New Geography

Tag: Obama’s America

  • The Heartland Rises

    The change in congressional power this week is more than an ideological shift. It ushers in a revival in the political influence of the nation’s heartland, as well as the South.

    This contrasts dramatically with the last Congress. Virtually its entire leadership — from former House Speaker Nancy Pelosi (D-Calif.) on down — represented either the urban core or affluent, close-in suburbs of large metropolitan areas. Powerful old lions like Reps. Charles Rangel (D-N.Y.) of Harlem, Henry Waxman (D-Calif.) of Los Angeles and Barney Frank (D-Mass.) of Newton, an affluent, close-in Boston suburb, roamed. The Senate was led by Sen. Harry Reid (D-Nev.), who loyally services Las Vegas casino interests while his lieutenant, Sen. Chuck Schumer (D-N.Y.), is now the top Democratic satrap of Wall Street.

    The old Senate tandem remains in place — but with greatly reduced influence. Many remaining Democrats, particularly those from the heartland, now live in justifiable fear for their political lives. But the most radical shifts in political geography are in the House.

    The new House leaders are, for the most part, from small towns, suburbs and interior cities. Most GOP pickups came from precisely these regions — particularly in the South and Midwest.

    The new speaker, Rep. John Boehner (R-Ohio), for example, represents a southern Ohio district that includes some Cincinnati suburbs. Rep. Eric Cantor (R-Va.), the majority leader, comes from suburbs west of Richmond. Rep. Paul Ryan (R-Wis.), chairman of the Budget Committee, hails from Janesville (population: 63,000).

    Power is moving within state delegations. Before the elections, California’s most influential House members hailed from coastal districts. In contrast, Rep. Kevin McCarthy, the new majority whip, represents Bakersfield, an oil-rich, largely agricultural area known as “Little Texas” — a far cry from the urbanity of Pelosi’s San Francisco.

    This change in geography also suggests a shift in the economic balance of power. The old Congress owed its allegiance largely to the “social-industrial” complex around Washington, Wall Street, public-sector unions, large universities and the emergent, highly subsidized alternative-energy industry. In contrast, the new House leaders largely represent districts tied to more traditional energy development, manufacturing and agriculture.

    The urban-centered environmental movement’s much-hyped talk of “green jobs,” so popular in Obama-dominated Washington, is now likely to be supplanted by a concern with the more than 700,000 jobs directly related to fossil fuel production. Greater emphasis may be placed on ensuring that electric power rates are low enough to keep U.S. industry competitive.

    The Obama administration’s land-use policies will also be forced to shift. Sums lavished on “smart growth” grants to regions, high-speed rail and new light-rail transit are likely to face tough obstacles in this Congress.

    Ken Orski, a former senior Transportation Department official and longtime observer of Washington land-use and transportation policy, said that no member of the GOP majority on the House Transportation and Infrastructure Committee comes from a big-city, transit-oriented district. The new committee, dominated by members from rural, suburban and interior smaller cities, represents areas that rely little on mass transit. These members are expected to steer money back to the roads and bridges their constituents rely on.

    Even more important are pending changes in energy policy. Many conservatives disdain what they consider “green pork” — subsidies for renewable fuels like solar and wind as well as the electric car and battery industry. Many firms involved in renewable fuels, already struggling to compete with cheap natural gas, could be driven out of business without continued federal nurturing.

    Another top priority for GOP leaders — and perhaps some energy-state Democrats — may be to choke off funding for the Environmental Protection Agency’s announced new regulations for greenhouse gases. Three out of four jobs in the oil and gas extraction industry are in GOP-dominated Texas, Oklahoma and Louisiana. California’s still-large oil industry includes many who work in the state’s increasingly Republican-leaning interior.

    Similarly, more than two-thirds of the nation’s coal mines, a prime EPA target, are in just three, increasingly red-leaning states — Kentucky, Pennsylvania and West Virginia, according to the Energy Information Administration.

    Yet urban areas can expect some benefits from this Congress. The recent extension of the Bush tax cuts largely benefits wealthy professionals, who cluster in a handful of expensive, liberal-oriented cities and their leafy, affluent suburbs. San Francisco, Boston and Manhattan liberals may groan about “breaks” for the rich, but many may be cursing the GOP all the way to the bank.

    Over time, the new emphasis on fiscal austerity could also play to Wall Street’s advantage — probably the last intention of most tea party activists. Reductions in public borrowing should drive more money into the private economy. This approach, adopted by Conservative British Prime Minister David Cameron, has helped create a smart recovery for London — even as the rest of Britain suffers from government cutbacks.

    The drive for austerity could also threaten traditional heartland staples like agricultural price supports and military spending. Major defense budget reductions, a necessity for any credible cut, could prove painful for military-oriented, red states like Virginia, Arizona, Alabama and Texas.

    This new regional balance of power poses a profound existential question for Democrats in states like California, New York and Illinois. The unlikely possibility of any future bailout for states or cities should help concentrate their minds on things like cutting spending and restoring their ability to create new jobs.

    Overall, it may be better for all regions to have a divided government. With President Barack Obama still in charge of the executive branch, we are not likely to see a repeat of the Bush-era excesses that favored traditional energy companies, suburban housing speculation and agribusiness.

    Optimistically, we may now see a canceling out of both parties’ regional tilts, spurring greater competition among localities for both investment and human talent. This could ultimately benefit the entire economy — taxpayers and communities — shedding an enlightened pragmatism on the current dreary landscape that is U.S. politics.

    This article first appeared at Politico.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by Smaku

  • Washington Opens The Virtual Office Door

    On December 9, President Obama signed into law the Telework Enhancement Act, a bill designed to increase telework among federal employees. Sponsored by Representatives John Sarbanes (D-MD), Frank Wolf (R-VA) and Gerry Connolly (D-VA), the legislation gives federal agencies six months to establish a telework policy, determine which employees are eligible to telework, and notify employees of their eligibility. Agency managers and employees are required to enter written telework agreements detailing their work arrangements and to receive telework training. Under the Act, teleworkers and non-teleworkers must be treated equally when it comes to performance appraisals, work requirements, promotions and other management issues. Each agency must designate a Telework Managing Officer, and must incorporate telework into its continuity of operations plan.

    Supporters of the measure, including the National Treasury Employees Union and the Telecommunications Industry Association, rightly tout its potential to improve the productivity of federal employees, reduce the government’s overhead expenses, decrease energy consumption and cut carbon emissions. Indeed, the Telework Research Network estimates that if the eligible federal workers who wanted to telecommute did so once a week, agencies would increase productivity “by over $4.6 billion each year” and save “$850 million in annual real estate, electricity, and related costs.” The country would save nearly six million barrels of foreign oil and reduce greenhouse gas emissions by one million tons per year. The bill would enable agencies to continue functioning during emergencies (federal telecommuters saved the government an estimated $30 million per day when D.C.-area snow storms shut down offices last winter), and it would decrease traffic congestion.

    Increasing the number of federal telecommuters is a good first step towards empowering the nation to tap telework’s many benefits. However, a diverse group of advocates would like to see telework become widely available for all workers. The Obama Administration endorses this goal. Proponents of broad access to telework include champions for small businesses and for energy independence, transportation alternatives, work/life balance, homeowners, environmental protection, disabled Americans, and rural economic development. To maximize telework’s promise — including its potential to open employment opportunities for 17.5 million people — Congress must enact comprehensive legislation offering employers, workers and other stakeholders in both the public and private sectors a wide array of cogent reasons to expand the practice.

    Comprehensive legislation would need to offer either carrots or sticks to constituencies that may resist telework’s growth: organizations with telework-shy managers; commercial landlords worried about telework-induced vacancies; and cities and states afraid that reducing the number of commuters will decrease their revenue. A few key elements:

    Remove Regulatory Barriers
    Perhaps the single greatest regulatory barrier to telework is the threat interstate, part-time telecommuters face of being taxed twice at the state level on the wages they earn at home: once by their home state and then again by their employer’s state. New York has been especially aggressive in taxing nonresidents on the wages they earn at home even though their home states can tax those wages, too. The double tax risk makes telework unaffordable for many Americans.

