Assessing the U.S. Elections: Changes in U.S. Policy Toward Japan and Asia

Date November 11, 2004
Speaker Barry M. HAGER(President, Hager Associates)
Lead Discussant Paige COTTINGHAM-STREATER(Deputy Executive Director, The Maureen and Mike Mansfield Foundation)
Moderator NAKABAYASHI Mieko(Fellow, RIETI)


What I will try to do today is three things. One is to talk about my view of what did or did not happen in the election. That is, how important was this election? Was it a kind of watershed election in U.S. politics or not? Does it portend some big shift in the American political dynamic or paradigm? After that, we will discuss some of the specific policy implications of the reelection of President George W. Bush and the increased margin that the Republicans have in both houses of the Congress. Then we will talk a little bit about the long-term future or potential legacy of this administration.

The most obvious question perhaps is: Was this a kind of watershed election or does it represent a major change in U.S. politics? My answer to that question is no. I understand that it makes perfect sense for President Bush and his political advisors, such as Mr. Karl Rove in particular, to claim that this constitutes a major mandate and to assert, as they have, that the American people are becoming more Republican and agreeing broadly with the policy positions of this administration. I would respectfully dissent from that and make the following argument.

First of all, as you look at the electoral outcome, one point I would make is that more Americans voted for John Kerry to be president than have ever voted for any previous presidential candidate. It is also true that even more people voted for George Bush. But the fact is, Kerry got more votes than Al Gore, who, as we all know, won the popular vote in 2000 and who, at that time, received more votes than anyone had ever received for the presidency. Therefore, it is not the case that there are not a lot of people who still are voting for the Democratic candidate or that Senator Kerry did worse than then Vice President Gore.

Also, it was a pretty stable election. Only three out of the 50 states switched sides, all of them comparatively small states. New Hampshire switched from the Republican to the Democratic side and vice versa in Iowa and New Mexico. Even if you look at the Electoral College numbers, most of the additional Electoral College votes that President Bush got this time compared with 2000 arise from the fact that the so-called Sunbelt States continued to grow in population and consequently have more electoral votes. That is why, even by essentially winning the same states, President Bush's total Electoral College votes increased. Therefore, his reelection does not represent a major shift in the composition of the American electorate at the presidential election level.

With respect to Congress, I will begin perhaps with a provocative assertion that despite the discussion of major gains by the Republicans in the Senate race, only one incumbent Democrat actually lost, and that was the well-known case of Senator Tom Daschle. If you look at the long-term trends in terms of voter support for the Democrats versus the Republicans in the Senate, the potential 55-45 split that we will have in the U.S. Senate after this election is really only a return to the split that the Republicans had in their favor in the last years of the Clinton administration during the 106th Congress. The big story politically of 2000, which never got noticed, was how much progress or success the Democrats had in the Senate election. That year they gained five seats and moved to parity with the Republicans in the Senate, and briefly gained control when Sen. Jeffords changed parties in 2001. Then they lost some ground in the 2002 election, when President Bush's post-9/11 popularity was still quite high.

My point is that there has been a very gradual movement. At first, the Democrats were making progress in regainng control of the Senate. In this particular election, the important point is that the Republican gains in the Senate really came only because of the retirements of the Democrats in the South (North Carolina, South Carolina, Georgia, Florida, and Louisiana) rather than through defeats of the incumbents. On the House side, another three seats shifted to the Republicans. Those are basically accounted for by the extraordinary redistricting which took place in Texas, resulting in the creation of more favorable districts for the Republicans. Therefore, I do not see major shifts to be read out of this election.

Having said that, I do think that there are some important lessons for both parties to come out of this election. A county-by-county breakdown of the 2004 U.S. presidential election shows that it is not about the "red" versus "blue" states, but about urban versus non-urban areas; it is in these non-urban areas that the Republican party is strong. By the same token, in the major urban areas including those of the "red states," there are concentrations of Democratic votes. In my view, the lesson for both parties is to deal with how to appeal to those two apparently different constituencies. I am not unrealistic and I can see that the Republicans are doing better than the Democrats right now, but it is a challenge for both parties.

