The US and Australia: Taking Note of Conservatives

Mary Kissel is an editorial board member of The Wall Street Journal Editorial Board and from 2005 to 2010 was editor of The Wall Street Journal Asia’s editorial page. Kissel joined the Journal in Hong Kong in 2004 as writer of the Money & Investing section’s Heard in Asia column. Mary Kissel has worked for Goldman Sachs in New York and London and has a master’s degree in international affairs from the Johns Hopkins School of Advanced International Studies. On 28 September 2010, Mary Kissel addressed The Sydney Institute during a visit to Sydney.

THE US AND AUSTRALIA – TAKING NOTE OF CONSERVATIVES

MARY KISSEL

Good evening everyone and a special thanks to Gerard and Anne Henderson for this opportunity to be here tonight. I’m very honored to be here because I really do love Australia; it is truly one of the world’s great democracies. And I’ve been very lucky to make good Aussie friends both here and abroad. An Aussie friend of mine gave me the 1942 Instructions For American Servicemen, I think as a short primer for the country because it is written in simple sentences and in my American dialect. The book starts out with a quote: “You’re going to meet a people who like Americans and whom you will like.” That was written almost eight decades ago, and it’s certainly true for me. I hope that it’s also true for you by the end of this short talk.

Globally, there’s a much larger movement towards smaller government, lower taxes and fiscal prudence. 

I have been asked to address trends in US and Australian conservativism, given my perch somewhat in between the two in Hong Kong, based at the Wall Street Journal editorial page. And I’d ask you to take my remarks as just that – as a kind of outsider from both countries, sitting in the free part of China.

As a general statement, it’s important to note that the United States and Australia are not the only places where we’re seeing conservative ideas gain ground. Globally, there’s a much larger movement towards smaller government, lower taxes and fiscal prudence. You could argue that it started in Britain in May, when the Tories formed a minority government with the Lib Dems, breaking 13 years of Labour rule. It’s gained momentum in Japan, which has seen five prime ministers in five years. That Keynesian consensus has broken down and the Japanese people are pushing for more responsible government. It’s even happening in Sweden, where last week they ushered in their first Right government in modern history. Now we know for sure that miracles really can happen.

Voters were told that Keynesian solutions would work to solve their problems, and they didn’t. And when voters went to their representatives to ask why, they couldn’t explain why.

But why are these miracles happening? It’s not easy to generalise this conservative surge. Swedish politics are very different from Japanese politics. With Australia and the United States, there are some common themes. These have just as much to do with missteps on the Left here as it does with the messaging and achievements on the Right.  So, let me explain. Here’s my thesis.

In both of our countries, voters simply got tired of administrations on the right. They voted in what they thought were centre-left governments. But in 2008, after the Lehman crisis, voters discovered something very surprising. They discovered that these administrations were not actually centre-left; they were not what they had advertised. They were actually very far to the left. Voters were told that Keynesian solutions would work to solve their problems, and they didn’t. And when voters went to their representatives to ask why, they couldn’t explain why. So now voters are turning to the alternative, which is the conservative side. The question is, can conservatives seize the opportunity that they have now.

It has been a truly remarkable turn-around. It wasn’t so long ago that the Left’s ideas were in the ascendancy. At the Australian 2007 elections, which I experienced, there was not only a Liberal loss but Prime Minister John Howard lost his Bennelong seat to Maxine McKew. The US 2008 elections saw Democrats seize control of both houses of Congress and the Presidency, and that’s only happened twice in American history in the last 80 years. So the turnaround is quite a remarkable event.

Kevin Rudd swung this country radically to the Left, which I think was ironic given the Hawke and Keating legacies.

These losses, again, had a lot to do with voter fatigue. People were simply tired of Howard, and they were tired of Bush. But these elections weren’t a symbol, I would argue to you, of the failure of conservative ideas. Yes, President Obama was elected on a platform of change – “yes we can”. But he was also elected as a man who would unite the country and hew to the centre-left. That was the pitch. Democrats ran for Congress on largely the same platform. Kevin Rudd, likewise, painted himself as a fiscal conservative, a man who would also hew to the middle, but who would make symbolic changes that had very few costs to the economy. Such as, for example, the apology to Indigenous Australian or signing the Kyoto treaty. Voters did not know much about these men in public life because they hadn’t been in public life for very long compared to their predecessors.