    Proposed federal legislation called the Telecommuter Tax Fairness Act would eliminate this roadblock to telework, prohibiting states from taxing the income nonresidents earn in their home states. This bill, introduced in the 111th Congress by Representatives Jim Himes (D-CT) and Frank Wolf, enjoys bi-partisan support from lawmakers representing states across the country. It must be included in any package intended to accelerate telework’s adoption.

    Simplify the Home Office Deduction
    The complexity of the current home office deduction discourages home-based workers from taking advantage of it. Potent telework legislation would give both home-based business owners and telecommuting employees the option to take a standard home office deduction.

    Offer Incentives To Employers
    Employers should be allowed to treat as nontaxable income the dollar savings they realize as a result of telework. Alternatively, they should receive a tax credit based either on the cost they incur for equipping employees to telecommute or on the percentage of workers who telecommute. They should receive a payroll tax break when they hire new teleworkers

    Because managerial resistance is a significant obstacle to telework’s growth, and because managers who telecommute themselves may have a more positive view of telework than their office-based colleagues, businesses should receive added incentives to allow managers to telecommute.

    Offer Incentives To Workers
    Workers should be allowed a tax credit based on the amount of time they spend telecommuting or on the cost they incur to purchase equipment and services necessary for telecommuting. They should have the option to treat the value of all equipment and services the employer provides to facilitate telework as a fringe benefit excludable from their taxable income, even when personal use of the tools is also permitted.

    Officer Incentives To Insurers
    Insurers covering losses that telework can minimize should be recruited to promote telework with tax advantages. Because experienced teleworkers enable their companies to continue operating even when emergencies render the main office unusable, business continuity insurers can limit their exposure by increasing the number of their policyholders that maintain strong, well-designed telework programs. They should receive incentives to do so.

    Automobile insurers should also be enlisted. The less frequently people drive, the fewer accidents occur and the less liability car insurers face. To motivate these insurers, Congress should offer them tax advantages based on 1) the proportion of their corporate policyholders that have both significant telework programs and aggressive policies to replace work-related driving with Web-based or telephone conferencing; and 2) the proportion of their individual policyholders who telecommute regularly.

    Offer Incentives To Commercial Property Owners
    Because businesses with dispersed workers need less office space, commercial landlords may wince at decentralization. However, the landlords able to fill their buildings with a greater number of tenants requiring less space – rather than fewer tenants requiring more – can thrive. In addition to operating greener and more cost-efficient sites, these landlords can reduce their risk of loss: Because each tenant represents a smaller proportion of a landlord’s total revenues, a single tenant’s default or decision to relocate is less likely to deal the landlord an insurmountable blow.

    To entice commercial property owners to encourage their tenants to adopt telework, Congress should offer the owners tax incentives based on the proportion of their tenants that have either vigorous telework programs or well-enforced policies requiring employees to replace business travel with remote conferencing.

    Make State and Local Efforts To Promote Telework A Condition Of Federal Transportation Funding
    By reducing the demand for roads and mass transit, telecommuting minimizes the cost of repair, maintenance and expansion of such infrastructure. Before the federal government subsidizes state and local transportation investments, the funding recipients should be compelled to mitigate costs by promoting telework.

    One step that states receiving federal aid should be required to take is to eliminate tax barriers to interstate telework. For example, they should be prohibited from subjecting a nonresident company to business activity taxes when the company’s sole connection to the state is its employment of a few in-state telecommuters. States could also allow car insurers to offer pay-as-you-drive policies.

    States and municipalities could require their agencies to develop telework programs for their own workers and to engage only those contractors that make the maximum possible use of telework. They could require agencies seeking funds to increase their car fleets or facilities to submit an assessment of whether telework could eliminate or reduce the need. They could compel their employees who seek approval for business travel to demonstrate that remote conferencing would not be an adequate substitute. They could authorize agencies to retain the funds the agencies save as a result of telework.

    States could create offices that promote telework and provide technical/legal support for both public and private employers developing telework programs; designate high traffic and pollution days as telework days and publicize them; and conduct public awareness campaigns to encourage telework, including campaigns specifically targeting businesses. Municipalities could eliminate telework-hostile zoning rules.

    All of these proposals would go a long way towards minimizing needless travel. Some would cost the federal government nothing or save it money. Others require a federal investment, but the investment would be made via business and individual tax breaks — welcome incentives for many members of the incoming Congress. Together, these suggestions would create jobs and strengthen the nation’s energy security. They would reduce traffic, carbon emissions and transportation costs; enable workers to meet conflicting job and family responsibilities; help businesses lower expenses, and drive profits. These are fundamentally important goals with bi-partisan support. Congress should act quickly and forcefully to unleash telework’s potential to meet them.

    Photo by By Rae Allen, “My portable home office on the back deck”

    Nicole Belson Goluboff is a lawyer in New York who writes extensively on the legal consequences of telework. She is the author of The Law of Telecommuting (ALI-ABA 2001 with 2004 Supplement), Telecommuting for Lawyers (ABA 1998) and numerous articles on telework. She is also an Advisory Board member of the Telework Coalition.

  • General Motors’ IPO: Deal Or No Deal?

    Those who are looking for a feel-good stimulus story, notably members of the Obama administration, cite the recent initial public offering (IPO) in which the federal government sold off 28 percent of its General Motors shares for about $15 billion.

    When the government-owned shares went public, President Obama said: “American taxpayers are now positioned to recover more than my administration invested in GM.” From the headlines and sound bites, you might think that the government was in the money on the $49 billion that the Troubled Asset Relief Program invested in GM during the dark days of the Great Recession.

    To believe that the U.S. government made money on its GM investment is to imagine that former republics of Yugoslavia will get back together so that they can restart the production lines of the Yugo.

    In the GM story, there have been many winners and losers on the road from bankruptcy to IPO. For the most part, the losers include investors, bondholders, taxpayers, and the 65,000 workers laid off so that, in the showroom of American politics, the bailout money could look like a rebate.

    The winner was the United Auto Workers union, which delivered Ohio and Michigan to the Obama campaign in the 2008 election. Without the union’s support in 2012, the president’s handling and maneuvering ability in the electoral college might resemble the torque on a Chevy Vega.

    The GM that went bankrupt in 2008 was not just a car company; it was also an unfunded pension plan, a bad bank (partial ownership of General Motors Acceptance Corporation or GMAC), and a health maintenance organization notable for padded bills.

    As it hit the crash wall, GM had negative equity, $88 billion in losses since 2004, 92,000 workers, 500,000 retirees, and 22% of a domestic car market that had shrunk to 13 million cars a year.

    What sleight of an accountant’s hand turned the originator of the Chevy Nova into an emerging juggernaut (maybe one with “soft Corinthian leather?”) that the market now values at $51 billion?

    Instead of letting GM go through Chapter 11 liquidation, and winding up the company according to bankruptcy laws, the U.S. government stepped in and allocated the spoils according to political rather than legal precedents. In theory, the move was designed to “protect American jobs.” What did these jobs cost?

    The immediate losers were GM shareholders (largely wiped out), and the holders of $95 billion in corporate bonds, now worth about $0.30 on the dollar.

    If you check the price of GM shares today, you will see them trading at around $34 a share. “Not bad,” I can hear you saying, recalling GM at $22 or even $8. But these are the new Government Motors shares; the old ones, which your grandfather owned, are trading for less than $1 on penny stock exchanges. Maybe the certificates are selling at flea markets?

    In the restructuring, the new owners of GM became the U.S. (61%) and Canadian (12%) governments, and the United Auto Workers (17.5 %), whose generous health and retirement packages would have been watered down or lost in a commercial liquidation.

    In the bankruptcy, the UAW retirees were moved ahead of the bondholders to the front of the disassembly line, no doubt because their rust-belt votes count more in presidential elections than those of bi-coastal hedge funders.

    Stakes in the new GM were granted to the union in lieu of cash due on health care and other benefits, which survived the reorganization. In the recent IPO, the unions netted $3.4 billion for a third of their stake.

    Other options thrown into the car deal included the $17 billion given to GMAC, whose losses became a ward of the state, and whose profits go to the hedge fund, Cerberus. It’s been renamed Ally Bank, just so you won’t associate its bad debts with the GM bailout. (“Test drive the new Ally… from zero to $17 billion in six point four seconds.”)