In terms of the impact of the election on U.S. policies, the conduct of the campaign itself gives one reason to believe that President Bush is unlikely to change any of his policies. In my opinion, the reason he prevailed is because he did persuade slightly more Americans that he was the more resolute and stronger leader, and that he was confident and steadfast in his positions and would not waiver.

What does it mean to say that there will be a continuation of his first-term policies? Starting with foreign policy, but leaving Iraq aside for the moment, the consensus among foreign policy experts is that President Bush will pursue a more aggressive foreign policy on countries such as Iran and North Korea. The administration is likely to take a tougher line than the Europeans with respect to Iran, and a tougher line than our allies with respect to North Korea. Having said that, I think we will be a little bit more reasonable about the need for substantial cooperation with our allies and be more amenable to a multilateral approach in Iran and North Korea than we were in Iraq, given our experience there. With respect to Iraq, I do not think we have much choice but to complete the military component of the mission more or less on our own.

Going beyond the combat issues, there will obviously be major financial implications for the reconstruction of Iraq. Because of our own fiscal constraints, I think there is going to be a lot of pressure on our allies to make greater commitments because of the increasing cost of reconstruction in Iraq. I do not think the pressures on the Japanese government would have changed very much if Senator Kerry had been elected. My instinct is that if Senator Kerry had been elected, he would have issued some sort of interim transition statement of complete support for the troops in Fallujah and complete determination to see this thing through. His diplomatic position would have been that all members of the current coalition continue their support and that the United States would be upset if any country withdrew from the coalition or reduced its support for Iraq. After all, Senator Kerry had pledged to further internationalize the effort, so you might have been under more pressure to send more troops had Senator Kerry won.

As for Russia and China, they have both been skillful in their handling of the U.S. administration since 9-11, taking on the language and rhetoric of support for the U.S. efforts to combat global terrorism and acting in a range of ways has been cooperative. In the case of Russia, the administration of President Vladimir Putin has earned a great deal of goodwill from President Bush. In the case of China, it dramatically altered the attitude and rhetoric of the Bush administration. After the first six months of the Bush administration, we were hearing a lot of very aggressive rhetoric about China from the Bush administration and the so-called neoconservatives or "neocons" in the Bush administration, which resulted in a lot of tension between the two countries; this has more or less evaporated after 9-11 because of the cooperative attitude shown by the Chinese.

What I believe might happen is a reexamination of those sort of positive relationships with Russia and China. I think there are a growing number of people in Washington saying that we need to look again at whether we should have a supportive relationship with President Putin and his increasingly repressive policies. This may be a dynamic that might come forth in Washington; it is not something that will emanate from President Bush himself. With respect to China, I think there may be more tensions in relation to national security and foreign policy issues, and in trade and economic issues. On the former, there is growing concern over the increasingly aggressive exchange of words between Taiwan and mainland China, as well as unhappiness over China's handling of Hong Kong. On the trade and economic side, one of the big issues has been the need to adjust the value of the Chinese currency. A major issue next year will revolve around the impact of the end of the Multifiber Agreement (MFA). A World Trade Organization (WTO) study from this year suggested that relatively soon after the end of the MFA, China will probably take over approximately 50% of the U.S. textile market and India another 17% or 18%, leading experts to believe that this loss of competitiveness will be the final demise of the U.S. textile industry. At the same time, I think you will see a certain amount of concern expressed in Congress about the impact of this development on smaller emerging countries that export textiles to the United States. That is another reason why I think there will be an increasing focus on China with respect to trade issues.

