McCain’s failure is a warning to Cameron: offer tax cuts before Brown does
There was something almost comic about Gordon Brown and David Cameron’s rush to associate themselves with Barack Obama’s victory, each offering their own quite different interpretation. The Prime Minister declared that people are looking to government to help them during the economic downturn. The Conservative leader, with no less confidence, asserted that people are obviously hungry for change. But neither British party leader will have felt comfortable with the slogan which the Democrats were pushing in every swing state until the last possible minute: ‘Obama-Biden for tax cuts’.
The Conservative leadership persuaded itself some time ago that elections are not won with such a message. The view, held in some Cameroon quarters with almost religious fervour, is that the British thrice rejected tax cuts and should not be offered them again. When George Osborne’s political capital was greater, he would speak about ‘educating the party’ on the issue of tax cuts. Yet at the last Tory conference, I met some delegates only half-joking about an ‘educating the Osborne’ session, in which they would teach the shadow chancellor how to fight a spendthrift government with a taxcutting message.
Mr Obama has just given a rather spectacular lesson in how to do it. While John McCain seemed a little squeamish about his offer of tax cuts (which would, after all, increase the deficit) Mr Obama was utterly unapologetic. It became one of his core pledges to America, placed at the heart of every major speech and rally address — and it had a galvanising effect. When asked which of the candidates was the ‘real’ taxcutter, polls showed that Mr Obama beat Mr McCain three to one — even though the Republican plan was, in fact, the betterformulated and further-reaching of the two. Obama thus stole a key issue from his rivals, as George W. Bush once did with education, and Bill Clinton with welfare reform.
All this is freighted with meaning for the Conservatives. Mr Cameron argues that the Tories need not talk much about tax, immigration or crime as they will always be trusted more on these issues. This is precisely what Mr McCain thought about tax cuts. In his determination to come across as a different beast to the rest of his unpopular incumbent party, he left key flanks undefended. His attempts to sell his (more genuine) tax cut message came across as insincere, whereas Mr Obama has for two years been calling for the burden to be lifted on 95 per cent of American families.
Mr Brown can certainly claim some ownership of the Democrats’ victory, in that many of his accounting tricks have been deployed in the forging of the Obama tax cut policy — chiefly his repackaging of welfare payments as ‘negative tax’. This allowed the Democrats to claim that their tax cuts would be directed at low-earners such as Joe the Plumber, a character introduced to the campaign by Mr McCain. ‘Joe’s cool,’ Mr Obama said. ‘I got no problem with Joe. All I want to do is cut Joe’s taxes. But Senator McCain isn’t working for Joe the Plumber. He’s working for Joe the Hedge Fund Manager.’ It is easy to imagine the Prime Minister salivating at this line of attack and making a variant of it his own in due course.
So in Britain we can expect tax credits to be given a new label, and the British public to be promised ‘tax cuts’ — which would amount to the Prime Minister’s old trick of having the low-paid fill in forms for the return of the money already taken from them in tax. As if in anticipation of this, Alistair Darling is talking about how the public can’t bear more burdensome taxes. And Mr Brown must be hoping that the Tories are still too traumatised by old battles to discuss tax cuts rationally; that they will continue to believe, as Mr McCain did, that wise conservatives never sell this message too hard, and do not have to.
Of course the tax issue was simply the last of the campaign messages Mr Obama used — as much as anything, his victory reflects his awesome campaigning abilities and his talent as the best public speaker for perhaps a generation. Yet almost every tracking poll has identified the turnaround in his campaign as the moment when Lehman Brothers collapsed in September. The financial crisis has worked for the Democrats in a way it has emphatically not for the Republicans. Mr Obama not only had a tax cut message to put centre-stage, but he was able to link the turmoil to misjudgments of the last eight years of government.
When the crash came, it was Mr Obama who was able to articulate a plan and Mr McCain left lost for words. In Britain it was Mr Brown who had an instant explanation, and lost no time driving home a message as clear as it is misleading. The Prime Minister repeatedly refers to the ‘global downturn that started in America’, so as to absolve himself from blame. It seems to be working. The Tories have been mystifyingly incapable of linking his reign of error at the Treasury to the debt crisis Britain faces now.
It is as if conservatives on both sides of the Atlantic have been grasping for a message on the economy, having not considered it too important beforehand. Mr McCain felt able to confess that ‘the issue of economics is not something I’ve understood as well as I should’, a weakness that was painfully apparent during the campaign. Mr Cameron was until recently saying that General Wellbeing (GWB) was at least as important as GDP. How frivolous this message now seems with a tsunami of unemployment, negative equity and repossessions about to hit Britain.
To be sure, Mr Obama won with a message of change — but he was also able to augment this with a firm and quantifiable promise: I will make you better off. This was ‘retail politics’, aimed at those who have no partisan affinity but ask simply what they will get in return for their vote. There are a sizeable number of such voters in Britain and they are open to persuasion. A fifth of George W. Bush’s voters switched to Mr Obama. But they needed a firm, attractive pledge. Their counterparts in Britain will support the party which most credibly offers a good deal.
At last month’s Conservative conference in Birmingham, the slogan was ‘plan for change’. But as one shadow cabinet member pointed out, ‘this is an instruction, not a description. There is no plan for change.’ Tax cuts may be a traumatic issue for the Tories, reviving painful memories of old internal battles, but as Mr McCain found to his political cost, they are not a weapon exclusively reserved for conservatives’ use. The most left-wing senator ever to run for the presidency has just been elected as a tax-cutter. There is nothing to say that Mr Brown will not now attempt to do the same.
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