The Obama administration, for its part, did similar things. They piled up a $1.35 trillion federal deficit – about 9.2 per cent of GDP or the economy of France – also on social problems and pet projects.

There was no reason to disbelieve the message that Obama and Rudd were selling to their voters. But what did voters get? What they got were the most far-left governments since the Carter administration or the Whitlam administration. Let’s just go through this briefly. Kevin Rudd swung this country radically to the Left, which I think was ironic given the Hawke and Keating legacies. He took the country from a $19.7 billion surplus to a $32.1 billion dollar deficit in a single year, mostly through spending on social programs and pet industries like the Green lobby. He vastly re-regulated the labour market through the Fair Work Act, which I think is one of the most important and least understood pieces of legislation that was passed under the Rudd Government. And he moved to raise taxes through cap and trade and, as you know, through the super profits tax.

The Obama administration, for its part, did similar things. They piled up a $1.35 trillion federal deficit – about 9.2 per cent of GDP or the economy of France – also on social problems and pet projects. They nationalised health care, they nationalised the auto industry, they nationalised auto financing, they nationalised the student loan market, they rejected free trade. They started trade disputes with our major trading partners – Canada, Mexico and China. We saw the latest blowback of that earlier this week when China announced anti-dumping duties between 15-102 per cent on chicken imports from the United States. They’ve also raised taxes.

The Obama health care bill was retroactive from 1 January 2010 so our taxes have already been raised. They also tried to push a super profits tax on energy. They tried to push through cap and trade as well but there they failed. The economic damage, I would argue to you, was enormous. In the US, Christina Romer, the head of the Economic Council, promised that we would be at eight per cent unemployment right now. Instead we’re at 9.6 per cent and growing. That doesn’t even count the number of people who are looking for work, if you look at specific states like say Michigan which are seeing unemployment rates of 15 per cent and higher.

The damage to this economy was not immediately apparent to the voters, because this country started in a better fiscal condition.

The US has technically been in recovery since 2009. This is one of the weakest recoveries that we’ve even seen, despite the fact that we’ve had huge productivity gains in our private sector as of the third and the fourth quarters last year. Normally that would be accompanied by a rise in employment. But the banks are scared to lend, and small and medium sized businesses are scared to borrow to invest, because they just don’t know what’s coming down the road in terms of taxes, in terms of regulation. So we’re in the middle of what’s called a capital strike. Companies are sitting on a lot of money, they want to put it to work but they just don’t know what Democrats are going to do.

Here in Australia you had a different situation. The damage to this economy was not immediately apparent to the voters, because this country started in a better fiscal condition. And it wasn’t the epicentre of the financial crisis; no banks failed here. But from the pink batts scandal to Building the Education Revolution and its scandals to the solar rebate scandal, from the end of 2009 the media really started to dig into this. It became clear that hundreds of millions of dollars of taxpayers’ money was being misspent, just as it was in America.

Kevin Rudd then proposed the super profits mining tax on your most globally competitive industry. All of a sudden, capital here went on strike as well. Companies started laying off workers, foreign direct investment was put on hold. You would think that such a performance in both countries would have immediate implications for the conservative movement. You’d think these guys would have immediately jumped off their chairs and gotten up in protest. But, interestingly, the American and Australian conservatives reacted in slightly different ways. Although they may end up at the same point, arguing basically the same message.

This really is a bottom-up revolution in American politics and probably the most revolutionary development that we’ve seen in a very long time.

In the US, Republicans immediately protested at the Obama agenda, but they didn’t have much credibility. You will recall that the Bush administration was a compassionate conservative administration. It was also big government, big spending, and part of the reason why we had such a surge of Democratic wind in the last Congressional elections. The Republican Congress was so corrupt. So it was a hard argument for them to make.

