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Peter Morici: Virginia may show the way forward for Republicans

Gavin Newsom’s victory in California’s recall is a warning to Republicans to get a substantive platform to succeed in the midterms. The gubernatorial race in Virginia may provide the template.

California is bedeviled by horrific forest fires, power outages, water shortagesrising urban crime, COVID restrictions and surging illegal immigration. During the early days of the recall campaign, fallout from homelessness, a shoplifting epidemic that is forcing stores to close, and other sordid conditions gave Republican Larry Elder some hope of deposing the Democratic governor.

Newsom is the quintessential progressive governor and with the attendant fundraising advantage, he was able to turn the recall ballot into a referendum on the Democrats’ approach to addressing the pandemic—more specifically Donald Trump.

Republicans should not be surprised

Campaigning for Newsom, President Joe Biden said “Voting ‘no’ we’ll be protecting California from Trump Republicans trying to block us from beating this pandemic.”

Republicans may choose to take some solace in the fact that so many Republicans have moved to Texas. However, despite all the agony the Golden State has endured this year, 62% of the electorate voted to retain Newsomabout the same as backed him for governor two years ago and voted for Biden last year.

Coming in the wake of the president’s announcement to extend vaccine mandates to private firms, deeper into public education and hospitals, conservatives, libertarians and Republicans should not be surprised.

Unvaccinated Americans are 4.5 times more likely to get infected with COVID and 11 times more likely to die if infected. Though the risk of a breakthrough infection is small for the vaccinated, they must be exposed to an infected individual to face that risk—generally that means exposure to unvaccinated, unmasked folks.

Southern Republican governors do no service for Republican candidates in more moderate states attaching the party to the antivaccine and anti-mask movements.

Repugnant narrative

Also, all the distress Californians currently endure did not move the needle for Elder—even among swing voters—because the Democrats have a narrative—however repugnant to libertarians and conservatives—that find some resonance among swing voters.

Specifically, climate change is threatening coastal communities and the global food system. Sexism, structural racism and globalization beget jaundiced market outcomes, damaging inequality and monopoly abuses.

The Democrats prescribe aggressive social spending and tougher antitrust enforcement to boost growth. And say their new taxes on households with incomes over $400,000 and corporations could pay for four entitlements—child allowances, universal pre-K and child care, paid family and sick leave, and two years of free college—plus address climate change and a host of other ills.

Unfortunately, budget trickery abounds, these programs are likely to cost up to $2 trillion more than advertised. The tax haul will come up short because contrary to Democratic claims, their program will slow growth.

For example, means testing child allowances and higher marginal tax rates for professionals would encourage lower-earning spouses to quit the job market. Higher capital-gains taxes would discourage risk taking in high-tech startups, and college is already a poor investment for half of those that enroll.

Cruelty of inflation

Overall, we are facing federal deficits up to $2 trillion a year and will have little latitude to address a future pandemic or financial crisis. Washington could hit its limit to sell new debt to the public and be forced to issue more bonds that the Federal Reserve would buy by printing more money. The resulting inflation would bring home the folly of spending more than our means with cruelty not seen since the days of Jimmy Carter.

Voters may believe the warnings about the unaffordability of all this spending and instinctively accept that combined all these goodies will discourage work but among the half of households that do not pay income taxes, there is something attractive for everyone.

In Virginia, the GOP candidate for governor, Glenn Youngkin, is tapping a vein of suspicion by offering alternative solutions. For example, eliminating the highly regressive sales tax on groceries and doubling the standard deductions on Virginia’s income tax—those would put cash in working folks’ hands to solve their own problems. Addressing the state’s very poor jobs creation record and declining public-school performance with jobs training programs. Devoting part of the state’s budget surplus to strengthening public safety.

Not that Youngkin fails to highlight the Biden record, but he also offers a positive alternative vision.

For the last dozen years, Democrats have dominated statewide elections but now the race is a dead heat.

The results from Virginia could provide a way forward for Republicans nationally.

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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