The US Democratic Party is bewildered and spooked. One year after Barack Obama’s inauguration, a political asteroid struck yesterday, imperilling the road ahead for the President’s agenda, including his cherished healthcare reforms.

That Obama’s party could lose a Senate race in the liberal-left bastion of Massachusetts is proof that political hell has officially frozen over.
Republicans last held the seat in 1972. But to lose in a special election triggered by the death of Ted Kennedy?
That’s just too cruel, too macabre. Kennedy’s dream was for the US to enact universal healthcare, similar to Australia or Britain. With Massachusetts gone, the Democrats now slip from 60 to 59 seats in the 100-member Senate. And under the arcane rules of that chamber, they lose the ability to override Republican legislative opposition – on healthcare or anything else.
Even for the Democrats, this must rank as a cock-up of historic proportions. Much of the blame rests with their candidate, Martha Coakley, the Attorney-General of Massachusetts. After winning the Democratic primary, Coakley assumed the general election would be a cakewalk. She didn’t bother airing television ads or raising money. In an act of complacency that will go down in folklore, she ambled off the trail for a six-day holiday over Christmas. Right now Martha’s Vineyard is being renamed “Martha’s graveyard”.
Coakley’s negligence opened the door for her Republican opponent Scott Brown, a personable state senator and former Cosmo centerfold, to dominate the hustings and the airwaves – including one highly effective spot introducing him as an ordinary bloke in a pick-up truck.
By last week, Coakley’s 30-point lead in the polls had melted to single digits. Panicked, she compounded her problems by calling Curt Schilling, the champion pitcher for the Boston Red Sox, a member of the New York Yankees (as big a howler as claiming Andrew Johns played Origin for Queensland). Obama himself parachuted into Massachusetts over the weekend to no avail – Brown, the Republican’s newest folk-hero, won 52 to 47.
But this is more than a story about mismatched candidates. The Democrats lost Massachusetts because a dud candidate was overwhelmed by a toxic, anti-incumbent environment.
All year, a populist revolt has been brewing against the spending frenzy in Washington DC – all those politicians who wrote blank cheques to bail out irresponsible banks and stepped in to save Chrysler and General Motors.
Worst of all for Obama has been the albatross of his $787 billion stimulus program. In Australia, the Rudd government’s stimulus was more or less accepted despite the occasional dodgy school hall project. Funds were bundled out quickly and unemployment peaked at 5.8%. In the US, however, two-thirds of the infrastructure spending is back-loaded after 2009. It’s one thing to spend $787 billion. It’s quite another to have nothing to show for it – since the program was enacted, unemployment has risen from 7.6% to 10%.
Inevitably, this has all but sapped Obama’s political capital to push for $900 billion in healthcare reforms. Americans are exhausted and in the mood to throw the bums out. On yesterday’s showing, the Democrats could lose control of both houses of Congress in the midterm elections later this year.
So what now for healthcare?
On Christmas Eve, the Senate, by a party-line vote, actually approved a bill. The problem is that it’s a bill only a mother could love. While it includes subsidies to help Americans afford private health insurance, coupled with regulations to outlaw insurers from withholding coverage, progressives bemoan a corporate sell-out that fails to establish a universal Medicare-style scheme. Trade unions oppose the “Cadillac” tax financing mechanism – one to be shouldered by many of their members. Socially conservative Democrats want to close loopholes that permit government funding of abortion.
The plan had been for Democrats in the House of Representatives (who enjoy a solid majority) to resolve these various issues and then squeak a revised bill through both chambers. But with Brown proudly proclaiming himself as the Republican’s 41st vote, the Senate terrain is now treacherous.
So Obama and Congressional Democratic leaders essentially have three options: First, delay seating Brown in the Senate – a non-starter because it would look like something out of Robert Mugabe’s Zimbabwe. Second, force the House to simply rubberstamp, word-for-word, the flawed Senate bill and send it to the president’s desk. Finally they could remodel the healthcare package in a bid to attract some Republican votes.
We are poised to learn a lot more about Obama these next few weeks. All presidents face a defining moment where they can choose to double down or listen, recalibrate and adjust. When even Massachusetts voters want to bring an end to one-party Democratic rule, that moment has been reached. They knew Obama’s healthcare proposal was on the line yesterday – and they gave it the middle finger.
For Obama – and all politicians in Washington DC – the message is surely clear. Slow down. Reach across the aisle. Start talking to each other.
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