Democrats Lost, What's Next?

The American people have chosen Trump. What did the Democrats do wrong, and what should they do about it?

Past Mistakes

The story is pretty clear. There was a uniform right shift across the country, not a collapse with specific demographic groups (although there were a few isolated cases of that). The Associated Press did extensive polling which confirmed that voters' top two issues by far where:

1. The economy (by which they mean inflation)
2. Immigration

In this environment it would be extremely hard for any incumbent party to win — which is probably why incumbent parties have lost ground in every single developed nation that has held elections in 2024:

But this was especially true for the Democratic party, which was already less trusted by voters on both issues.

This is not to say that other issues did not matter on the margins, certainly to name a few:

• Abortion
• Jan 6th
• Biden's age
• Israel/Palestine
• Trans rights
• DEI
• "Inclusive" language

Most of these were favorable to Trump, but even without them any realistic campaign would probably have lost.

What is less clear is what the Biden administration or the Democratic party could have been done to avoid this. Certainly not running Biden or Biden's VP would have helped, both due to his age and due to their association with inflation and immigration issues during his term.

But is there anything that could have been done on the underlying issues? Inflation is mostly a result of Covid-19 relief, which was partially done under Trump, and was at least to some degree necessary to avoid worse economic damage. But there are some things that could have been done differently.

The American Rescue Plan

The single biggest act of Biden's administration came at the very beginning, with a $1.9T spending bill. The "American Rescue Plan Act" or ARPA roughly broke down as follows^[0]:

In retrospect it was far too large, and this was strongly suspected at the time by policy wonks. All government spending is probably somewhat inflationary once the economy is not under-stimulated, but especially the direct stimulus and welfare, and to a lesser extent the bailouts and the state/local budget subsidies (many of which were used for stimulus/welfare by states). And there is a lot that could be cut from this bill:

• The state and local budgets were fine! Almost none of this money should have been allocated to them. Universities maybe the exception since they lost a lot of enrollment both domestic and international, and unlike K-12 schools they can go under.
• The $1,400 checks were a campaign promise, but they were too large and the phase-out created terrible incentives. Democrats shouldn't have promised $1,400, but even if they did they should have broken it.
• The unemployment rate was already at 2014 levels (no matter which rate you look at) and falling, so while it eased the burden for many people the unemployment expansion was not necessary.
• The Child Tax Credit would be sensible public policy if made permanent, but they knew at the time they wouldn't have the votes (Manchin wouldn't budge), plus this was just not the environment to go big on progressive spending.
• Likewise it was not the environment for the EITC expansion.
• Bailouts could have been cut back a bit given the fast recovery already in progress in most sectors.

A slimmed down version would have looked like:

This would add up to ~$530B instead of $1.9T, and while stimulus would be a larger portion of it than before, it would still be much less inflationary. On the flip side, we would definitely see higher unemployment and lower low-income wage growth. But real GDP growth would probably be higher as lower inflation would help both in lowering the adjustment factor and in allowing the Fed to keep rates a bit lower.

The Build Back Better/Inflation Reduction Act

The Inflation Reduction Act of 2022 was a net good bill with ~$300B in deficit reduction, but it could have been better with more focus on actual inflation reduction and less focus on climate change. Of the ~$500B in new spending, about 2/3rds was climate-change related^[1]. A bit over half of this was for generation and transmission infrastructure, which is good even from a non-climate point-of-view, but the other ~half was mostly for "environmental justice" programs and for emissions reductions in industry and agriculture. This stuff should have been jettisoned to reduce the deficit by more or reduce the corporate tax increase.

But more broadly, the Inflation Reduction Act was not the product of a concerted congressional effort to reduce inflation, but a rescue of a net-deficit-reducing subset of policies from the Build Back Better Act after Joe Manchin refused to support it. Democrats probably could have done better than my proposal above if they had started with reducing inflation as the goal.

Other Bad Economic Policy

The Biden administration did a lot of little inflationary things to satisfy various constituencies or groups that in retrospect were not worth it politically:

• Various partial student loan forgiveness measures
• The Affordable Connectivity Program under the IIJA which has to date connected zero (0) people
• Being slightly hostile to US oil and natural gas production (although under Biden the US still broke records)
• Spending $31B bailing out the Teamster's union pension fund
• Siding repeatedly with unions in labor disputes
• Increasing labor standards under the US-Mexico-Canada trade agreement
• The "Made in America" executive order restricting Federal procurement
• Imposing tariffs on Canadian lumber and dairy
• Keeping various Trump tariffs on many Chinese manufactured goods with no security rationale
• Partially keeping Trump steel and aluminum tariffs

The Biden administration shouldn't have done these things, and instead should have gone the opposite way on some labor questions in order to combat inflation, e.g. repealing the Jones act.

Immigration

Perhaps the biggest political mistake of the Biden administration was not taking faster action on immigration. I actually think Biden's approach here was otherwise good, given that he had to operate under dual constraints:

• Republicans foreclosed on any Congressional action at Trump's urging in order to help Trump in the election.
• He needed the cooperation of the Mexican government to reduce crossings and they wanted to wait until after their election.

