A very blue week for Republicans

Republicans lost big last week. The Democrats retain their gubernatorial hold here. Nationally, the swing states didn’t swing. The networks’ color maps recalled the Bobby Vinton classic, “blue on blue, heartache on heartache.” For all that, the voters gave no one a mandate, assuring stasis in D.C. and Olympia.

The president had to defend a record that included high unemployment, massive debt, and an unpopular health care law. He held his base. The winning formula is by now well known: Superior use of sophisticated data mining; preserving the swing state fire wall; some well-timed swag for key constituencies; a changing national demographic; and aggressive attacks on Republican candidates and the Bush legacy. Not inspiring, but enough. Obama becomes the only president re-elected with fewer votes than he received the first time.

Blue states got bluer; red, redder. The Pew Center on the States reports that more than a third of the nation’s legislative chambers are now under supermajority control.

Across the nation, Republicans still have a slight advantage. They control both houses in 26 states, but Democrats boosted their majorities from 15 to 19 legislatures.

Even as voters turned out for the president, exit polls showed they were uneasy with big government and higher taxes. Asked whether government needs to do more to solve problems or if government is doing too many things better left to businesses and individuals, only 43 percent said government should do more. A majority said government is doing too much. Only a third want taxes raised to cut the budget deficit, though another question found 47 percent think income tax rates should increase on incomes over $250,000.

California may be a weathered bellwether, doubling down on its highly progressive income tax. Voters approved lifting the highest income tax rate to 13.3 percent. Depending on economic conditions, the “1 percent” provide from a third to half of the state’s income tax revenue. The volatility of capital gains and the departure of high earners to friendlier tax climates have reduced the share.

The tax-the-rich meme is sure to gain traction, spurred by the impending fiscal cliff. In a quest more symbolic than substantive, Obama wants to end the tax cuts for the wealthy. Letting them expire won’t dent the deficit.

A recently released CBO study found that the effect of repealing the high-end tax cuts would slow economic growth by 0.25 percentage points. The headlines called that a trivial slowdown. James Pethokoukis of the American Enterprise Institute, however, says, “a quarter point is a pretty good chunk of growth” in this sluggish economy.

The debate in Olympia will be similar.

Jay Inslee vowed to veto tax increases. But he’ll be working with a Democratic legislature looking for new revenue for education and social programs. A budget shortfall of more than a billion dollars will test his commitment.

Gov. Gregoire unveils her last budget proposal in December. She says it will include new revenue for education. The menu doesn’t change much: close loopholes, tax capital gains, and raise sales and business tax rates. Voters again decisively approved the supermajority requirement for tax increases. Unless the state Supreme Court tosses the law – a distinct possibility – any tax hike will likely require voter approval. Lawmakers will be tempted to ask voters to raise taxes on other people, on the rich or on corporations.

Most businesses and fiscal conservatives will be wary of such appeals. Not because they choose to cosset the comfortable, but because the policies don’t work. In 2013 the Democratic majority must find a way to increase education funding without damaging Washington’s economic competitiveness. It won’t be easy, but it can be done.

***

Rob McKenna’s defeat marks the beginning of a new era for the state GOP. The two-term Attorney General has long been the party’s best hope for ending its gubernatorial drought. With roots in metropolitan Seattle, the brainy and articulate candidate was positioned well for this election. The national tide was against him.

McKenna is a proven leader with a bright future ahead of him. Until it finds a way to win votes from minorities, the young and the unmarried in secular cities, the same will not be said of his party.

Richard S. Davis is president of the Washington Research Council. His email address is rsdavis@simeonpartners.com

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