If 2012 was like 2004, then 2014 can be our 2006

I have noted prior that the 2012 election was an inverted version of the 2004 election. Obama beat Romney using the same base-appeal, define-the-other-guy and retail politics that Bush did in 2004.  In some respects, it was an important election to give Bush the opportunity to finish in Iraq and confirmed his stewardship of the economy. But we all know that by 2006, things were not good for Bush or Republicans: we had an unpopular war, the Iraq War seemingly becoming an endless grind, a base angered by comprehensive immigration reform, a budget deficit too large, and then a scandal timed by opponents to hit at the worst time. we had and we had Democrats feisty and spoiling for advantage. After that election, Bush had to acknowledge “We were thumped” – it was the beginning of the unravelling of the Bush political legacy.

What the Democrats did to get there is instructive. They were not compromising in 2005. Bush wanted to use his political capital on Social Security reform, and the Democrats, rather than propose their own bill or agree on entitlment reform, simply attacked the proposal mercilessly. They refused to compromise at all, or even propose any serious alternative on it. They were the party of “No”. When supreme court nominees came up, the talk of filibuster came up as well, and though we got Roberts and Alito through, it was evident that Democrats would not let a number of other qualified judges through.

The good news for conservatives is that 2008 election was our nadir. 2010 was the Tea Party comeback that put us back in a position to stop further left-liberal legislation.2012 leaves the President with the strength of re-election but a still-split Congress.

For all the lamenting about 2012, and the sad fact that a President with a poor economic record got re-elected, we need to consider that in fact the Romney campaign, while putting in a good effort, was no better a campaign than Kerry in 2004. Or worse. Romney failed to respond to the attacks on Romney’s character, his Bain past, and he made it worse with 47% comment.

This bad news is good news politically for Republicans, and this is where we have to see a few steps ahead and think like Wayne Gretzky:

“Go to where the puck is going.”

What are the issues that will bog Obama down? Clearly, the debt and the deficit are major ones. Its not too hard to see how the $1 trillion deficit that Obama is running is his very own Iraq, a quagmire of economic indigestion. President Downgrade now has two ratings agencies looking to review the US credit rating in 2013 and it isn’t looking pretty.  When Obama was elected, the debt was $10 trillion, now its $16 trillion, and without serious budget cuts, we are looking at $18 trillion by 2014.  Obamacare tax increases are hitting and unless we extend the Bush tax rates, it will be another tax hit. Too much in the way of tax increases and we will be in another recession next year.

Will our economy improve to the point where the economy is not the main issue? Unlikely.  Growth estimates have been falling not rising, to under 2% in H1 2013, and there will be some fiscal cliff to slow things down.  Unemployment by 2014 may still be in the 7-8% range, while our deficit still rages and the economy putters on weakly. What is more likely then is that the three issues most favorable to the Republicans will be the driving issues – taxes, budget, and economy.

Some have argued for throwing in the towel on the ‘fiscal cliff’, letting tax increases happen, but that would only put the Republicans in the spot of being ‘for’ taxes increase.  Far better would be to have a clear agenda and stand by it,  willing to compromise but only in ways that maintains the principles – keep tax rates low and cut the spending to lower the deficit. We should hammer the point day in and day out with better alternatives, including the repeal of the unaffordable Obamacare. Repeal of parts of Obamacare taxes and Obamacare spending, and use that as a negotiation strategy to get some of what you want. In the end, though, beyond the need for budget compromise, the best outcome for Republicans in the next Congress is gridlock. We WILL bounce back in 2014, so Republicans need to use this time to lay the groundwork and turn that hope into reality.