But both of these could have been avoided by acting before the 2022 midterms. And while it was not a top-of-mind crisis at the time, it was obvious that it would be a key issue of the 2024 election:

• It was Trump's signature issue
• With the economy recovering, the Covid immigration collapse would obviously reverse
• The asylum claim backlog was already growing rapidly

The Biden administration should have known that this would be a political crisis for them by 2024, and also should have assumed that (like most administrations) they would lose their trifecta in the midterm. This means passing the failed Border Act of 2024 back in 2022, when they actually could.

The Next 4 Years

In the short term, recriminations about Federal policy are pointless because Democrats won't get to make any over the next 4 years. This in turn makes it difficult for Democrats to gain trust on these issues — while they should say the right things, many voters will not trust them to do what the voters want even if they say it. However, while inflation and immigration are bad for Democrats generally, they will either be less salient next election or they will be blamed more on the incumbent Trump administration.

So Democrats will be on more even footing next time, and might even win without any course correction. But there is a lot that Democrats could do in the meantime on other issues that would collectively dramatically improve their odds. Currently Democrats biggest liabilities are:

1. They can't take many popular positions without getting tons of flak from leftist groups and institutions
2. They get blame for the unpopular positions taken by these institutions
3. The Democrat-aligned media is far less politically effective than the Republican-aligned media — in fact arguably net negative^[2]

The first two problems are both symptoms of the same underlying issue — the Democratic party is too institutionally weak and decentralized. There is nobody who can say what groups are and aren't part of the party, so politically harmful groups end up both exerting a degree of control over the party and being perceived as spokespeople for the party. The Republicans have completely avoided this problem via the Trump takeover. A Republican can take whatever position they want so long as they praise Trump, and people don't blame a Republican for anything any other Republican says besides Trump. Even though Trump an obvious scumbag with serious political liabilities, the advantages of this centralization far outweigh his downsides.

Ironically, in order to make the coalition of Democratic voters larger they will need to make the party a smaller tent. The Democrats will need to centralize. This is very hard to bootstrap, but the most realistic path I see is for the more reasonable groups to moderate and cooperate to marginalize the less reasonable groups, and for new leadership to emerge from these groups.

The groups that want to be influential in the new Democratic party will need to stop pushing their most politically toxic positions:

• Police abolition
• Decriminalization of "quality of life" crimes
• Racial preferences in universities/hiring
• Undermining school offerings in the name of equity
• Trans women competing in women's sports
• Postmodern language demands
• Rapid elimination of fossil fuels

More marginal Democrat-aligned groups could still push these positions of course, but they would need to focus on persuading the public rather than trying to bully Democratic politicians, and the Democratic party would need to make it clear that they do not take orders from these groups.

The Next Democratic Administration

Both of the previous sections also apply to the next Democratic administration, whether it comes in 2028 or later — they should be organized and disciplined as a party and govern carefully. But if they want to win another term, there is more they can do (and not do) once they have power.

One of the lessons of this election is that interest group politics as practiced by Democrats does not paid off. Joe Biden was the most pro-labor president in recent history, and unions moved right just as much as any other group. Leftist on Twitter insist that this is because Joe Biden was not pro-labor enough, and that the next Democratic president needs to be much more pro-labor. But under realistic political constraints this just won't be possible — at best with a larger majority Biden could have passed the PRO act, but given that Biden got zero credit for his other actions it seems unlikely this would make any difference either.

The next Democratic administration should give unions nothing. This will free them up to improve the American economy with measures like:

• Port automation
• Repealing the Jones act
• Reducing procurement costs
• Prioritizing the public over public sector employees in service provision

Similarly, the next Democratic administration shouldn't listen to climate groups at all. Where they can make otherwise sound policy more climate-friendly they should (e.g. if we're going to subsidize industrial development, green energy is a good choice). The American and global electorate have made it clear that Climate Change is not a priority relative to economic considerations, and so there is little reason for the Democrats to try to unilaterally take action on what is fundamentally a collective action problem.

They will also need to deal with immigration. It's hard to say what they will need to do here because it depends on what state Trump leaves the system in. If immigration has been massively curtailed, they will need to be strategic about ramping it back up. If he leaves it in roughly the same mess it's currently in, as he did in 2016 and as is probably politically wise, Democrats will have to do what they should have done in 2022 and get asylum claims and border crossings under control.

0. ^

   I used ChatGPT to help me chase down these number, as I couldn't find a single authoritative breakdown. The best overview of this I've found is here. A more thorough breakdown of the welfare spending is here. Some other provisions are analyzed here.

1. ^

   See the breakdown and analysis here

2. ^

   What I mean by this is not that the Republican-aligned media (Fox News, Sinclair, etc.) is more biased than Democratic-aligned media in what they say about individual politicians and issues. Rather, Republican-aligned media strategically tries to advance the party electorally by spending as much air time as possible on their most winning issues and staying silent on unpopular positions. Democratic-aligned media by contrast loves to praise Democratic politicians for taking unpopular positions that flatter the media's sensibilities and to cover Democratic infighting, both of which are electorally harmful. I don't actually have a solution to this besides some billionaire saving the day by building one.