The Democrats' 2012 Rust Belt Problem

A rally sponsored by the Tea Party Express in Waterford, Michigan. Bill Pugliano / Getty Images

Amid the rubble of the midterm results last week, two small signs of hope for Democrats—their strong performance among Latinos, which helped them save a handful of officeholders in the West, most notably Senate Majority Leader Harry Reid in Nevada, and their continued advantage among young voters—were widely noted in the press. Every wag loves counterintuition. So, at the apparent apogee of Democratic unpopularity it seemed worth noting that, if present trends continue, Republicans will be in for a rude awakening sometime between now and, oh, 2050, when the U.S. is projected to become a majority-minority nation. But 2050 is a long way off, and even then the electorate, which excludes noncitizens and children, changes more slowly than the population.

Meanwhile, the Democrats have a problem: if they remain as unpopular in 2012 as they currently are among older white voters, it could make them vulnerable in the Rust Belt states that have been essential to successful Democratic presidential campaigns and Senate majorities. The Rust Belt—the industrial stretch from upstate New York, where the Democrats just lost at least four House seats, through Pennsylvania, where they lost five seats and a Senate race, to the Upper Midwest, where liberal titans such as Sen. Russ Feingold of Wisconsin and Rep. Jim Oberstar of Minnesota were knocked off and a raft of Republican governors were elected—is essential to any Democratic presidential victory.

President Obama turned a handful of traditionally Republican states blue in 2008: Virginia, North Carolina, Indiana. But if the 2012 race is closer, and those states return to the Republican fold, Obama cannot win in 2012 while also losing all the big Midwestern swing states—Pennsylvania, Ohio, Michigan, Wisconsin, and Minnesota.

The drop-off in Democratic support among older voters and white voters from the last midterm election is remarkable. In 2006 Democrats lost white voters by 4 points in House races, which are a fairly good indicator of party preference, and they tied among voters 65 and over. This year they lost whites by 23 points and lost older voters by 21 points. Luckily for Democrats, the electorate in 2012 will be younger and more diverse, as it always is in a presidential election. (Last week voters under 30 years old were only 11 percent of the electorate, but they were 18 percent in 2008.)

That demographic shift toward younger voters, however, may not be enough for Democrats in the Midwest. The populations of the essential Democratic Rust Belt states is older (except for Minnesota) and whiter than the country as a whole. In 2008, Latinos were 9 percent of all voters but only 4 percent of voters in Pennsylvania and Ohio and 3 percent in Michigan, Minnesota, and Wisconsin. Republicans will face challenges in retaining their high level of support among older voters. They will need, for example, to protect seniors' cherished entitlement programs, which in turn means performing remarkable acts of intellectual contortion for a party whose last president advocated privatizing Social Security. But the short-term challenge for Democrats remains clear: they must win back some of these voters, at least in the crucial Midwest.

Democratic losses in this region are pretty clearly correlated to the Rust Belt's economic fragility. The region has been struggling with de-industrialization for decades, and this recession has hit hard there. Michigan suffers from the second-highest unemployment rate of any state in the nation (after Nevada). "There was a fair amount of hope a couple years ago that the administration would be able to do something about [Midwestern economic decline]," says William Galston, a senior fellow at the Brookings Institution and a former policy adviser to President Bill Clinton. "The midterm results in the Midwest are an exaggerated version of the disappointment that befell the rest of the country."

Democrats have generally perceived their problems among white voters to be one of cultural politics, but Republicans say that they are making inroads in the Midwest with economic appeals. Rep. Paul Ryan (R-Wis.) is a leading advocate of supply-side economics, having put forward a plan to balance the budget by turning Medicare into a voucher system and cutting Social Security benefits. He has won regularly in a district, the First, that used to swing back and forth between Republicans and Democrats in Congress, and still does in presidential elections—it favored President Bush in 2004 and President Obama in 2008. "Paul Ryan's been able to sell a positive Republican economic message," says Soren Dayton, a Republican consultant.

So President Obama and his allies in Congress obviously must improve the economy, or at least make a convincing case that they have the better plan to do so. Obama acknowledged as much repeatedly in his first post-election press conference last week, but the more difficult question is how they can do so without being blocked by Republicans in Congress, or engaging in politically perilous deficit spending. There are a few possibilities: first, there is the foreclosure crisis, which continues to threaten most middle-class suburban families' greatest asset, their homes. There are various proposals as to how best to reduce the projected 4 million home foreclosures, such as mortgage modifications or low-interest emergency bridge loans. But politically, it is essential for Obama and congressional Democrats to start pushing one soon. "The administration would do well to demonstrate a real sense of urgency in this area," says Galston.

An idea gaining currency on the left for how to get Americans, particularly the laid-off Rust Belt workers, back to work without driving up the deficit is to invest in infrastructure with private capital. Unlike many stimulus proposals that increase the deficit by cutting taxes or increasing spending, infrastructure can be built with private-sector dollars. That is, the government can sell bonds to raise money for building, say, a bridge, highway, or train line, and pay it back over time with revenue from tolls, ticket sales, or other user fees. Right now, there is the labor pool with the necessary skills, a huge backlog of needed projects, and a lot of private capital being hoarded. The government could easily offer better interest rates than the low rates being currently available through banks and corporate bonds. Infrastructure investments can also generate long-term economic growth and activity. The creation of a national infrastructure bank is likely to be part of any Democratic proposal for the long-overdue surface-transit reauthorization bill in the next Congress.

But Democrats can't do any of this if Republicans disagree about the proper role for government in bolstering employment growth—preferring tax cuts to free up capital for private investment over investing in public goods. Republican Gov. Chris Christie of New Jersey recently rejected plans to build a much-needed tunnel between his state and New York City, citing cost. And Republican Governor-elect Scott Walker in Wisconsin is putting the kibosh on a high-speed rail line between Milwaukee and Madison. Congressional Republicans are expected to unveil a "pro-growth strategy" that prescribes deregulation and tax cuts. The parties, in short, may keep talking past each other.

The nonpartisan Congressional Budget office recently evaluated different options for improving employment based on their economic efficiency. It rated aid to the unemployed, which Republicans oppose, as the best option; infrastructure as a middling one; and reducing income taxes as the worst. But two other options it rated highly—reducing employers' payroll taxes and allowing companies to lower their taxes up front by deducting the whole cost of a business investment when it is spent instead of over time—may get bipartisan support in Washington.

To some extent, though, the partisan allegiances of the Upper Midwest will be out of Democrats' control for now. Republicans have won control of more statehouses in those Midwestern states than they have enjoyed in decades, and the economic advantages, or lack thereof, of shutting down projects like high-speed rail, will soon be apparent. Says Dayton: "A bunch of Republican ideas will be put to the test."