Democratic Party leaders, stripped of the economic growth that has allowed them to dominate domestic social policy for nearly half a century, are faced with a bitter internal conflict within their electoral base as they struggle to fashion an economic program designed to regain majority status.
Of the party's two core constituencies, one, the working and middle class, perceives itself as in fundamental competition with the other, the poor and those on the margin of the workplace, according to poll and election data. This competition is over the benefits of an economy that, from the vantage point of the working man and woman, has stagnated for nearly a decade.
It is a conflict permitting Republicans to siphon off significant votes in the last election. It has effectively frozen the ability of Democrats to maneuver during the final years of the Carter presidency and, even more, during the opening months of the 97th Congress.
The consequences are reflected daily in the halls of Congress, where Democratic members vacillate between denunciations of the Reagan administration's gutting of government support for the working poor and calls for austerity and balanced budgets.
The Democratic difficulty forging an economic strategy that translates into a majority coalition on election day is epitomized by the kind of pressures facing Rep. James Shannon (D-Mass.). "The way I can make one group of Democrats happy is to hurt another. They (the party loyalists who turn out at town meetings) want me to cut food stamps."
In effect, Democrats whose economic ties to the party, or those of their parents, were formed during the New Deal have seen their real spendable income decline and have, in varying degrees, focused responsiblity on the poor and working poor who have been the beneficiaries of the programs initiated by Lyndon Johnson's Great Society. This attitude has also given impetus to the Reagan budget-cutting drive, which is directed largely at the Great Society programs.
In economic terms, the Democratic Party's main base of support has been among voters at and below the median income. But in recent elections, poll results show the strongest defections among those in the top half of this spectrum.
The problem faced by Shannon in effect is the pressure to choose between voters from families making $15,000 to $25,000, who make up 30 percent of the population but who turn out at polls at a 58 percent rate, according to the census, and those making less than $15,000, who make up 40.1 percent of the population but who turn out at only a 44 percent rate.
It is also a conflict with strong racial overtones. Nearly one in five--18.1 percent--of the families with earnings under $15,000 are black, while only 8.7 percent of the families with incomes from $15,000 to $25,000 are black.
Thus, as the problems of high interest rates, a fragile stock market and a crumbling bond market are coming home to roost in the Reagan administration, Democrats are finding it hard to move beyond the stance of critical outsiders, the role of a minority party.
The thinness of Democratic economic thinking surfaced during consideration of the Reagan tax bill, as House Democrats produced an alternative measure that functioned only to force the GOP to match benefits targeted to the wealthy in a battle for votes. In the Senate many Democratic critics of the administration bill backed into an essentially Republican corner and argued that the main failing of the Reagan measure was its threat to a balanced budget, abandoning questions of equity and fairness.
As the Democratic left and center remained directionless, the party's right wing, primarily Southern conservatives, largely abandoned colleagues and supported the Reagan program in its entirety.
Meanwhile, the geographic-ideological splits within the Democratic Party have become more severe. Once-secure Southern incumbents, whose conservatism was often tinged with a native populism--former Rep. Wright Patman (D-Tex.) is perhaps the best known of this breed--have come under seige from a revived GOP.
The threat has pushed Southern Democrats further to the right--the congressional boll weevils--and diluted the populism that encouraged past party unity on some issues.
Traditional Democratic economists are, in many cases, stymied by the problems that now face the country and, to the extent they advocate specific policies, the proposals are both very similar to traditional Republican positions and politically painful.
Charles Schultze, perhaps the quintessential Democratic economist who served in the administrations of Presidents Kennedy, Johnson and Carter, now decries the excesses of the Great Society and, with the passage of the Reagan tax cut, calls for new budget cuts. "It doesn't sound very Democratic," he commented on his own views at the end of a recent interview.
Many of the young Turks in both the House and Senate--Sen. Gary Hart (D-Colo), Sen. Bill Bradley (D-N.J.) Rep. Richard Gephardt (D-Mo.) and Shannon, for example--are eyeing with interest a number of innovative Democratic economists, the best known of whom is Lester Thurow.
Taking such issues as capital formation and productivity, which in the political arena have been dominated by Republican approaches, these economists are attempting to propose strategies that retain the Democratic Party's past traditional allegience to constituents at or below the median income and to principles of social equity.
Converting the ideas to policy create, however, significant political problems for elected officials.
Thurow, for example, has suggested a formal government policy of encouraging "sunrise" industries and an implicit, if not overt, policy of encouraged decline for "sunset" industries.
"When a firm moves from Ohio to Texas, the nation as a whole does not suffer an economic disaster. Texas grows, the new workers get new, higher-paid jobs, and those remaining in Ohio do not necessarily lose out in the long run," Thurow contends.
In strict political terms, however, it represents a transfer of money and voters to a state where, during the past 20 years, the GOP has gone from insignificance to the status of holding the governorship, one Senate seat and five of 24 House seats.
The distinction between the New Deal and Great Society constituents of the Democratic Party is significant in both political and economic terms. The New Deal programs--including unemployment insurance, Social Security, the Fair Labor Standards Act (setting overtime and minimum wage standards for the first time), creation of the National Labor Relations Board--all provided a layer of government backing to people normally in the workforce, but suddenly faced with an extraordinary set of hostile economic conditions. They were (and are) relatively good voters.