    GM was also allowed to carry forward $45 billion in Net Operating Losses through bankruptcy, a deduction rarely, if ever, granted to other scrapped companies. Clunkers for cash? The company also got a $6.7 billion loan, at below market rates.

    And finally, to promote Chevy Volts, buyers of the new hybrid electric car are given $7500 in federal tax credits. Maybe Ford dealers can match the subsidy on their hybrids by throwing in a set of snow tires?

    The new GM is allowed to operate with an unfunded pension liability, which remains on the books to the tune of about $30 billion. Mark that claim to market (those accounting rules that did so much to collapse the likes of Merrill Lynch), and GM’s IPO stake is hardly worth $15 billion.

    The contrived GM liquidation also kept the auto maker from dumping about $14 billion in promises onto the Pension Benefit Guaranty Corporation, a nominally private company — the board, however, consists of the secretaries of Labor, Commerce, and Treasury — that, with government benedictions, backs up politically correct pension payments.

    There is almost no way to know the total losses that can be attributed to the government’s GM restructuring. But, clearly, the government played Three-card Monte with the company’s bad assets, and kept the good ones for themselves. On Wall Street — the object of so much government venom — this is called “asset stripping.”

    Little wonder that everyone, including its government shareholders, are now upbeat about GM’s prospects. Morningstar writes: “GM can break even at near-depression-like sales volume, and it is selling more units in the U.S. with four brands than old GM did with eight brands in 2009.”

    At the time of GM’s IPO, President Obama sounded like Mr. Goodwrench: “Just two years ago, this seemed impossible. In fact, there were plenty of doubters and naysayers who said it couldn’t be done, who were prepared to throw in the towel and read the American auto industry last rites.”

    What he might have said is this: “We hosed the shareholders and suckered the bondholders down to $0.30 on the dollar. We propped up GMAC with $17.5 billion and then buried the losses in bad bank accounting. We leaned on the accountants to keep $45 billion in Net Operating Losses. We learned something from Bernie Madoff and are letting GM continue to carry $30 billion in unfunded pension liabilities. We dumped GM’s health care obligations, for shares, into a union trust. The rest we moved off the lot. Home run.”

    The government originally threw $49 billion at GM’s cash guzzling problems and then forced another $100 billion on the market in losses. In exchange thus far, it has recouped $15 billion, for about half of it stake in the new GM.

    In Washington, that might pass for a good deal. It might also seem fair in a remake of The Godfather (“The Corleone Family wants to buy me out? No, I buy you out, you don’t buy me out.”) Elsewhere, it sounds like a lemon.

    Photo of Classic Cadillac 2 by Shiny Things: “For-sale Cadillac parked in Morro Bay. How tempting is that?”

    Matthew Stevenson is the author of Remembering the Twentieth Century Limited, a collection of historical essays. He is also editor of Rules of the Game: The Best Sports Writing from Harper’s Magazine. He lives in Switzerland.

  • Demography vs. Geography: Understanding the Political Future

    Demography favors Democrats, as the influence of Latinos and millennials grows. Geography favors the GOP, as the fastest-growing states are solid red. A look at America’s political horizon.

    In the crushing wave that flattened much of the Democratic Party last month, two left-leaning states survived not only intact but in some ways bluer than before. New York and California, long-time rivals for supremacy, may both have seen better days; but for Democrats, at least, the prospects there seem better than ever.

    That these two states became such outliers from the rest of the United States reflects both changing economics and demographics. Over the past decade, New York and California underperformed in terms of job creation across a broad array of industries. Although still great repositories of wealth, their dominant metropolitan areas increasingly bifurcated between the affluent and poor. The middle class continues to ebb away for more opportune climes.

    Each state has also developed a large and politically effective public sector. In both states, no candidate opposed to its demands won statewide office in 2010. At the same time, the traditional, broad-based business interest has become increasingly ineffective; instead, some powerful groups such as big developers, Wall Street, Silicon Valley, and Hollywood, became part of the “progressive” coalition, willing and able to cut their own deals with the ruling Democratic elite.

    In New York, Republicans did capture a handful of seats in rural areas that have historically been friendly to the GOP, but in California the Republicans made no headway at all, even in rural areas. The difference here can be explained by demographics. In New York, the rural population is overwhelmingly Anglo; in California, much of it is Hispanic, a group that is both growing and, for the most part, tilting increasingly to the left.

    Can the New York and California models be replicated in other states and yield political gold for Democrats? The answer depends on how these two economies perform over the coming decades.

    Another state model competes for supremacy. It can be found in Texas, the Southeast, and parts of the intermountain West. The hallmarks are fiscal restraint and an emphasis on private-sector growth. If these free market-oriented states can produce better results than the coastal megastates, with their emphasis on government they could own the political future.

    Demographics: The Democrats’ Best Hope

    Right now, demography is the best friend Democrats have. Over the next four decades, the two groups that will increasingly dominate the political landscape are Hispanics and millennials (the generation born between 1983 and the millennium). Both groups tilted leftwards in recent elections. This trend should concern even the most jaded conservatives.

    The Latinization of America, even if immigration slows, is now inevitable. Only 12 percent of the U.S. population in 2000, Hispanics will become almost 25 percent by 2050. As more Latinos integrate into society and become citizens, they are gradually forming a political force. Since 1990, the number of registered Latino voters swelled from 4.4 million to nearly 10 million today.

    Anglos—60 percent of whom supported Republican congressional candidates in 2010—are beginning to experience an inexorable decline. In 1960, whites accounted for more than 90 percent of the electorate; today, that number is down to 75 percent. It will drop even more rapidly in the coming decades, with white non-Hispanics expected to account for barely half the nation’s population by 2050.

    California and New York are laboratories of the new ethnic politics. In New York, Latinos represent roughly 12 percent of the voters, while the overall “minority” vote has risen to well over 30 percent. California has, by far, the nation’s largest Hispanic population and Latinos are now roughly 24 percent of eligible voters. Overall, non-whites constitute well over a third of the electorate.

    The growth of the Latino vote works to Democrats’ advantage. Until the GOP-sponsored passage in 1994 of the anti-illegal alien Proposition 187, Latinos in California routinely voted upwards of 40 percent Republican (and even did so for Governor Arnold Schwarzenegger in 2006). This year, barely one-third of California Latinos supported Republican candidates Meg Whitman and Carly Fiorina.

    The Republican embrace of what is perceived by Hispanics as nativism has clearly alienated Latinos. This applies not only to California but also in Arizona, where Latino voters are now 18 percent of the total; in Nevada, they represent 14 percent and played a critical role in re-electing Majority Leader Harry Reid.

    This shift is all the more remarkable given the fact that many Democratic policies, on both social issues and regulations squashing economic opportunity, are at odds with Latino social conservatism and aspirational instincts.

    Of course, Latino voters are not the same in every corner of the country, and Republicans can do well with Hispanic voters if conditions are right. For example, Latinos in Florida and New Mexico support Republican candidates far more than in California or New York. Texas Republicans picked up two predominately Latino house districts along the Mexican border this year. And several recently elected high-profile Latinos—Florida Senator Marco Rubio and Governors Brian Sandoval in Nevada and Susan Martinez in New Mexico—earned strong Hispanic support (Rubio won more than 45 percent of Latino voters in a three-way race). Latino Republican candidates also won in Washington State and, of all places, Wyoming.

    The elevation of such emerging leaders could eventually turn the Latinos into a successfully contested group. But there is also a distinct possibility that emboldened nativist-oriented Republicans (backed largely by their older, Anglo base) could embrace policies, such as abolishing birthright citizenship, that seem almost calculated to alienate Latino and other immigrant voters.

    Millennials: Growing Up, Staying Left?

    Latinos and minorities are not even the GOP’s biggest demographic challenge. Millennials, the so called “echo boomers,” constitute a growing percentage of the electorate. They also tilted heavily Democrat. In 2008, millennials accounted for 17 percent of the nation’s voting-age population; by 2012, that share will grow to 24 percent. By 2020, they will account for more than one-third of the total population eligible to vote. Their power will wax while the seniors’, who broke decisively for the GOP this year, will inevitably fade.

