Romney, Bain, and the End of the Reagan Coalition

Listening the last couple of days to the Republican crack-up over Mitt Romney and his time at Bain Capital has been fascinating. Conservatives have pounced on Newt Gingrich and Rick Perry for their harsh criticisms of Romney. Perry, for example, has said: "We need more venture capitalism, and less vulture capitalism."

This is an attack from the "left," observers left and right have said. It is not conservative. Rush Limbaugh sputtered in exasperation: "My gosh, that's what the people who indict capitalism say ... this sounds like left-wing social engineering." Gingrich, Rush said, "sounds like Elizabeth Warren."

I couldn't disagree more. This isn't an attack from the left, it is an attack from within the unstable marriage that has been the Republican Party for at least the last thirty years. What's happening, I think, may be nothing less than the disintegration of the Reagan coalition.

The idea that the critique of Romney and Bain is "left-wing" is only true if you conceive of modern American conservatism in extremely narrow terms. By any reasonable definition of the word "conservative," the critique (especially as made by Newt Gingrich) is in fact deeply conservative.

What we are seeing here is the tension, if not outright contradiction, between two strands of modern American conservatism. On the one hand, conservatives value tradition. They talk about small-town values: family, work, religion. But the other strand is unrestrained free-market capitalism, the single most progressive force in history. The essence of capitalism is incessant change. Everywhere it has enjoyed free rein, it has undermined traditions and traditional values.

Ever since Herbert Hoover, the Republican Party has tried to maintain a coalition that includes both strands. Hoover was the epitome of both small town values and capitalist business success: born in the heartland (Iowa), he was orphaned at age 9, overcame being shuffled around for several years, attended Stanford, became a mining engineer, sought his fortune abroad, and became a self-made millionaire. As president during the depression, he warned against the moral degeneracy of dependence on the state.

But the Republican political leader who best combined these strands was, of course, Ronald Reagan. Like Hoover, he came from humble origins. But unlike Hoover, he became "the Great Communicator," a politician who never lost the common touch. The key to his political success was winning over the so-called Reagan Democrats: white, middle-class voters who had become disaffected with 1960s liberalism, and whose economic interests had suffered in the stagflation of the 1970s.

Modern American conservatives, however, have sometimes had trouble maintaining the coalition Reagan forged, and in Romney's Bain experience, we have a stark example of why it can be so hard.

When faced with the recent criticisms, Romney has relied on the power of the free market strand of conservatism. He claims that all of the attacks on him are meant to put "free enterprise on trial." In that, he has the support of Ron Paul, conservatism's purist defender of laissez-faire capitalism: “Bankruptcy and restructuring are very important principles in free markets.”

Free markets always create the correct, and moral, result according to this doctrinaire view. If people get fired in the pursuit of greater profits, so be it. The greater economic good counter-balances whatever harm may have been done by the invisible hand.

But we all know that unemployment is socially corrosive. When people lose their jobs, families suffer. It puts tremendous strain on them, sometimes they break up. When a company goes bankrupt, it can destroy an entire community.

That is the thrust of the devastatingly effective video put out by the pro-Gingrich Super Pac.

What  makes it so powerful is the testimony of real people put out of work by Bain. These are the Reagan Democrats. They come off, as Andrew Sullivan notes, not as "envious," as Romney condescendingly puts it. "They come off as bewildered, betrayed and sure that Romney's goal in all this was merely, solely to make money for himself - the kind of money that most Americans cannot even compute."

Newt's real apostasy here is that he is pointing out the contradiction that has always been there: the market is not inherently moral. The workings of free enterprise can be entirely legal and also immoral.

And, believe it or not, Gingrich is making the moral argument.  Here's how he put it on MSNBC Wednesday:

A company Bain had invested $30 million in, they took $180 million out -- that's 6 to 1-- and the company went bankrupt. And you have to ask yourself, if you're going to get a 6 to 1 return when the company's going bankrupt, gee, what if you'd only taken  3 to 1? ... Just because you have the right to do something, doesn't mean it's the right thing to do.

This is the traditional values argument: doing the right thing. In the video, we see families harmed, we see good people who want to work unable to support those families. We see them sincerely question whether what Bain did was morally right.

