Why the Republicans need to lose
Losing the election could be good for the GOP in the long term - and winning it could be bad for the Democrats, says Fortune's Cait Murphy.
By Cait Murphy, Fortune assistant managing editor

NEW YORK (Fortune) -- Power may be corrupting, but it is also addictive. That's why no party likes to lose an election. But the truth is that sometimes a loss is just what is needed to regain a sense of purpose and energy. And that's why the Republicans need to lose in November.

In 1974, for example, Britain's Conservative Party lost. Disillusioned Tory voters failed to turn out and more than a few, tired of the tired Edward Heath, decided what the hell, and voted Labor.

In the aftermath, small groups of Tories, both in and out of government, sat down and thought. In think tanks, and party clubs, through pamphlets and speeches and arguments and chats over tea, they set out to define what it meant to be a Conservative. The answers - lower taxation, rolling back the state from the private economy, a reassertion of British confidence - brought the Tories four straight wins.

Tired of losing, the Labor party eventually went through a similar rite of passage. The result was "New Labor," a term coined in 1994. The party jettisoned its socialist moorings and accepted the union legislation it had fought tooth and nail in the 1980s. New Labor emphasized fiscal prudence, competitiveness and integration with Europe, while reconnecting with core British values. One slogan that captures its essence: "tough on crime; tough on the causes of crime."

In the United States, there are similar examples. After getting killed in the 1974 mid-terms and losing the White House in 1976, Republicans took a look at the party and saw that, among other things, the GOP was failing to differentiate itself from the Democrats. (Remember, it was Nixon who introduced wage-and-price controls, the kind of economic interventionism more associated with the other guys.) Result: the Reagan Revolution.

And in 1994, after the loss of the White House, the Republicans unveiled the Contract with America. This was a list of 10 bills that a Republican Congress pledged to try to pass - ranging from things like a balanced budget amendment, to welfare reform, to tort reform, small business incentives and term limits.

Like it or not, the Contract (critics derided it as the "Contract on America") represented a set of ideas and principles. Faced with a coherent vision, voters went for it, giving the GOP one of the biggest mid-term jumps in history - 52 seats in the House, and nine in the Senate - more than the Democrats got after Watergate.

Losing the 2006 mid-terms could provide such a watershed moment for the GOP.

Time for change in the GOP

The Republicans are a tired party right now, in need of a good internal shake-up. The evidence for this is overwhelming. Take Congress - please.

According to a recent poll, only 16 percent of Americans approve of its performance. This, of course, is not entirely the GOP's fault; after all, there are lots of Democrats filling office space there, too. But fish rot from the head down. Leadership means accepting responsibility, and this is about as incompetent, dysfunctional and trivial a Congress as this proud nation has ever seen.

Or take the economy. Republicans have long argued for smaller government; they were supposed to be the stingy ones. Not any more, apparently.

According to estimates in a September research report by the Heritage Foundation, a conservative think-tank where almost everyone can be expected to vote Republican, federal spending has risen 45 percent during Bush's presidency, three times as fast as it did under Bill Clinton.

Almost half of the increase is in discretionary spending (not entitlements, a whole other issue the GOP has disdained to address in any sustained fashion). And no, Osama is not to blame. As the exasperated Heritage folks note, non-military spending has gone up by 44 percent. Gross ploys like earmarks (putting pet projects into non-related appropriations bills) have ballooned. Although the economy is doing okay, with growth and productivity stable, the GOP's grade on fiscal management is awful.

Then there's trade; Republicans are supposed to be the free traders on the block, but it's hard to tell. The steel tariffs were a protectionist boondoggle by any measure; there is also the total lack of leadership to unstick the Doha round of world trade talks. Free trade agreements with, say, Jordan, don't add up to much compared to this.

What about defense, another traditional GOP emphasis? There's not much thinking here, either. Clearly, no rational person can look at Iraq and say that, yes, this is what we intended. In a larger sense, though, consider the following questions: What is national security? How do we support it? Is what we have now doing the job? Are there other ways? What is America's role in the world?

These are questions that the public has the right to expect a ruling party to answer, or at least wrestle with. That isn't happening. As for the lobbying/fundraising scandals, they reflect a culture more absorbed with staying in power than doing anything useful with it.

At bottom, the Republicans right now are a party that has no discernible sense of direction on any of the really important issues that face the country and the world. A whacking loss could be just the thing to get them thinking seriously again.

Defaulting to the Donkeys

Of course, the Democrats have swallowed regular doses of defeat without bothering with this kind of self-examination. One emblematic moment:

Congress Daily quoted Charles Rangel, the New Yorker who would head the Ways and Means Committee in a Democratic Congress, saying in late September he would consider tax increases across the spectrum. A few days later, Rangel retreated. It's too soon to discuss either increases or cuts, he told the New York Sun. Great - the head of the nation's tax-writing committee has no views on taxes. But then, no one else in his party does, either.

Democrats may well benefit politically from the mess in Iraq - but only by default, because the only discernible Democratic policy on the matter is to blame Bush for it. More troops? Fewer? A timetable for withdrawal? With conditions? Who knows?

On immigration, entitlement reform, military tribunals, education, the environment - the Democrats have been intellectually missing in action. (Hint: Bashing Wal-Mart (Charts) is not an economic policy and trashing Big Oil is not an environmental one.) If they take Congress in November, it will not be because they did the soul-searching Labor did in the '90s or the Republicans in the '70s. It will be because the public wants to spank Bush.

That might be enough to take the mid-terms. But the party will have to be more than not-Bush to win in 2008. And let's face it - the Democrats have not exactly been an idea factory.

In a sense, then, both parties could benefit by losing this election. And there is a certain justice to that, because both deserve to.

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