- The Washington Times - Tuesday, May 31, 2011

ANALYSIS/OPINION:

The Democratic victory in upstate New York on Tuesday seemed to be about the unpopularity of the Republican Medicare plan. Democrat Kathy Hochul beat Republican Jane Corwin 47 percent to 43 percent to win the open seat in New York’s 26th Congressional District, a shocking turn of events in a district that long had been a Republican beachhead in a blue state. The special election focused the last few weeks on the GOP’s proposal to turn Medicare into a voucher program.

The Democratic victory reminds us that the blue-collar Buffalo and Rochester suburbs was the early model for the Republican Party’s transformation in the late 1970s. They were long a Democratic stronghold, home to middle-class voters who wanted economic growth and an end to inflation. Jack Kemp, the former Buffalo Bills quarterback who represented the area in Congress for nearly two decades, made it a laboratory for what became the domestic component of the Reagan revolution.

Through the 1970s, Kemp continuously won re-election in what had been a Democratic stronghold as a full-spectrum conservative championing the supply-side economic reforms of lower taxes, hard money and free trade. By 1980, Kemp’s winning example showed Ronald Reagan how a Republican could lead a populist movement for economic opportunity. Reagan’s electoral success on the backs of so-called “Reagan Democrats” like those in upstate New York transformed the GOP from the party of Wall Street to the party of Main Street, which enabled it to dominate American politics for a generation.

This was no accident. Prosperity was a conservative Republican strategy. Kemp and Reagan orchestrated marginal tax-rate reductions for all working people intended to expand the economy toward full employment. In contrast, Republican tax proposals have tended to favor corporate and investment income over wage income. Such tax proposals tilt the tax code to benefit the holders of physical capital over families and workers who rely on their labor, such as the typical voter in Jack Kemp’s New York district.

Kemp and Reagan also focused on the integrity of the dollar. During the 1970s, the U.S. economy was battered by the phenomenon of stagflation - slow growth and high inflation. Prices soared while bracket creep pushed wage earners into higher tax brackets that stifled upward mobility. Kemp’s proposal to re-establish the dollar as good as gold through the gold standard did not ultimately become Reagan’s monetary policy, but it did encourage a course correction and restore the GOP as the party of hard money. Since Kemp and Reagan left the scene, no national Republican figure has picked up that mantle.

Republican leaders have been focused on rolling back the size of government. This is a worthy goal: The budget parameters set by President Obama are unsustainable, and entitlement programs like Medicare need to be reformed to be made solvent in the long term. Voters, particularly those in the Tea Party, are upset about the expansion of federal power into daily life. But a program to cut spending does not amount to an economic agenda for sustained economic growth and full employment. Economic growth, rising real wages and full employment are exactly the conditions we need to reform all federal entitlement programs. Sacrifice works politically during periods of rapid economic growth.

Today the country is faced with challenges similar to the 1970s - an anemic economy, a weakening dollar and general loss of confidence in government.

Conservatives and Republicans must hear Jack Kemp. Kemp warned about this void in 1979 when he wrote, “If one political party concentrates on increasing public spending and the other party concentrates on decreasing public spending, who is left to concentrate on economic growth, and the expansion of opportunities that can come only from such growth?”

Lewis Lehrman is chairman of the Lehrman Institute and former candidate for governor of New York. Frank Cannon is president of American Principles Project.

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