As for the domestic impacts of President Bush's reelection, he has made it clear that his two top domestic priorities are the extension of the tax cuts that were passed in his first term along with a somewhat unspecified tax reform and, secondly, the partial privatization of Social Security. My big argument with respect to both of those is that they have major, negative implications for U.S. fiscal policy. With respect to tax cuts, President Bush, in his first term, pursued a "tax cut a year" kind of approach. The reality is that it has become very difficult in American politics for any politician to oppose tax cuts, let alone support tax increases. The trick in those tax cuts is in the way we legislate in the U.S. Congress. A proposal like a tax cut is given a kind of price tag for purposes of fiscal and budgetary policy, which is referred to as a "budget score." That represents the cost of the tax cut if fully implemented over a 10-year period. Although analysis concluded that we could not afford the full 10-year cost of these cuts as a matter of fiscal policy, no one wanted to say that they opposed the cuts. As a result, tax cuts were passed but were phased in gradually, in some cases to avoid feeling the full cost of the tax cuts. Therefore, you have the situation where most of the tax cuts will expire at one point or another over the next six years. The current position of President Bush is to make all of those tax cuts permanent even though analysis shows that that would be extraordinarily costly and will cause the American budget deficit to worsen.

On the Social Security privatization issue, President Bush wants to establish a kind of blue-ribbon commission that would come back to him with specific proposals. As a matter of politics, I am sure he wants to get some Democratic support for the idea because opposition from the Democratic side may characterize the Republican initiative as trying to kill Social Security. As for the fiscal implications, the point here is that we have unfortunately been using the Social Security revenues as general budget revenues. So whatever fraction of the money that is allowed to be privatized by being withheld by the individuals is money that will not go into the general revenues of the U.S. government, thereby increasing the deficit. Thus, unless there is an unexpected amount of congressional resistance to President Bush, fiscal policies in the next term will increase our already growing deficit problem. The Center on Budget and Policy Priorities suggests that this is the first time the U.S. deficit has grown for four consecutive years since World War II. This fiscal situation will in turn have implications in terms of U.S. interest rates, global trading relationships, the yen-to-dollar exchange rate and the dollar-to-euro exchange rate, among others.

Since President Bush is committed to these policies on the fiscal side, and since there is a lot of focus now on our so-called twin deficits - the fiscal and trade deficits - I would expect this administration to be more aggressive on trade issues, and to be protectionist if necessary. I do not think the administration can solve the fiscal problem given the president's policies, but I think it will try to do something on the trade deficit side. Perhaps I should say parenthetically that the likelihood of restraining our spending is low because neither Congress nor the president is very good at doing that. At present, we are spending U.S. $70 billion a year just on the war in Iraq, and the costs of reconstructing Iraq as well as rebuilding or rehabilitating our military after the war are huge.

To conclude, I would say my own view of the election and of how President Bush may be viewed historically is that if I were a Republican I would be, at this moment, rather disappointed with where the Bush administration and the Republicans stand. Given the extraordinary national unity in the United States after 9-11 and given the extraordinary support worldwide for the U.S. at that moment, I think this last election could have been a historic realignment and a watershed type of election. If President Bush had governed differently in a lot of ways, including not invading Iraq based on what most Americans now believe was incorrect information with respect to weapons of mass destruction (WMDs) and so forth, the outcome of the election would probably have been more like 60:40. Therefore, I think this could have been a watershed election.

From the standpoint of the country, I think it was a lost opportunity because a lot of things could have been done right that have not been . As you can tell from my analysis, I am pessimistic with regard to the situation the United States will face in terms of our global position in foreign affairs and our global fiscal situation going forward. We in the United States, however, are already talking about the next midterm congressional election in 2006 and also the next presidential election in 2008. In that regard, one interesting point is that since it is extremely unlikely that Vice President Dick Cheney will be a candidate, it is hard to see who will be the standard-bearer for either the Democrats or the Republicans. So it is kind of wide open as far as what happens in 2008.

Questions and Answers

Q: What international situations affected this presidential election? Republicans may be seen as more skillful in dealing with such affairs as the split with Europe and at the United Nations. What kinds of situations, if any, do you foresee arising?

A: I guess that goes under the heading of what I mentioned as lost opportunities. The first Bush administration created a number of international problems which now it must spend the second administration fixing. Therefore, over a period of eight years, we will have lost a tremendous number of opportunities to have really done some positive things in the world.