The real upsurge instead came from the Tea Party movement – an organic uprising from outside the party system that supports the same things that real conservatives are supposed to support: lower taxes, smaller government, balanced budgets. How did this start? It’s hard to say. I’m happy to say that a journalist actually had something to do with it. Last February, a CNBC reporter went on television and ranted about government bailouts and called for a Chicago Tea Party. If you’re going to pinpoint a start to the Tea Party Movement that’s probably it. Pretty soon people were using the internet to organise all over the country.

Who are the Tea Partiers? … In terms of age, educational background, employment status and race, they are highly representative of the US public at large.

To paraphrase Henry Kissinger, if I wanted to call the Tea Party Movement who would I call? It’s not really evident. There is nobody to call. This really is a bottom-up revolution in American politics and probably the most revolutionary development that we’ve seen in a very long time. So now what do we have? We have thousands of organisations all over the country calling for these great conservative ideas. Compare that to continental Europe where they’re protesting in the street, such as in Greece, to preserve social welfare. So you can understand just how remarkable a movement this is in American politics.

Who are the Tea Partiers? It’s hard to generalise about them, but I can tell you a couple of facts. A USA Today poll in March 2010 found that in terms of age, educational background, employment status and race, they are highly representative of the US public at large. Eight per cent were white, six per cent were black, fifteen per cent were “other ethnicities”. A New York Times poll in April found them “more affluent and more educated than most Americans. Seventy-five per cent are aged 45 or older.” So this is very different from the picture of Tea Partiers that you get through some American newspapers and television stations.

Tea Partiers are broadly representative of the American public, and they’re not necessarily Republicans. In fact they might be people somewhat akin to my family, who were never really political people. If you’re a Republican after what’s going on today in America you’re going to vote Republican. The Tea Partiers may not necessarily vote Republican; they’ll vote for the people who believe in their ideals. And they are largely independents or sympathetic to Republicans but not necessarily going to vote for them.

We have seen Right-leaning Republicans and Tea Partiers win all over the nation, from Alaska all the way to my home state of Florida.

So what can we say for sure about these people? We know for sure that they’re succeeding in the polls. Conservatives won the governorships of Virginia and New Jersey. Then Republican Scott Brown won the Massachusetts by-election for Ted Kennedy’s seat. I cannot emphasise to you how totally amazing this is. There has not been a Republican Senator for Massachusetts since 1972. If I had told somebody two years ago that a truck driver, a Republican, and a former male model would be occupying Ted Kenney’s seat, I would have been laughed out of the room. As it turns out, Scott Brown was just the beginning of a surge. We have seen Right-leaning Republicans and Tea Partiers win all over the nation, from Alaska all the way to my home state of Florida. And they look set to win a lot of Congressional races, although not all of them, in November. That’s the United States.

In Australia, the conservative reply to the Left’s agenda that I outlined took a lot longer. I would put that down to the disarray within the Liberal party leadership. I know I have to be careful here because I see a couple of Liberal Party advisors sitting pretty close to me. Brendan Nelson’s premiership was always going to be a really tough slog. The party lost many heavyweights. Peter Costello was just one of them and Downer another.

It was only with the ascendance of Tony Abbott to the leadership that the Australian conservative movement regained its political compass.

Any government that has served eleven and a half years and finds itself in opposition, without funding and without its senior leadership, is going to take a long time to put an agenda together. But Nelson made it much harder on himself by waffling on some key issues like cap and trade. He had no clear growth agenda. He had no a clear argument against the kind of spending that Kevin Rudd was already engaging in. I see some raised eyebrows. I’m going to be in for some tough questions during the Q and A. When Nelson was rolled by Malcolm Turnbull, the Liberals further muddied their intellectual waters. Malcolm Turnbull agreed with Labor on cap and trade, on the stimulus spending, on Kyoto, on renewable energy mandates. So, if I were a Liberal sitting in Australia, who was I going to vote for? Labor? Or Labor Lite?

It was only with the ascendance of Tony Abbott to the leadership that the Australian conservative movement regained its political compass. The genius of Mr Abbott is that all he really did was present a traditional conservative opposition and stick to it. Why? Because he knew that the Left couldn’t run on their record. Just like the Democrats: they’re all running away from President Obama. And it’s the same here.

