the most obvious, natural talking points for every Democratic nominee running for everything from senator to town constable.
But no, the Democratic blockheads remain silent, even as their constituents feel Republican-induced pain every day.
James J. Cramer is co-founder of TheStreet.com. At the time of publication, he owned stock in Cisco, Intel, IBM, Microsoft, Motorola, Sun Micro, Dell, and EMC. He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions that he takes may change at any time.