You mentioned Europe, and that is of course a primary example. Although the European Union is certainly a political and economic rival to the United States, not only have we not paid much attention in the last four years to what is going on there, we have actually managed to alienate the Europeans because of Iraq. At the same time, I think we lack a clear or coherent approach toward other major powers like Russia and China. Our relationship with China has been seen largely through the prism of whether China supported us with respect to Afghanistan, Central Asia, Iraq, and again, the war on terror. In terms of our relationship with Russia, if we truly support the growth of democracy globally, we should be concerned about Russia. We are looking the other way, however, because Russia nominally supports us on Iraq.

As for Japan, our relationship has been subordinated to much too great an extent to this issue of Iraq. On the whole, the war in Iraq has totally subordinated all of the other global interests of the United States. I doubt that anybody in Washington believes that the president's vision and the sort of neocon vision of creating democracy throughout the Middle East starting with Iraq is realistic. In that sense, I would say that it has been a huge loss of opportunity. The sad thing is that I do not know if Senator Kerry could have fixed it any better. Getting out of Iraq, restoring good relations with Europe, and taking a clear-eyed view about our relationships with China and Russia are big tasks, so it will go down in history as a very unfortunate eight-year period.

Q: I am interested in the religious divide in the United States as political advisor Karl Rove reportedly played a very important role in gaining votes from religious groups. Would you please explain the importance of religious issues in terms of the U.S. presidential election? Secondly, at a recent Brookings Institution dinner party, Mrs. Hillary Clinton said, "I have faith." What is your view on the possibility of Mrs. Clinton as the next Democratic presidential candidate?

A: On the evangelical Christian issue, I would like to give a very balanced answer. The first wave of analysis of the election emphasized that point based on some of the exit polls. According to such polls, 22% of the voters thought moral values were the most important issue, and of those, approximately 80% voted for President Bush.

I do not want to dismiss that as unimportant, but I tend to think there is a little bit of a spin game going on, in which people take events or analyses and spin them toward a certain point of view. If the Republican party succeeds in persuading people that it represents so-called moral positions, it may succeed in getting people, including Mrs. Clinton, to profess their faith, which I think is not really consistent with the separation of church and state under our First Amendment. It also has policy implications. If you can intimidate people into thinking that by taking a certain position on a policy issue like abortion, you will be attacked by people of faith, then taking that policy position is difficult.

Other analyses include the influence of so-called security moms - married women with kids living in suburban areas who are anxious about terrorism. There was a 2%-3% increase in the proportion of married women voting Republican compared with past elections, as well as an uptick in Hispanic support for President Bush. New immigrants, especially, tend to be very patriotic and committed to the sort of Republican attitudes about hard work, free enterprise and individual initiative. In addition, President Bush replaced Mr. John Ashcroft with Mr. Alberto Gonzales, who is Hispanic, as the new Attorney General, in part because the Republican party wants to appeal to the growing Hispanic population. There are different ways of analyzing the vote. You can just as easily say that President Bush's increased margin was due to security moms and Hispanics as to evangelical Christians. Having said that, although the Islamic world seems to view the United States as an extremely godless and secular place, in reality most Americans are religious and go to church. Therefore, I do not view this quite as much of a change as some people are portraying it to be.

One of the disappointments for the Democrats was the youth turnout. All the new registration numbers suggested that young voters between the ages of 18 and 29 were going to vote and were going to vote for Kerry. In fact, young people voted in the same proportion of the electorate as in the past.

As for Mrs. Hillary Clinton, with all due respect, she is probably not the prototype. Some of that has to do with structural reasons. It may not be a good idea to nominate a senator because they have extensive voting records. In fact, John F. Kennedy was the last senator to be elected, and he was not a senator for very long. It is hard to be elected from the U.S. Senate; governors are better candidates. Frankly speaking, some degree of sexism still exists in the United States, so I do not know if we are ready to elect a woman. That remains to be seen. She is also from the "liberal" Northeast; she and her husband remain controversial. That is taking on a lot of liabilities. Frankly speaking, I hope we can find someone else.

