There has been a lot of talk in the past couple of weeks about the need for each of the two major political parties to unify. Some have even called for a new politics that pulls people together across party lines. One can only hope.
History shows, however, that some of the most important decisions are forged from bitter fights within a party, while the other party stands quietly aside.
In democracies, good economic policies depend more on political skill than on economic analysis. That is particularly true in times like these, when no single party controls both the presidency and Congress or has a clear majority in both house of Congress.
Unless Democrat Barack Obama captures the presidency and the Democrats get veto-proof majorities in both houses, we may experience that again in the next few years. (The chance of such a combined John McCain-Republican sweep appears to be zero.)
There was a similar situation after World War II, when President Harry Truman’s secretary of state, George Marshall, proposed a significant program of U.S. economic assistance for Europe. The Marshall Plan and other actions to bolster democratic governments in postwar Europe now are widely lauded as great successes in the history of U.S. foreign policy. But they did not enjoy broad political support when enacted.
Indeed, it is ironic to witness contemporary Republican leaders like President Bush or Newt Gingrich extol Truman, despite bitter opposition by many Republicans to Truman’s policies 60 years ago.
Many were opposed but not all. That is where the lesson lies. In June 1947, faced with economic deterioration among allies, civil war in Greece and other threats to stability, Marshall brought forward his plan to help Europe rebuild.
While not all congressional Democrats favored the measure, the administration could expect most to fall in line. But most Republicans were opposed, and the Truman administration did not have enough votes to get secure passage. Time was quickly running out.
One group of Republicans supported Marshall’s initiative, however. Led by Michigan Senator Arthur Vandenberg, they set out to win over enough colleagues for the plan to pass. Truman and Democratic leaders in Congress wisely kept their mouths shut while the Republicans slugged it out. Fortunately, Vandenberg and his supporters gained the upper hand. In other instances, the Republicans were relatively united and the bitter fight took place within the Democratic Party. A century ago, many Democrats viscerally opposed Wall Street financial interests. The Panic of 1907 showed the need for a central bank, but populists among the Democrats adamantly bucked any change that might benefit large financiers.
Republicans generally were ready to support a Federal Reserve Act introduced by Carter Glass, a Democratic congressman from Virginia, with the blessings of Democratic President Woodrow Wilson. But the Republicans wisely chose to stand on the sidelines while different factions among the Democrats fought to a decision.
In both cases, relative inaction represented wisdom. If an active Democratic attack had made the Marshall Plan a strictly partisan issue in 1947, it never would have passed. A full-court partisan press by Republicans in 1913 would have scuppered the Federal Reserve Act by undercutting Glass and his cohorts.
Similarly, passing welfare “reform” during the Clinton Administration was more a fight within the Democratic Party than between the two parties.
Regardless of the vote counts in November, our country faces similar issues where the crucial politicking will take place within one party rather than between the two parties.
Future U.S. trade policies depend on the relative strengths of populists versus internationalists in the Democratic Party. Deficit reduction hangs on the relative strengths of pragmatists versus ideologues on the Republican side of the aisle. In both cases, a partisan offensive by one party will prove counter-productive.
Energy policy, the environment and tax reform are areas where there are splits in both parties and a variety of cross-party coalitions might emerge.
In economic policymaking, things don’t always come out OK in the end, but the experiences of 1913 and 1947 give one hope.
© 2008 Edward Lotterman
Chanarambie Consulting, Inc.