    Millennials and generation X, their older brothers and sisters, constitute the majority of self-professed Democrats, note Mike Hais and Morley Winograd, authors of the forthcoming Millennial Momentum: America in the 21st Century. Last November, they supported Democratic candidates 55 percent to 42 percent, although their turnout flagged compared to what it was in 2008. They can be expected to turn out in bigger numbers in the 2012 presidential election.

    A connection exists between the Latinization trend and millennial voters. Boomers were 80 percent white; among millennials, at least the younger cohorts, the majority are from minority households.

    More critically, on a host of issues—from the environment to gay rights and economic re-distribution—this generation appears well to the left of older ones. One hopeful note for libertarian-minded Republicans: almost half believe that government is too involved in Americans’ lives (in this sense, their views are similar to those of older generations).

    Can millennials and generation X-ers be turned toward the center? History suggests this is at least possible. Boomers started off relatively left of the mainstream, notes political scientist Larry Sabato (although as Hais and Winograd suggest, Boomers were never as “left” as their louder, and often better-educated, generation “spokespeople”). In 1972, their first appearance at the ballot box, they split between Richard Nixon and George McGovern while older voters went overwhelmingly with President Nixon. In 1976, they helped put Jimmy Carter in office.

    But, over time, Boomers clearly shifted to the center-right, and eventually tracked close to the national averages. They supported Ronald Reagan in 1984, Democratic Leadership Council standard-bearer Bill Clinton, and George W. Bush. Politically, Sabato notes, “the boomers have become their parents.”

    Will today’s younger voters follow a similar arc? The key lies with how Republicans deal with critical issues, such as gay rights and the environment. It should be sobering for Republicans that a popular conservative like Senator Jim DeMint—the putative godfather of the Tea Party—lost overwhelmingly among South Carolina millennials by 54 to 46 percent against a marginal Democratic candidate.

    “This doesn’t say that the millennials will necessarily be Democrats forever and could never vote for Republicans,” notes Hais, who surveyed generational dynamics for Frank N. Magid Associates, an Iowa- and Los Angeles-based market research firm. “Obviously, the Democrats will have to produce, especially in the economy. But, I think that for millennials to begin to vote for Republicans, it is the Republicans and not millennials who will have to do most of the changing. The Republicans will have to come up with a way to appeal to an ethnically diverse, tolerant, civic generation—something they haven’t done very well to date.”

    Geography: The Great Republican Advantage

    Demographics may seem a long-term boon for Democrats, but geographic trends tilt in the opposite direction. Actually, Republicans did exceptionally well in the country’s fastest-growing places, both within metropolitan areas and by state. Democrats won the urban core, winning it by almost two-to-one in an otherwise disastrous year for them. But this is not where population growth is concentrated. Out of the 48 metropolitan areas, notes demographer Wendell Cox, suburban counties gained more migrants than core counties in 42 cases over the past decade. Overall suburbs and exurbs accounted for roughly 80 percent or more of all metropolitan growth.

    Suburbs and exurbs, where a clear majority of the country lives, are where American elections are determined. Dominated by the automobile single family houses, these areas shifted heavily to the Republicans this year, voting 54 to 43 percent for the GOP. Unless there is a startling economic development or the unlikely imposition of density-promoting national planning policy, the periphery is likely to remain the ultimate “decider” in American politics for the foreseeable future. The next generation of homebuyers, the millennials, note Hais and Winograd, also identify suburbs as their “ideal” place to live—even more than their boomer parents.

    Immigrants also are demonstrating a strong preference for the suburbs. Since 1980, the percentage of immigrants who live in the suburbs has grown from roughly 40 percent to above 52 percent. They also remained the preferred home for most boomers as they age.

    Republicans also dominate the fastest-growing states: Virginia, Utah, Florida, North Carolina, and, most importantly, Texas. Over the past decade, more than 800,000 more people moved to Texas than left the Lone Star State. In contrast, New York suffered a net migration loss of over 1.6 million, while California, once the nation’s leading destination, lost almost as many. Texas, Florida, and Virginia will gain congressional seats while New York will lose seats and California, for the first time in its history, will add none.

    More important still are the reasons driving this migration: job growth, cost structure, taxes, and regulation. While the highest earners in Hollywood, Silicon Valley, or Wall Street may still flourish in the two big blue states, jobs are evaporating for many middle- and working-class residents.

    For the vast majority of middle- and working-class people, the growth states are increasingly attractive places for relocation. Over the past decade, states like Texas, Virginia, North Carolina, and Utah, according to a Praxis Strategy Group analysis, enjoyed faster growth in middle-income jobs than in the deep blue strongholds. Texas, for instance, has increased middle-income jobs at seven times the rate of California over the past decade.

    This job growth extends beyond low-wage jobs at places like Walmart. Over the past decade, Texas has increased its number of so-called STEM jobs (science, technology, engineering, and mathematics related jobs) by 14 percent, well over twice the national average. Virginia and Utah performed even better. In contrast, New York and Massachusetts grew high-tech jobs by a paltry 2.4 percent, while California lagged with a tiny 1.7 percent increase.

    Jockeying for the Future

    In its first two years, the Obama administration tried to reverse these geographic trends by steering funds into universities, mainly those located in big cities and along the Northeast and California coasts. This tilt was natural for an administration which one Democratic mayor from central California described as “Moveon.org run by the Chicago machine.”

    The Obama administration’s “green” policies are also designed to favor major dense urban areas, with large increases in transit funding, high-speed rail projects, and grants for pro-density “smart growth” policies. But with the resounding defeat in November, the drive to force the population into dense and normally democratically inclined cities seems certain to ebb. The demise of the fiscal stimulus will put increased pressure on states like New York and California to cut down their public-sector growth, further threatening their weak recoveries.

    In the coming years, budget-constrained states will have to focus on private-sector jobs and growth. Given the likely tight job market over the next decade, particularly for minorities and millennials, Republicans could do well to demonstrate the superiority of their pro-enterprise model.

    Currently, red-leaning states top the list of states with the “best” business climates. Texas, North Carolina, Tennessee, and Virginia topped a recent survey by Chief Executive Officer magazine. In contrast, the bottom rungs are dominated by New York and California, as well as by longstanding Democratic bastions Michigan, New Jersey, and Massachusetts.

    To succeed, Democrats will need to prove capable of something other than a reverse Midas touch. They will need to develop a pro-growth, job-oriented program, something that they have not done well since the Clinton era. The decline in the numbers of pragmatic, business-oriented Democrats at the state and federal levels could make that job tougher than ever.

    It is still possible that, as millennials and Latinos flock to the suburbs, blue state demographics could overwhelm red state geography. In a decade, for example, Texas will likely be more far Latino than Asian; by 2040, according to demographer Steven Murdoch, the overall minority population, could be three times that of Anglos. At the same time, surging high-end employment will bring more educated, socially liberal people to the state. If these groups continue to favor the Democrats, Texas and other deeply red states could turn purple if not blue.

    In the long run, each party has strong cards to play. Demographic shifts favor Democrats, while geography tilts to the Republicans. Ultimately, the winner will be the party that offers a successful strategy for economic growth—but without culturally alienating the demographic groups destined to hold the balance in the political future.

    This article originally appeared at The American.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by Eric Langhorst

  • Holiday Greetings from New Geography

    Here’s to the end of our 31st month publishing NewGeography.com. It’s been another good year of steady growth. Thanks for reading, for the good natured arguments, and your submissions. We hope your holiday season is relaxing and safe (for me it’s a 350 mile drive across the frozen tundra.)

    Here’s a look at of some of our most popular pieces over the past year.