The Great Society, in contrast, went after another group altogether. Prompted in part by the civil rights movement and by the sudden awareness of continued poverty through publication of such books as "The Other America," the Great Society provided a whole new set of benefits targeted to the economic underbelly of the country, people not in the workforce at all or on the fringes: families headed by women, part-time maids and other service workers, the elderly who did not qualify for Social Security or who receive benefits at the minimum level, the rural poor.
In an equation that calculates the return in votes for federal dollars invested in programs, the poor are a far worse investment than the working and middle classes. The massive federal commitment to the poor was made at a time when the Democratic Party was able to capitalize on a continually growing economy that allowed its social conscience to grow simultaneously.
For the New Deal constituency, the commitment was relatively painless. Throughout the 1960's into the early 1970's, the weekly spendable income of the average worker steadily grew in absolute terms. Going from $82.25 in 1960, for the married nonagricultural worker with three dependents, it rose to a high of $97.11 (all in 1967 dollars) in 1972.
From then on, however, spendable income went into reverse, dropping to $91.14 in 1974.
For the next four years, income leveled off. This was also the period when Democrats expanded their majorities in the House and Senate, largely because of Watergate. But many of the Democrats elected in this period had abandoned the commitment of their elders to traditional Democratic economic policy. On questions of labor protection, federal spending and expansion of entitlement programs, these Democrats, especially those from the freshman classes of 1976 and 1978, demonstrated a significant shift to the right.
In 1979 and 1980, the weekly take-home pay of workers (again calculated in 1967 dollars) took a nosedive. The married worker with three dependents saw spendable income drop in 1979 to $89.27 and then, in the sharpest decline since 1946, it fell to $83.56.
In other words, the voting mainstay of the Democratic Party, the married worker with two children, saw his or her take-home pay go from $82.25 in 1960 to $83.56 in 1980, a net increase of $1.31 in 20 years of supposed growth. For Democrats this was a disaster.
In charting voter perceptions of which party is more likely to keep the country prosperous, the Gallup organization found a steady choice in favor of the Democratic Party, which had a 24 percentage-point lead in the 1960's and 17 points in the 1970's. At the end of the 1970's, however, this advantage fell in direct proportion to the decline in real income: by June 1980, Democrats held only a 1 percentage-point advantage over Republicans on the prosperity issue.
As the economic pie stopped growing, more affluent Democratic voters began to perceive government spending, and the taxation required to finance it, as a key factor in the decline of their spendable income. Over the past 20 years, the percentage of persons who identified big government as the most significant cause of inflation rose from 14 to 51.
William Schneider, writing in the book "The American Elections of 1980," found that "Reagan's gains over Gerald Ford were greatest among Democrats, labor union families, manual workers, southerners, Jews, Catholics, older voters, and the noncollege educated--all groups that had been core supporters of the New Deal Democratic coalition." In these groups, Democratic voting fell by 10 to 19 percentage points.
Polls by The Washington Post, New York Times and CBS found in the 1980 election that President Carter maintained majority support only among those making less than $10,000 a year--the Great Society constituency--while losing among voters making $10,000 to $25,000. Voters making $10,000 to $20,000--32 percent of the electorate and essential to a Democrat--cast 47 percent for Reagan, 43 percent for Carter.
In contrast, the demographic group most clearly identified with the Great Society part of the Democratic coalition--blacks--slightly increased its margin of support for the party's candidate, from 85 to 86 percent.
These poll results reflect the internal conflict over fundamental economic policy within the Democratic Party. At the bottom of the economic scale, loyalty remains firm as the Democrats are at least nominally more supportive of federal transfer programs. Among the working and middle class, as well as with many of the party's elected officials, the political memory of, much less the pride in, the programs of the 1960's, when the national rate of poverty fell from 22 percent in 1959 to 12 percent in 1969, appears to have faded, if not died.
Initially, the Reagan administration's economic recovery program capitalized on this split. Most of the budget cuts are directed towards those programs serving the poor and moderately poor--Medicaid, welfare, food stamps, etc.--although some of the reductions in unemployment and trade adjustment assistance benefits will hurt voters in the New Deal category.
For Democrats, the continuing problems of high interest rates and declines in both the bond and stock markets have created windows of opportunity, but there is very little coherent strategy emerging.
House Speaker Thomas P. (Tip) O'Neill (D-Mass.) is promoting Democratic congressional hearings across the country to dramatize the problems of Reagan cutbacks for those in need of medical care, retirement payments and job security, three basic elements of strong appeal to the working and middle class that had defected in large numbers to the GOP.
Along other lines, however, Sen. Hart, for example, is exploring entirely new ways of approaching economic programs. "Our economy is going through a tremendous transition . . . probably the equivalent of the Industrial Revolution. I think it is that dramatic," he said.
The explorations of Hart and some of his colleagues are, however, very tentative, and the far more dominant strategy--if the word is appropriate--is a posture of waiting to determine whether the Reagan economic program fails, with little or no preparation of proposals that would function to restore majority support to the party.