Labor can’t run on its record. So what did Abbott do? First of all, he told it like it is. One of his first statements was about cap and trade. Abbott it was just a great big tax. And you know what? That’s exactly what it is. And the minute that Abbott said that, it raised a question in voters’ minds. It went something like this: if they’ve misspent all of my money on all of these other initiatives and they put cap and trade in place, they’re going to get more money. What are they going to do with that great big fat tax? Where’s that money going to go? Can we trust them to spend that money?

Well, if it was a great moral challenge, why not be like John Howard and go to an election on it like the GST?

Abbott also exposed Kevin Rudd’s lack of political conviction when it came to cap and trade: “The great moral challenge of our time,” as Rudd had described it. What a great quote. As a journalist I love quotes like this. The great moral challenge of our time. Well, if it was a great moral challenge, why not be like John Howard and go to an election on it like the GST? Kevin Rudd couldn’t explain that. And he didn’t have the political conviction to do it. So what did the man believe in? What’s the real agenda of the Left? It’s impossible to defend.

Tony Abbott also pounded on about the misspent stimulus spending. This is an easy one to do. Most importantly, he gave voters a positive agenda. He said, “We’ll stop the taxes, we’ll stop the spending, and we’ll stop boats.” Now, that may be jingoistic, but if you’re going to a polling booth it’s a very easy thing to remember. He gave people something to vote for, as opposed to Malcolm Turnbull, who didn’t give them anything different to vote for.

As you know, Tony Abbott’s strategy has created panic in the Labor party, and you all know the story of the knifing of Kevin Rudd, the faceless men, and the historic unseating of a first term prime minister by his own party. Kevin Rudd’s demise put Julia Gillard in a very difficult position. Because the argument was this: if Kevin Rudd’s Labor government was so bad, and she was number two in the decision making, then why was Julia Gillard good enough to be re-elected in a Labor government? That’s an almost impossible pitch for government, an impossible message to send.

Voters responded to Tony Abbott’s ideas, and the election in August spoke for itself. The story of the election was not the squeaky Labor-Coalition victory, it was the fact the Tony Abbott made up a double digit deficit in the polls in a matter of months. This is actually one of the most remarkable electoral surges that I’ve seen, an incredible story. Not only did the Liberals make up that deficit, they won over 700, 000 more primary votes than Labor, as the Sydney Morning Herald’s Paul Sheehan pointed out. In the key independents’ country seats, in the Senate races, the Liberals won by 15-20 percentage points. Queensland swung to them, a couple of seats in New South Wales also swung to them. And Labor saw a lot of its vote actually go to the Greens. Now, it’s bad for Labor when voters think that the Greens are a viable option.

This reorientation to the Right is not splitting the Republican Party in the United States. It’s actually saving the Republican Party. You won’t read that in the New York Times.

So what does this all mean for conservatives? I’ll offer three really quick observations. First, I think the conservative surge we’ve seen in the United States, through the Tea Party and in Australia through the Liberal party, brings both countries back to their founding ideals. These are naturally conservative nations. They’re large, continental, democratic nations, founded on the same things. They are founded on the rule of law, the protection of private property; they celebrate individual freedom and entrepreneurship. These are natural conservative ideas.

These countries are not based on the redistribution of income or on some sort of classism. It’s no coincidence that conservative governments have largely defined Australia since federation. The exception of course being 1983-96, but you know in that period you basically have Labor appropriating Liberal Party ideas. This is why the current prime minister, during the campaign, tried so hard to move to the centre. Julia Gillard knows that’s where the electorate is. So she made a deal on the mining tax, she dumped cap and trade and she started talking about things like fiscal responsibility and fiscal prudence.

In America, it’s a very similar story, although we have a longer history as a federal government though on the whole the US has had more conservative governments than liberal governments (as in Democrat equivalents). That being said, conservative governments have to be truly conservative if they want to regain power and keep it, and that’s the second point that I want to make. This reorientation to the Right is not splitting the Republican Party in the United States. It’s actually saving the Republican Party. You won’t read that in the New York Times. This is my argument.