    January
    The War Against Suburbia
    Reducing Travel Congestion and Improving Travel Options in Los Angeles
    Housing Affordability as Public Policy: The New Demographia International Housing Affordability Survey
    Beyond Neo-Victorianism: A Call for Design Diversity

    February
    America on the Rise
    A Race of Races

    March
    What American Demographics Will Look Like in 2050
    Midwest Success Stories
    New Traffic Scorecard Reinforces Density-Traffic Congestion Nexus
    Let’s Not Fool Ourselves On Urban Growth

    April
    Best Cities Rankings
    Finding Good in this Bad Time

    May
    Is it Game Over for Atlanta?
    Bungled Parliament: The Price of Pursuing Safe Society Over Growth and Opportunity
    Shanghai: The Rise of the Global City

    June
    The Future of America’s Working Class
    Time to Dismantle the American Dream?
    The Suburban Exodous, Are We There Yet?

    July
    How Texas Avoided the Great Recession
    ”James Drain” Hits Cleveland
    Civic Choices: The Quality Vs. Quantity Dilemma

    August
    The Golden State’s War on Itself
    The Beginning of the Great Deconstruction
    Urban Legends, Why Suburbs Not Dense Cities are the Future
    City Thinking is Stuck in the 90s
    Can the Suburban Fringe be Downtown-Adjacent?

    September
    The New World Order
    City Size Does Not Matter Much Anymore

    October
    The Smackdown of the Creative Class
    Greetings from Recoveryland, Ten Places to Watch Coming out of the Great Recession
    The World’s Fastest Growing Cities
    The Privitization-Industrial Complex

    November
    I Opt Out of California
    The Rise of the Efficient City
    The Other Chambers of Commerce

    December
    Hasta La Vista, Failure
    If California is so Great, Why are So Many Leaving?
    Cities that Prosper, Cool or Not

    Photo by Fusionpanda

  • Toward a Continental Growth Strategy

    North America remains easily the most favored continent both by demography and resources. The political party that harnesses this reality will own the political future.

    America cannot afford a prolonged period of slow economic growth. But neither Democrats nor Republicans are prepared to offer a robust growth agenda. Regardless of what happened in the November midterm elections, the party that can outline an economic expansion strategy suitable to this enormous continental nation will own the political future.

    Economic expansion that barely exceeds the current 2 percent or less is woefully insufficient for the United States. Such meager growth could perhaps work in countries with very low birthrates and limited immigration, such as in much of Europe and Japan, but not in the demographically vibrant United States.

    In the years between 2000 and 2050, Europe’s workforce will decline by 25 percent; Japan’s by 44 percent; China’s by 10 percent. In contrast, America’s workforce is expected to expand by more than 40 percent, adding millions of new entrants from an increasingly diverse population.

    Given the growth in workforce, it is impossible to see how the country succeeds without rapid expansion not only of employment but also a broad-based wealth creation. Despite conservative attempts to dress up the numbers, the vast bulk of all the gains in wealth since 2000 have been achieved by the relatively small number of Americans with incomes significantly above the poverty level. Meantime many middle-tier educated and skilled workers have lost ground while the rate of upward mobility has stagnated.

    The collapse of the housing bubble has eliminated the one way that middle class families took advantage of economic growth during the Bush years. Under Obama, virtually all the gains have been to the stock market (up 30 percent) and corporate profits (42 percent). Meanwhile, weekly earnings, jobs, and home sales price all stagnated or declined. But the biggest price may be paid by young people; even those with degrees have lagged behind in wage growth as they crowd into a labor market potentially far tougher than the one their boomer parents faced.

    All this suggests an emerging “aspiration gap” that could define our politics for much of the next few decades. Today, belief in the achievability of the “American dream,” according to a recent survey by Strategy One, has dropped to the low 40s. Americans may still overwhelmingly believe in the ideal of upward mobility but, as individuals, now only a minority feel they can achieve it themselves.

    The “aspiration gap” fundamentally does not advantage either party at the moment. Democrats are set for large losses in the 2010 election. But party identification and approval for the GOP remain low, particularly among the rising minority and millennial constituencies. Even in suburbia, amid rapidly rising middle class angst, the Republicans, according to a recent Hofstra University poll, have lost more support than the Democrats since 2008. Independents have been the big winner and constitute the largest faction of suburbanites—more than 36 percent, compared to just 30 percent two years ago.

    Our Failing Parties: The Democrats

    Let’s start with the Obamacized Democratic Party. Up through the 1990s, the Democrats still maintained strong links to small businesses, private sector unions, and the old Midwest industrial economy. This gave them reasons to favor growth-inducing policies that could close the “aspiration gap.”

    But today the party has become captured largely by the coastally oriented alliance of public employees, their charges, greens, and the professiorate—what Fred Siegel calls an alliance of the “overeducated and the undereducated.” For the most part, these constituencies are largely detached from the private sector, and thus only tangentially interested in economic growth. Even high unemployment, unsurprisingly, was not the primary concern for an administration dominated by longtime public servants and tenured professors—people who rarely lose their jobs.

    This indifference stems not so much from a traditional socialist agenda, as imagined by some conservatives, but by the nature of the party’s constituencies. It is more a dictatorship of the professoriate than that of the proletariat.

    Further obscuring the growth agenda is the fact that some key advisors consider growth itself inherently evil. Take for instance the president’s science advisor John Holdren. A protégé of the Malthusian Paul Ehrlich, Holdren long has favored the planned “de-development” of Western economies in order to reduce consumption.

    The “de-development” agenda has been bolstered by the growth of the climate change industry. Proposals for “cap and trade” rules or Environmental Protection Agency regulations on greenhouse gases represent profound threats to basic industries like manufacturing, housing, and agriculture. In contrast, they have proven boffo for university research grant-seekers and Silicon Valley venture capitalists, who increasingly focus on “clean” technologies subsidized by government grants and edicts favoring their technologies.

    The climate change agenda also distorts the administration’s approach to infrastructure. Instead of focusing on transportation bottlenecks effecting companies and commuters on a daily basis, the administration has favored massive boondoggles such as high-speed rail or sometimes poorly conceived light-rail systems. These are often too expensive compared to alternatives, and not well-suited to the needs of most American communities or companies.

    Our Failing Parties: The Republicans

    Today, with as many as 25 million Americans unemployed or underemployed, the Democratic Party still seems to be missing a coherent program to put them back to work. Sadly, much the same can be said of the Republicans, who benefit from populist outrage about the stimulus, but also lack an answer to the deepening aspirational gap.

    The fundamental problem is obvious at the level of the Tea Party, the grassroots driving force behind today’s GOP. Tea partiers know what they are against—higher taxes and government spending—but have not developed much in the way of approaches to spur growth.

    This is epitomized by the career of the movement’s patron saint, Sarah Palin. Celebrated by many in the “lower 48,” Palin is widely seen among Alaska’s predominately Republican business community as indifferent to economic growth. As governor, they maintain, she proved more interested in redistribution to the middle class—through larger checks from the state’s energy fund—than in investing in things like new infrastructure.

    “She epitomizes the whole idea of we get a piece and no sense of planning for the future, about thinking about what we need to do,” notes Jim Egan executive director of Commonwealth North, a local think tank.

    Long-term growth, in Alaska and elsewhere, Egan suggests, needs government to play a critical supporting role. The fact that the Obama administration missed its opportunity to focus on basic infrastructure in its bungled, politically driven stimulus does not mean that investing in the future is an inherently bad idea.

    The Republican embrace of austerity represents good policy when it comes to reducing wasteful spending, notably on public employee pensions. But knee-jerk resistance to any government spending could prove detrimental in an increasingly competitive world.

    Needed: A Continental Strategy

    To promote economic growth, the country needs to develop a new national consensus around which I call “a continental strategy.” This would focus on taking advantage of the unique demographic and resource assets of this country as well as its North American neighbors, Mexico and Canada.

    Today the United States faces formidable competitors, notably from China, India, and Brazil. These are proud, vast countries with considerable resources and an expanding middle class population. At least in the short run, they suffer neither the ruinous demography of Japan nor the elaborate welfare burdens of Western Europe.

    Already these countries are investing in their basic infrastructure so that they can tie their vast landmass together and profit from it.

    Hard as it is to imagine amid the wreckage of the stimulus, American history is replete with examples of how government can actually do good things. The public support for canals, railway lines, the New Deal engineering and construction projects, the Interstate Highway, and space programs all greatly benefited the country’s economy. They underpinned first American leadership in the industrial age, and then in the information economy. In recent decades, public investment in basic infrastructure construction and maintenance has declined, even in the face of considerable population growth.