This is a conservative case, one that harkens back to an older, pre-capitalist, communitarian ethos, one that values the stability of the community, one that seeks a balance between the interests of the individual and those of the whole.

For advancing this line of attack, Republicans and other conservatives are roundly condemning Gingrich. The president of the right-wing Club For Growth has accused Newt of engaging in “economically ignorant class warfare” and making an "attack on a basic tenet of economic freedom."

Newt has rightly countered: "Criticizing one businessman for one set of practices is not an assault on capitalism." Of course that's true. But there's a good reason today's conservatives cannot agree to that. They're all in. They have fully committed to the free market strand of conservatism.

Note how John McCain put it to Fox News: "To go after [Romney], on really what is the essence of what we Republicans believe about economy, is a serious mistake.... There's an alternative to how Bain does business. It's called communism."

In other words, the distinction Newt makes -- between the ideal of capitalist competition and the predatory practices of Bain -- simply does not exist for today's Republican Party. It is either unrestrained free market, with all of its excesses and destruction (both "creative" and not), or it is communism. There is no middle ground.

Republicans and conservatives cannot acknowledge the conservative moral legitimacy of the Gingrich critique because they have been damning it for at least the last three years. To say that Gingrich has a point would invalidate their entire critique of Barack Obama: it would expose the "Obama is a socialist" line for the idiocy that it is.

It is Obama who has been making the conservative critique of capitalism. It is Obama who has been criticizing specific businessmen and specific business practices. It is Obama who has championed Wall Street reform and consumer protection -- not because he doesn't believe in capitalism (as Republican demagoguery would have it), but because, like Theodore and Franklin Roosevelt before him, he sees that capitalism is in crisis and needs to be saved from its greatest and most self-destructive excesses.

There is no room for such a view among the power elites of the Republican Party and conservative movement. They have forgotten that the moral component of conservatism was never merely lip-service opposition to abortion or gay marriage. At its best, it has been much more than that.

Reagan knew that. As Obama has adroitly noted, his so-called "Buffett Rule," far from being "class warfare," was Reagan's idea.  In 1985, Reagan said that tax loopholes "sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy.... Do you think the millionaire ought to pay more in taxes than the bus driver or less?"

That same year, Reagan said the following:

I told some people ... of a letter that I just received ... from a man out here in the country, an executive who's earning in six figures -- well above $100,000 a year. He wrote me in support of the tax plan because he said, “I am legally able to take advantage of the present tax code -- nothing dishonest, doing what the law prescribes -- and wind up ... paying a smaller tax than my secretary pays.” And he wrote me the letter to tell me he'd like to come to Washington and testify before Congress as to how that's possible for him to do and why it is wrong [emphasis added].

Legal, nothing dishonest -- but wrong. Reagan knew the difference, and knew how important that difference was politically. Today, in his political desperation, Newt Gingrich also knows it matters politically.

In his segment on Romney's Bain problem Wednesday night, Lawrence O'Donnell put it beautifully:

The freedom to choose our occupations, the freedom to choose what we will do for money, requires us to check, not just if it's legal, but if it is the right thing to do.... What we do for money, and what harm we do while doing it, goes a long way to define who we are.

O'Donnell is a liberal, but that is a fundamentally conservative statement: freedom is not license, freedoms come with responsibilities, and we are responsible not just to ourselves, but to others and to our communities.

This debate over Romney and Bain is not about Republicans sounding like Democrats, or about both parties trying to be economic populists: it is about the moral dimension of our politics. It's something that a significant number of Republican voters value, but that the radical individualists among the Tea Partiers and libertarians either reject or flatly deny, and the corporate elite don't even understand.

Gingrich is, of course, primarily motivated to make these attacks by personal animus to Romney due to the negative ads that killed Newt's chances in Iowa. But one of Newt's (few) political virtues is that he does sometimes see a bigger picture. In this case, he knows that the Republicans, if they nominate Mitt Romney, are handing this potent political issue to President Obama, and with it, possibly, an essential component of Republican political success over the last 30 years.

If Obama can take advantage of Romney's moral blindness and regain a significant number of Reagan Democrats, he will win re-election. If he can go further and recapture the mantle of the moral dimension of politics, he can realign American politics and fracture the Reagan coalition.