Take the Liberal Party under Malcolm Turnbull. There was his stand on global warming. And later social progressiveness. Remember the Bill Henson art scandal, where Malcolm Turnbull came out on the side of the artist and Kevin Rudd came out on the conservative side? This undoubtedly help Turnbull in Wentworth, but it doesn’t make him nationally electable. If the Liberals want to maintain and sustain their popularity with the Howard battlers then they have to tack to the centre.

It’s the exact same thing in the United States. The Republican Party under Bush and compassionate conservativism ended with bigger government, more regulation, higher deficits and stimulus spending. It was the Bush administration that conceived of TARP, of No Child Left Behind, of ethanol subsidies. There was even trade protectionism under Bush, with the steel tariffs. The Bush administration by no means was the kind of conservative government that the Tea Party would support, or a normal conservative like me would support.

In fact, the Tea Party is doing a service to the Republican Party. I was talking to Grover Norquist this morning – he is in town with the Americans for Tax Reform. I asked him if the Tea Party was throwing up unelectable candidates. And he said, “It may. However, the Tea Party has also ejected some unelectable Republican candidates.” I’ll just go through a couple of these.

Point number one: this is a natural movement back where these countries generally tend to go. Number two: conservatives can’t take this for granted.

Think of the Delaware race, where Christine O’Donnell beat Mike Castle, a 44 year Congressional veteran who supported cap and trade. If he went to voters as a Republican today saying I think we should impose cap and trade on the American economy, I don’t think you’d get a very good reception. O’Donnell turfed him out. Utah Republican Bob Bennett lost the primary for voting for TARP. The pro-stimulus Charlie Crist who’s from my home state of Florida was seen, very famously, hugging President Obama to thank him for all the money that he was spraying into the state of Florida. It became known as “The Hug”. Crist had such a poor showing in the race for the Republican primary that he had to leave the party. He’s now running as an independent and he’s probably going to lose.

Then there is Alaskan Republican Lisa Murkowski, who comes from one of the great political families in Alaska. If you want to talk about bringing pork home, the bridge to nowhere, this is Alaska. How many people in Alaska? How many bridges to nowhere? Who’s going to drive on this stuff? Who knows? Murkowski supported government-funded healthcare, and refused to drop her support of that. A guy named Joe Miller, a war vet, won the primary. But Murkowski, like Crist, refuses to respect those results and she’s going to try to run as a write-in candidate. Extraordinary.

So, point number one: this is a natural movement back where these countries generally tend to go. Number two: conservatives can’t take this for granted. They have to listen to what the constituents are saying and reflect that through their party platforms.

My third and last point is I don’t think that conservatives should be getting wrapped up in social issues like abortion or gay marriage or guns or that peculiarly American “don’t ask, don’t tell” policy which nobody outside America seems to understand. In bad economic times, like now, voters don’t prioritise such issues when they get to the polls. They vote for people who say they’re going to get government out of the way, attract investment and lighten the burden on business and tax payers. To that extent, Republicans were smart not to emphasise these things in the “Pledge to America” they made last week.

Tony Abbott may have a little more wiggle room here because the Greens are going to pull Labor to the left on social issues. There is talk, for example, of a euthanasia debate. That’s probably just the beginning. Tony Abbott has more leeway to talk about family and values than he would in America. And voters here don’t feel the economic strain so much. Australia’s going pretty well economically compared to the US so you can afford to think about these things. In America when your cousin’s out of work or your wife or your husband is out of work, who cares?

So will these conservative surges last? That’s the key question. Are they sustainable? In the US, it depends on whether the Republicans change enough to satisfy the Tea Party movement. If they do, you could easily see a Republican presidency in 2012. If not, you’re going to see the most volatile electoral politics in modern American history. In Australia, the future is much clearer. The Greens are going to push Labor way to the left. For instance the discussion on a carbon tax. Only a month ago, we heard the Prime Minister say there will not be a carbon tax in my government. Last week we heard Climate Change Minister Greg Combet saying the circumstances have changed, we just didn’t expect these sorts of circumstances, and now we have a coalition to satisfy. So, there you go. If Labor is pulled to the left, and so long as the Liberals and Abbott can stay on message, the trend is clear. The Liberals will rise and Labor will fall.