    “One looks back at that map ‘Landscape by Moses,’” writes the sociologist Nathan Glazer, about the legacy of New York City’s “master builder” Robert Moses, “and if one asks what has been added in the 50 years since Moses lost power, one has to say astonishingly: almost nothing.”

    Restoring our priority towards binding together and improving our continental infrastructure remains critical to achieving greater economic growth. Rather than a policy of retrenchment, it would represent a return to an approach that sparked our original ascendency and could gain broad bipartisan support.

    Even today, what makes a continental strategy so compelling lies with this often overlooked reality: North America remains easily the most favored continent both by demography and resources. It possesses the world’s second-largest oil reserves and massive, still largely untapped natural gas supplies.

    North America also constitutes by far the world’s richest agricultural area, with the most arable land. This is a huge advantage as global food demands grow over the next few decades. Critically, the continent also boasts more than four times as much water per capita as either Asia or Europe.

    Most important still, North America retains a unique demographic vitality among all advanced countries. It continues to lure upwardly mobile people from around the world: roughly half of the world’s educated migrants come to America, and a considerable number also head for Canada.

    Ultimately a continental strategy meets the needs of large segments of the country—ranging from immigrants and their children to millennials—who will dominate our emerging job market. These same groups in the coming decades will also shape our political future.

    The party that offers these new voters the greatest opportunities for work, raising a family, and buying a house will be the one that dominates the political future. As generational chroniclers Mike Hais and Morley Winograd, both committed Democrats, have pointed out, millennials are essentially nonideological; they will be attracted to those policies that work, both for society and for their young families.

    Although this year’s political results may please conservative ideologues, they should recognize that this represents only the defeat of poorly executed Obamian statism. The future belongs to whichever party emerges as the true party of growth.

    This article originally appeared at The American.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by IronRodArt – Royce Bair

  • The Toto Strategy: How Kansas Can Save Barack Obama’s Presidency

    Here’s an idea that could save Barack Obama’s presidency: Give up those troubling Chicago roots and get back to Kansas. If, as Dorothy observed in the Wizard of Oz, “We’re not in Kansas anymore,” get the Wizard to send you back there soon.

    Barack Obama owes much to Kansas–and the Great Plains in general–something he used to acknowledge often enough. Not only was he largely raised by products of that region (his mother and grandmother hail  from  the Sunflower State), but also his remarkable victory over Hillary Clinton during the presidential primaries was built largely by winning first in the Iowa caucuses, followed by surprising victories in Kansas, North Dakota, Minnesota and Illinois.

    But the midterm elections saw much of the central region’s Congressional Democratic contingent “annihilated,” using Ron Brownstein’s word. Stalwart senators like Byron Dorgan of North Dakota politely gave up without a fight, and the Democrats lost House seats in both of the Dakotas, Minnesota and Kansas. They lost four in Illinois. The political imperative for Obama to shift his focus to the Heartland has never been clearer.

    By embracing  his mother’s families historic heartland roots–as he did in the early part of the primary campaign–Obama could energize a listless presidency increasingly disconnected from much of mainstream America.  This would help the president and his party emerge from their coastal redoubts, college towns and big cities like Chicago–which is crucial since there aren’t enough electoral votes in these areas in win re-election, particularly after the reapportionment coming following the census.

    A Kansas–or “Toto”–strategy would provide the economic focus or bringing the country out of the recession. Illinois teeters on the edge bankruptcy, but Kansas and most Plains states remain fiscally healthy  states.  Although hardly a high flier, Kansas’ unemployment rate — a mere 6.6% — stands well below the national average; of the ten states with the lowest unemployment rates, five are in the Plains, including Kansas, Iowa, Minnesota and the Dakotas. Over the past decade, the region between Texas and the Dakotas has created more jobs per capita than the Northeast, the West Coast, the Great Lakes or the Southeast.

    Kansas and the rest of Great Plains also represent the part of America best positioned to benefit from changes in the global economy. Much is made about the “new economy” based on high-end intellectual products like software and biotechnology, venture capital and tech companies. Kansas is widely seen as falling way beyond coastal states like Massachusetts, Washington and Maryland, according to a recent survey by the Kansas City-based Kaufmann Foundation.

    But our country’s economic future may rely even more on more mundane fields, notably agriculture, manufacturing and energy, than the increasingly competitive information economy. Kansas ranks seventh among the nation’s agricultural states; Plains states Iowa, Texas, Nebraska, Illinois and Minnesota also rank in the top 10.  Growing demand for food from China, India and other developing countries places this part of the country in a fortuitous position. The U.S. agricultural trade balance jumped from roughly $5 billion in 2005 to $35 billion in 2008. This year’s corn crop, notes North Dakota State business professor Debora  Dragseth, could be the largest in the nation’s history. Overall the U.S. produces almost two-thirds of the world’s product of this much sought-after commodity.

    Of course, the Plains has its share of the large corporate farms detested among blue-state intellectuals, but most are family owned, including a growing number of smaller, specialized and organic producers. Due to strong demand from around the world, notes Creighton University economist Ernie Goss, the Plains’ “rural Main Street economy“ has picked up steam both in terms of jobs and income over the past year.

    The Plains also figures prominently in the country’s critical energy future.  Energy constitutes the largest component by far in our persistent trade deficit, accounting for roughly half the total. Texas has become a national leader in wind-driven energy, while the whole region has been described as “the Saudi Arabia of wind.”

    But wind, like solar power, is not a game-changer in the short run–in the Plains or anywhere else for that matter. For one it depends on huge subsidies roughly five times per kilowatt hour those for fossil fuels . More troubling still the industries associated with them–the supposed sources of miraculous numbers of “green jobs”–also are increasingly dominated by China.

    For the foreseeable future fossil fuels, which generate 84% of our power (all but 1% or 2% of the rest comes from nuclear or hydro-electrical power), will be more pertinent to our economic resurgence than renewables;  by 2035, according to federal Energy Information Administration, they will still account for roughly 75%.

    Unlike green energy, in which China and Europe remain stronger, the U.S. remains the world leader in fossil fuel technology. The industry’s global hub is in Houston, but many Plains cities, like Dallas, Oklahoma City, Tulsa and Bismarck, play important roles. Kansas ranks eighth among oil producers; Texas, Oklahoma, North Dakota and Montana also stand among the nation’s top 10 oil-producing states. More important, unlike carbon-crazed California, which still ranks third in total oil production, these states seem in favor of producing more of the gooey stuff.

    The Plains are also emerging as big players in what should be the key energy source of the next decade: natural gas. The country’s reserves of natural gas have grown rapidly; it is widely estimated we have 100 years supply of the stuff. Far cleaner than either coal or oil, our nation’s natural gas reserves are so great that energy executives in Texas are now talking about the possibility of becoming an energy exporter again.

    Kansas, for its part, is among the top 10 gas producers–along with Texas and Oklahoma. Colorado, New Mexico and Wyoming, other top ten producers, inhabit the western end of the Plains. A shift to natural gas for everything from electrical generation to fuel for trucks, cars and buses would do more to improve the country’s sagging finances than anything else on the horizon. It will also generate a lot of both high-end engineering and skilled blue collar jobs.

    Finally, the Plains are becoming the new frontier of America’s still potent manufacturing capacity. This is the region where, over the past year, goods-producing jobs have been growing fastest.   A steady, relatively well-educated workforce–North Dakota now ranks just behind Washington, D.C., and Massachusetts for percentage of people 25 and 34 with a college degree–is becoming a major lure.

    As a born-again Kansan, President Obama can rebuild his reputation and our economy. Rather than being dissed as a taciturn intellectual, he can be respected as reticent, self-controlled Plainsman, a Gary Cooper, if you will. And he wouldn’t be out of place: Kansas is far less homogeneous than when Obama’s grandparents left there. Whites are already a minority in four Kansas counties, with immigrants coming from places as diverse as Mexico, Myanmar, Ethiopia, Sudan and Somalia.

