Preparing For 2006

As 2005 comes to a close, I am struck by the observation that Democrats responded tactically, not strategically, to almost every big news event this year. If that same pattern continues in 2006, I shudder to think what the outcomes of the mid-term elections will be, given the GOP's proven willingness to fix elections, deceive Americans and assassinate the character of opponents.

What's the difference between tactical and strategic response? Unfortunately, that's all too common a question. Tactical response means an issue emerges in the headlines and the Democratic reaction focuses on attacking the corruption/inadequacy/unjust policies of the Bush administration or the GOP. A strategic response would involve Democrats using an emerging issue not only to show the failures of the GOP but to show that the issue would be resolved or moot under a progressive agenda for governing the country. That does not mean offering alternative band-aids. It means demonstrating that the situation would have been prevented by a progressive agenda that deals with the root causes.

First let's look at 2005. Three issues stand out. Iraq, Katrina and the rise of China. On Iraq, most Democrats were critical of the president's prosecution of the war but few beyond the Progressive Caucus were willing to offer an alternative. And when they finally did, as happened after the stand taken by Rep. John Murtha, the resounding theme was unilateral withdrawal. Here the party showed its worst side: a combination of poll-watching and a weak understanding of the tools available to craft foreign policy. A real progressive policy would deal with the immediate symptoms (incipient civil war in Iraq, through multi-party negotiations) and the underlying root cause (economic dependence on oil, through a plan to get America completely off of oil as a transportation fuel in 25 years).

Hurricane Katrina should have been a watershed event in American politics. America lost a major city, an essential port and 30 percent of energy production in the Gulf of Mexico is still shut in due to a predicted natural disaster. The worst hit were the poor and African-Americans. The cause was overwhelmingly attributed to two man-made problems: the unnatural engineering of the Mississippi that destroyed the wetlands protecting New Orleans and global warming that is increasing the intensity of hurricanes in the Gulf. New Orleans is the epitome of what is wrong in America: rising inequality, dysfunctional public infrastructure, pathological ecosystem depletion and extraordinary dependence on oil and natural gas. A strategic response would have dealt with the immediate symptoms—local devastation and economic exclusion—through a commitment to sustainable local rebuilding and bayou restoration. At the same time, such a response would also have addressed the underlying root causes of the catastrophe—federally mandated sprawl and wetland destruction—through national commitment to smart growth and an economic valuation of ecosystem services.

The third big issue in 2005 was China. Between Wal-Mart, the Ford and GM layoffs, outsourcing, rising gas prices, the housing bubble and our trade deficit, Democrats could have been turning American's attention to China on a weekly basis. The economic rise of China is a much larger strategic challenge than that posed by terrorism. Indeed, with China cranking up competition for oil in the Persian Gulf, it is one of the root causes of terrorism. A strategic response would have explained how each of these issues is caused or magnified by the Chinese economy, and instead of dealing tactically with each one, would have pounded consistently on the root cause of the problem, the global system of foreign exchange rates. That system allows China to use its state-suppressed wages to make state-owned firms wealthy and avoid the hard, democracy-inducing work of creating a vibrant domestic market economy. (Economist Tom Palley will have more on this in the coming year right here on TomPaine.com .)

Democrats have been able to do little more than criticize the president and his administration for the shoddy or corrupt job they are doing. What is lacking is the ability to shift from criticism to a comprehensive plan for America, so that each crisis brought on and/or mishandled by the president adds to the case that we need to make a shift. In the absence of that agenda, all these tragedies lead nowhere. Worse, having no strategy essentially means agreeing with the Bush administration on the overall direction of the economy and allowing the White House to call Dems 'whiners.'

Ah, but we are on the verge of a New Year, a time for bold resolutions. Matt Bai, writing in this past weekend's New York Times Magazine , wrote that it is time to re-think the contract between government, businesses and workers. That will certainly be part of it and it pegs the scale of the conversation. But we must also find a way to make such a contract strategically stabilizing and environmentally sustainable.

Dems must resolve to think and act strategically. That means anticipating what the future holds for 2006. Unfortunately, we can be assured that given the current policy environment, the new year will bring more crises and catastrophes. My top three for 2006:

1. With religious parties leading in the recent elections, Iraq is far more likely to explode in a rash of ethnic cleansing and full-scale civil war than it is to settle into a negotiated agreement among internal and neighboring stakeholders.
2. The U.S. economy will enter a recession involving a major currency revaluation. Morgan Stanley's Stephen Roach, among other economists, sees a major global economic "rebalancing" very likely in 2006.
3. The 2006 hurricane season will spawn killer storms in the Atlantic and Gulf of Mexico that will devastate cities and energy facilities.

If any one of those three events transpires, Americans will be hurting financially. Gas prices will skyrocket either because of a physical shortage or because of a devalued dollar. Jobs will be lost as domestic consumer demand falls off precipitously in the face of high interest rates and inelastic demand for gasoline. Counter-cyclical federal spending will jack up the deficit even higher and without major economic reform, will only dig the hole deeper. In other words, if we stumble, the economic dislocation will not be cyclical, as happened so often in the Cold War, it will be more like a global crisis in confidence and drop in demand a la 1929.

Unfortunately, our economy is so vast and interdependent that we just don't know where or when the tipping point will be. What is certain, however, is that economy, indeed the entire international order, is significantly imbalanced.

China's rise, competitive economies in Europe and Japan and global warming mean we cannot revert to old policy prescriptions. Thus, it is incumbent upon Democrats to think big and think fast.  If the Dems can really do that, then, and only then, will it begin to look a bit like Christmas.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future