Q: Apparently I am the sole Bush supporter in this room. It seems to me that you have this unbridled criticism of the Bush administration and its policy mistakes. However, is it not part of the problem that Democrats now have an elitist image, with the Michael Moore crowd turning off a lot of people, and that the Democrats failed to nominate someone with an attractive message?

A: I do not disagree with you as much as you might think. You probably think that the Democrat position cannot be made attractive because it is not attractive. That is where I disagree. In my view, the Bush tax cuts benefited largely wealthy people who are more or less my age or older and doing very well. If the United States eventually has to pay back its bills, it is the current youth - regardless of whether they are at that time successful - who will have to do so. That is an intergenerational transfer of wealth which I find outrageous. The long-term goal of President Bush and the Republican party is to eliminate taxation on all kinds of wealth and investment income. The only thing left in the tax base will be wages. Working-class people will pay for the U.S. government in its entirety and wealthy people who can live on investments will pay nothing. That is an inequitable system. It is hostile to the idea of work, reward for work, and support for families that work. I think Democrats stand for those kinds of values, but it was not articulated well. I think the Democratic party is far more pro-family, pro-working class, and pro-rewarding people for work than the Republican party, but it does not sound that way when you hear people talking.

Q: Our security is now influenced by who becomes the U.S. president. In that regard, many people outside the United States are worried that U.S. unilateralism, with its disregard for different cultures, may negatively impact international stability or security. How can we keep a check on the United States to prevent it from acting unilaterally and to encourage it to behave more moderately?

A: Precisely because we went into Iraq alone and it has turned out bady, this administration has been somewhat chastened. President Bush probably does now believe that a mechanism like the six-party talks is necessary for North Korea. In my view, the problem with the Bush administration's North Korean policy is their disregard for continuing the Korean Peninsula Energy Development Organization (KEDO) policy. I think we are going to have to, as a multilateral exercise, create something that looks a lot like KEDO. We are going to have to provide various kinds of assistance, including food and energy assistance to North Korea, as payment for them not to engage in weapons creation and proliferation. I do think we are going to proceed multilaterally, and I think that is a moderation of our behavior. It will more or less be the same thing in Iran. I think we recognize that we really cannot threaten to do something dramatic in Iran without European support. I think events have a way of moderating bad behavior, and Iraq is a major piece of that.

Domestically too, over time, the increasing cost and casualties in Iraq will increase domestic questioning of, if not opposition to, the war. That will cause people to think about what we are doing. Despite all the negative things I have said about the Bush administration, the great ability of the United States to somehow change course if necessary and find new ways of getting things done has really been remarkable. I think we will come back to a point where we are a positive influence on world affairs again.

Q: Given the election results, despite unprecedented campaigning efforts by the Democrats, I think the Democratic party should reform or reshape its policy package. Can I hear your views on how the Democratic party will change its policies?

A: I think the problem has to do more with articulating what it is that most Democrats stand for. For example on the environment, I think most Americans are pro-preservation of the environment, and a sound case can be made that the current administration is weakening environmental regulations. Democrats generally support environmental protection more than Republicans, but Senator Kerry did not deal with this issue. And take family values as another example. Historically, all kinds of social welfare safety net programs including Social Security for retirement, Medicare, Medicaid, school lunch programs,and nutritional programs for pregnant women and kids at risk are programs that the Democrats in Congress have passed and supported. By and large, the traditional Republican role has been to complain that they involve too much government and too much expenditure.

Most of the Democratic policies I disagree with are those that are there to get votes, not because they are good policy, such as agricultural subsidies. I think the things that the Democrats really fundamentally believe in, however, are actually good policy. We just have to communicate better. A lot of it probably does have to do with choosing the right person to bear the message because articulation means a lot in politics. I think President Bush did the right thing politically by being very restricted and direct in what he had to say. He really had to sell his character to the American people, and I think that worked.

*This summary was compiled by RIETI Editorial staff.