    The culture of the Plains produced the mother who bore our president, and the grandmother who raised him. He certainly owes more to Kansas than to Kenya or Indonesia–or maybe even Illinois. A revival of Obama Kansasness may not thrill all his coastal fans, but it could help the President and his party find a way out of the political wilderness.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by earlycj5

  • Will Ideology or Pragmatism Rule American Politics?

    Now that the dust from the midterm elections has settled, America remains just as divided as before on what type of governing approach it favors. As the LA Times’ Gregory Rodriguez, points out, if the United States “was a cartoon character, it would be a cheerful fellow with his head in the clouds and his feet planted squarely on the ground.”

    To win the support of the public, America’s next governing consensus must encompass the nation’s highest ideals, while presenting realistic solutions to today’s challenges. In the short run, the ideological orientation of each party’s congressional representation will push both parties toward their ideological poles. Flush with victory, top House Republicans and strategists said, they saw “little distinction between incumbent members and those who would be joining them as freshman…both benefited from the Tea Party activism that helped them trounce Democrats” and said that “the support deserved to be rewarded”. Congressional Democrats, especially in the U.S. House of Representatives, are also more ideologically uniform than previously. Virtually all of the members of the Congressional Progressive Caucus (75 of 79) were reelected in 2010, as were a clear majority (40 of 68) of the centrist New Democrats. By contrast, a majority of the conservative Blue Dog Coalition (29 of 54) were either defeated or saw their open seats won by Republicans. Together, these changes meant that, for the first time since these organizations were formed in the 1990s, the Congressional Progressive Caucus was larger than the Blue Dogs and New Democrats combined.

    The magnitude of the Republican victory was impressive, but constituted more of a continuation of the type of partisan political volatility the country experiences during periods of great generational change than a massive shift of America to the GOP and conservatism. A Pew survey taken just before the election indicated that the distribution of party identification within the electorate was little different in 2010 (49% Democratic to 39% Republican) than it was in either 2008 (51% to 36%) or 2006 (47% to 38%), two years in which Democrats won sweeping victories at the polls.

    Nor did Election Day exit polls show a clear endorsement of GOP positions on key issues. Only half of the voters (48%) called for repeal of the Democratic healthcare reform law. About the same number (47%) wanted the law left as is or even expanded. Only four in ten voters (39%) favored extending the Bush-era tax cuts to all Americans, including those with incomes greater than $250,000. By contrast, a majority endorsed either the Obama administration’s position of extending the tax cuts to only those with incomes below that level (37%), or the even more liberal position of letting the tax cuts expire for everyone (15%).

    Moreover, exit polls indicated that although the Democrats lost some ground among almost all demographics, the composition of the two party’s coalitions remained largely unchanged. The votes of Millennials (57% Democratic to 40% Republican), African-Americans (90% to 9%), and Hispanics (64% to 34%) were only slightly altered from what they had been in 2006 and 2008. The Northeast (53% to 45%), the West (49% to 48%), and the nation’s cities (56% to 41%) provided a firewall that helped the Democrats to retain control of the Senate.

    The GOP did strengthen its position within its core constituencies, winning solidly among men (56% Republican to 42% Democratic), as well as in the South, in rural areas, and among senior citizens, all of which voted Republican by about 1.5:1 margins. The Republicans were also able to split the women’s vote which they had lost in previous elections, primarily due to massive support from female senior citizens who voted 57% to 41% in favor of the GOP, even as younger women retained their Democratic allegiance. Geographically, Republican gains came predominantly in the Great Lakes watershed where the GOP won at least 25 new House seats, or about 40 percent of their pickups.

    The Republicans also made major gains in America’s suburbs, where the greatest number of Americans of all ethnicities and generations, including Democratic-leaning Millennials, African-Americans, and Hispanics, now live. Obama narrowly won the suburbs, 50% to 48%. In 2010, the GOP carried them even more decisively, 55% to 42%. Democratic losses in the suburbs were particularly great among white voters who had not completed college and were among those who had been most hurt by the Great Recession. The party able to win over suburban voters with a message that is both ideologically and pragmatically appealing will gain the strategic high ground in the battle over the nation’s political direction in 2012 and beyond.

    One of the reasons for this shift in the makeup of the 2010 electorate was a drop in the contribution from Millennials. Turnout among those 18 to 29 years of age was comparable to previous midterm elections: 21 percent of all Millennials eligible to vote did so, about the same percentage as in 2002 but less than the 24 percent turnout in the 2006 midterm elections. Those Millennials that did vote preferred Democratic candidates in almost all contested elections and approved of Barack Obama’s handling of his job as president by a 60% to 40% margin. In contrast to all other generations, Millennials remain overwhelmingly Democratic and liberal in their political orientation.

    If the 2008 election was a victory for young Millennials, the 2010 midterms represented a triumph for senior citizens. A big part of the increase in votes for Republican candidates was inspired by the Tea Party movement’s older supporters. A solid plurality (40%) of 2010 voters claimed to be Tea Party supporters and nearly nine in ten (87%) of them voted for Republican house candidates. The GOP’s clear emphasis on ideological themes, built around concerns about the nature and scope of government, inspired its frightened and frustrated base to turn out in record numbers to prevent what it perceived to be a dangerous drift toward liberal hegemony.

    In the end, however, most of those who voted in 2010 had little good to say about either party. Almost identical majorities among those who voted had an unfavorable opinion of the Democratic and Republican Parties. Reflecting the opinions of some of their Tea Party supporters, even one-fourth of Republican voters expressed a negative perception of the GOP

    So, in spite of the internal structural forces impelling both the Democrats and Republicans toward ideological uniformity, the new ruling party will be the one that most effectively integrates their party’s ideology with the country’s demands for solutions that work. That party will need to appeal both to those who embrace the ideals of individual freedom but also understand the need for a pragmatic program of collective action, integrating national purpose with individual choice. Shaped by some of the most profound demographic changes in American history, the key to future success for both the Democrats and Republicans will lie in synthesizing these two strands of America’s political DNA. The party that most effectively accomplishes that goal will be the dominant political force in the Millennial Era for the next four decades.

    Morley Winograd and Michael D. Hais are fellows of the New Democrat Network and the New Policy Institute and co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics (Rutgers University Press: 2008), named one of the 10 favorite books by the New York Times in 2008.

    Photo by hjl

  • How Liberalism Self-destructed

    Democrats are still looking for explanations for their stunning rejection in the midterms — citing everything from voting rights violations and Middle America’s racist orientation to Americans’ inability to perceive the underlying genius of President Barack Obama’s economic policy.

    What they have failed to consider is the albatross of contemporary liberalism.

    Liberalism once embraced the mission of fostering upward mobility and a stronger economy. But liberalism’s appeal has diminished, particularly among middle-class voters, as it has become increasingly control-oriented and economically cumbersome.

    Today, according to most recent polling, no more than one in five voters call themselves liberal.

    This contrasts with the far broader support for the familiar form of liberalism forged from the 1930s to the 1990s. Democratic presidents from Franklin D. Roosevelt to Bill Clinton focused largely on basic middle-class concerns — such as expanding economic opportunity, property ownership and growth.

    Modern-day liberalism, however, is often ambivalent about expanding the economy — preferring a mix of redistribution with redirection along green lines. Its base of political shock troops, public-employee unions, appears only tangentially interested in the health of the overall economy.

    In the short run, the diminishment of middle-of-the-road Democrats at the state and national level will probably only worsen these tendencies, leaving a rump party tied to the coastal regions, big cities and college towns. There, many voters are dependents of government, subsidized students or public employees, or wealthy creative people, college professors and business service providers.

    This process — driven in large part by the liberal attachment to economically regressive policies such as cap and trade — cost the Democrats mightily throughout the American heartland. Politicians who survived the tsunami, such as Sen. Joe Manchin in West Virginia, did so by denouncing proposals in states where green policies are regarded as hostile to productive local industries that are major employers.

    Populism, a traditional support of liberalism, has been undermined by a deep suspicion that President Barack Obama’s economic policy favors Wall Street investment bankers over those who work on Main Street. This allowed the GOP, a party long beholden to monied interests, to win virtually every income segment earning more than $50,000.

    Obama also emphasized an urban agenda that promoted nationally directed smart growth, inefficient light rail and almost ludicrous plans for a national high-speed rail network. These proposals appealed to the new urbanist cadre but had little appeal for the vast majority of Americans who live in outer-ring neighborhoods, suburbs and small towns.

    The failure of Obama-style liberalism has less to do with government activism than with how the administration defined its activism. Rather than deal with basic concerns, it appeared to endorse the notion of bringing the federal government into aspects of life — from health care to zoning — traditionally controlled at the local level.

    This approach is unpopular even among “millennials,” who, with minorities, represent the best hope for the Democratic left. As the generational chroniclers Morley Winograd and Michael Hais point out, millennials favor government action — but generally at the local level, which is seen as more effective and collaborative. Top-down solutions from “experts,” Winograd and Hais write in a forthcoming book, are as offensive to millennials as the right’s penchant for dictating lifestyles.

    Often eager to micromanage people’s lives, contemporary liberalism tends to obsess on the ephemeral while missing the substantial. Measures such as San Francisco’s recent ban on Happy Meals follow efforts to control the minutiae of daily life. This approach trivializes the serious things government should do to boost economic growth and opportunity.

    Perhaps worst of all, the new liberals suffer from what British author Austin Williams has labeled a “poverty of ambition.” FDR offered a New Deal for the middle class, President Harry S. Truman offered a Fair Deal and President John F. Kennedy pushed us to reach the moon.

    In contrast, contemporary liberals seem more concerned about controlling soda consumption and choo-chooing back to 19th-century urbanism. This poverty of ambition hurts Democrats outside the urban centers. For example, when I met with mayors from small, traditionally Democratic cities in Kentucky and asked what the stimulus had done for them, almost uniformly they said it accomplished little or nothing.

    A more traditional liberal approach might have focused on improvements that could leave tangible markers of progress across the nation. The New Deal’s major infrastructure projects — ports, airports, hydroelectric systems, road networks — transformed large parts of the country, notably in the West and South, from backwaters to thriving modern economies.

    When FDR commissioned projects such as the Tennessee Valley Authority, he literally brought light to darkened regions. The loyalty created by FDR and Truman built a base of support for liberalism that lasted for nearly a half-century.

    Today’s liberals don’t show enthusiasm for airports or dams — or anything that may kick up some dirt. Deputy Assistant Secretary of the Interior Deanna Archuleta, for example, promised a Las Vegas audience: “You will never see another federal dam.”

    Harold Ickes, FDR’s enterprising interior secretary, must be turning over in his grave.

    The administration would have done well to revive programs like the New Deal Works Progress Administration and Civilian Conservation Corps. These addressed unemployment by providing jobs that also made the country stronger and more competitive. They employed more than 3 million people building thousands of roads, educational buildings and water, sewer and other infrastructure projects.

    Why was this approach never seriously proposed for this economic crisis? Green resistance to turning dirt may have been part of it. But undoubtedly more critical was opposition from public- sector unions, which seem to fear any program that threatens their economic privileges.

    In retrospect, it’s easy to see why many great liberals — like FDR and New York City Mayor Fiorello LaGuardia — detested the idea of public-sector unions.

    Of course, green, public-sector-dominated politics can work — as it has in fiscally challenged blue havens such as California and New York. But then, a net 3 million more people — many from the middle class — have left these two states in the past 10 years.

    If this defines success, you have to wonder what constitutes failure.

    This article originally appeared in Politico.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University and an adjunct fellow with the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo: Tony the Misfit

  • The Smackdown Of The Creative Class

    Two years ago I hailed Barack Obama’s election as “the triumph of the creative class.” Yesterday everything reversed, as middle-class Americans smacked down their putative new ruling class of highly educated urbanistas and college town denizens.

    More than anything, this election marked a shift in American class dynamics. In 2008 President Obama managed to win enough middle-class, suburban voters to win an impressive victory. This year, those same voters deserted, rejecting policies more geared to the “creative class” than mainstream America.

    A term coined by urban guru Richard Florida, “the creative class” also covers what David Brooks more cunningly calls “bourgeois bohemians”–socially liberal, well-educated, predominately white, upper middle-class voters. They are clustered largely in expensive urban centers, along the coasts, around universities and high-tech regions. To this base, Obama can add the welfare dependents, virtually all African-Americans, and the well-organized legions of public employees.

    These are the groups for whom Obama’s persona and policies pack the greatest appeal. Since Obama took office, the prime beneficiary of fiscal and monetary policies has been Wall Street, which has seen a nice 30% rise in the market and record bonuses. Large corporations, which are largely financed by stocks and bonds, have seen their profits soar over 40%, in part due to access to easy money.

    The financial boomlet is most marked in key creative class strongholds such as Manhattan, Boston and San Francisco, as well as their surrounding, super-affluent suburbs. The largesse benefits not only the traders, but the high-priced lawyers, accountants and publicists serving the financial elite. It has also benefited the high-end consumer industry, including the arts, which support much of the creative class. Not surpisingly, the Democrats scored well in these areas last night despite the GOP tide.

    The creative class also has benefited from the lavish expenditures of public funds to major universities for research. This has lifted the prospects of the professoriate at the elite colleges from which Obama takes much of his advice. Finally the administration has rewarded its friends and funders among Silicon Valley venture capitalists. Once self-described paragons of entrepreneurial risk-taking, they increasingly search out government incentives and subsidies to pay for their large bets on renewable energy technology.

    In contrast, the traditional middle class has not fared well at all. This group consists of virtually everyone who earns the national household median income of $50,000 or somewhat above. They tend to be white, concentrated outside the coasts (except along the Gulf), suburban and politically independent. In 2008 they divided their votes, allowing Obama, with his huge urban, minority and youth base, to win easily.

    Since Obama’s inauguration all the economic statistics vital to their lives–job creation, family income, housing prices–have been stagnant or negative. Not surprising then that suburbanites, small businesspeople and middle-income workers walked out on the Democrats last night. They did not do so because they loved the Republicans but because the majority either fears unemployment or already have lost their jobs. Many were employed in the industries such as manufacturing and construction hardest hit in the recession; it has not escaped their attention that Obama’s public-sector allies, paid with their taxes, have remained not only largely unscathed, but much better compensated.

    Of course, few on the progressive left–more expressive of a dictatorship of the professoriate than that of the proletariat–seem likely to confront these class realities. Many will ascribe last night’s disaster to the dunderheadness of the American people, or to the clever venality of the right. Certainly some tea party candidates, inexperienced and untested, did appear incapable of passing a high school civics test. But the results had less to do with Karl Rove’s money than the Democrats disconnect with the middle class.

    The real problem for the Democrats lies with fundamental demographics. The middle class is a huge proportion of the population. Thirty-five million households earn between $50,000 and $100,000 a year; close to another 15 million have incomes between $100,000 and $150,000. Together these households overwhelm the number of poor households as well as the highly affluent.

    In contrast, the “creative class” represents a relatively small grouping. Some define this group as upward of 40% of the workforce–largely by dint of having a four-year college degree–but this seems far too broad. The creative class is often seen as sharing the hip values of the Bobo crowd. Lumping an accountant with two kids in suburban Detroit or Atlanta with a childless SoHo graphic artist couple seems disingenuous at best. In reality the true creative class, notes demographer Bill Frey, may constitute no more than 5% of the total.

    At the same time, this affluent constituency may be more than offset by another more traditional upper class. This consists of people closely tied to such basic sectors as agriculture, fossil fuel production, suburban home-builders and the aerospace industry. These voters have, for the most part, remained solidly Republican for generations, and but many followed the “creative class” into the Democratic Party in 2006 and 2008. Last night this part of the upper class shifted back toward their political home.

    But the real decider–to use George W. Bush’s unfortunate phrase–remains the much larger, more amorphous middle class. Given the economy of the past two years, the subsequent alienation of this group should pose no mystery. Suburban swing voters didn’t suddenly turn into racists or right-wing cranks. Instead they have seen, correctly, that Obama’s economic policy has to date worked to the advantage of others far more than themselves or their families. Until the Democrats and Obama can prove that they once again can serve the interests of these voters, they will continue to struggle to recapture the optimism so appropriate two years ago.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by World Economic Forum