GLOBAL MARKETS-Asian shares firm, dollar and U.S. bond yields slip after Fed
* Fed policymakers support gradual reduction in balance sheet
By Reihan Salam
NEW YORK Nov 27 In a post-election interview with the Milwaukee Journal-Sentinel, Paul Ryan, chairman of the House Budget Committee and the GOP's 2012 vice presidential nominee, said "the president should get credit for achieving record-breaking turnout numbers from urban areas for the most part, and that did win the election for him." Ryan's critics noted that President Barack Obama also fared well in states like Iowa, where the urban vote is relatively small. Some even suggested that Ryan's remarks were a kind of racial code, in which "urban areas" served as a stand-in for black and Latino voters. Yet Ryan's observation speaks to a deeper truth that should trouble Republicans.
Although rural regions dominate the map of the contiguous United States, an overwhelming majority of Americans live in urban and suburban areas. Democrats have long dominated dense urban cores. But Democrats increasingly dominate dense inner suburbs-as opposed to sprawling outer suburbs, where Republicans still hold their own-as well, and the share of the population concentrated in dense suburban counties is steadily increasing. This is true not only among Latino, black, and Asian voters living in these communities, but of white voters as well.
Consider, for example, the political trajectory of Fairfax County in northern Virginia, a dense suburban county with a population of 1.1 million that lies just across the Potomac from Washington, D.C.
As recently as 2000, the GOP presidential candidate George W. Bush won Fairfax with 48.9 percent of the vote to Al Gore's 47.5 percent. In 2004, though, Bush lost Fairfax to John Kerry 45.9 percent to 53.3 percent. Barack Obama won Fairfax by an overwhelming 60.1 percent in 2008, and he won it again by an only slightly less overwhelming 59 percent in 2012.
One of the most striking numbers from Fairfax is that George W. Bush's winning vote total in 2000 - 202,181 - is an eerily close match for Mitt Romney's losing total in 2012 - 206,733. It just so happens that Obama won 315,273 votes in 2012. And Fairfax is hardly alone.
Orange County, California-once a hotbed of Goldwaterite conservatism-backed Mitt Romney by 51.9 percent of the vote, a sharp decline from the 55.8 percent support George W. Bush received in 2000.
You'll find the same pattern in Wake County, North Carolina, DuPage County, Illinois and Jefferson County, Colorado and other populous inner suburban counties across the country.
In The Emerging Democratic Majority, John Judis and Ruy Teixeira referred to these communities as post-industrial "ideopolises," in which economic life revolves around college-educated professionals working in knowledge-intensive services and the less-skilled workers who meet their various needs.
Rather than fixate on ethnicity, conservatives would do well to think more about urbanity. What is it about life in America's densest, most productive, and most economically stratified metropolitan areas that persuades voters to back Democrats? When this phenomenon was limited to the populous coastal metropolitan areas, it could reasonably be explained away as a product of regional political polarization. But the leftward trend in urban areas is chipping away at the GOP's advantage in the South and the Mountain West as well.
Among conservatives, there is a broad post-election consensus that America's demographic transformation represents a serious challenge for a Republican Party that is disproportionately backed by white Anglos and voters over the age of 65.
Thus many on the right have called on congressional Republicans to embrace comprehensive immigration reform as part of a larger effort to woo Latino voters. The pushback has been that Latino voters tend to be less affluent and more likely to rely on anti-poverty programs such as SNAP and Medicaid, and so it is hardly surprising that they are more inclined to support Democrats.
What is more striking, however, is that Asian-American voters, a relatively affluent group, favored Obama by 73 percent to 26 percent. One possible explanation is that Asian-Americans are heavily concentrated in dense coastal regions, where they vote much like white Anglos with similar educational profiles and religious beliefs. That is, secular college-educated Asian Americans appear to be about as hostile to the GOP as secular college-educated white Anglos, which is to say very much so.
Embracing comprehensive immigration reform is relatively easy for the right, leaving aside the question of whether or not it is wise. Conservatives can feel relatively comfortable about bracketing the question of immigration policy from core ideological commitments. Many conservatives and libertarians see creating a path to legalization for unauthorized immigrants as a pro-market, family-friendly measure that should be defended on its terms while others are willing to compromise on immigration to keep taxes and spending as low as possible.
Crafting a political message that can appeal to voters in dense cities and inner suburbs, by contrast, is far more challenging for conservatives, as it will require a serious rethinking of the GOP's approach to domestic policy.
For much of the postwar era, Republicans flourished in inner suburbs, which were in many cases populated by families that had fled the chaos and disorder of cities plagued by violent crime and scarred by misbegotten urban renewal projects that drained cities of vitality. The decades-long crime explosion and the threat of urban riots created a new constituency for punitive law-and-order policies and gun rights, and the GOP was keen to seize the opportunity.
Yet over the past two decades, violent crime has sharply decreased for reasons that are still not fully understood. Many credit more effective policing strategies while others point to broader cultural changes. Regardless of the underlying explanation for the decline in crime, the politics of law-and-order is no longer as salient as it was in the wake of urban rioting or even at the height of the crack epidemic.
And so voters in the inner suburbs now focus on other issues, like the quality of local public schools, traffic congestion, and whether or not they are climbing the economic ladder as fast as they'd like. Republicans are seen as staunch opponents of tax increases, but most middle-income households find that the tax burden is a less pressing issue than the cost of medical insurance or even the cost of commuting. Lisa Margonelli, author of Oil on the Brain, recently noted that a typical family of four earning $50,000 will spend $7,900 a year on cars and gasoline, a staggering sum that outweighs what this same family spends on taxes and medical care.
So this will have to be the next frontier for conservatives. Liberals have answers for inner suburban voters. They propose raising taxes on the top 2 or 3 percent of households to increase funding for local public schools and infrastructure; to boost salaries for public employees while also expanding their ranks; to offer subsidized insurance coverage to the poor and the middle class; and to subsidize other expenses middle-income families incur in the course of a lifetime.
The conservative reply is that this approach is not likely to work, and indeed that it is a recipe for economic sclerosis. Though this negative reply is, in my view, almost entirely correct, it is not enough to win back the inner suburbs. Rather, conservatives will have to explain how and why they can do a better job of delivering high-quality public services more efficiently. They need to demonstrate that they can successfully tackle quality-of-life issues like traffic congestion that are in many regions vitally important economic issues as well.
Wisconsin Gov. Scott Walker's push to reform collective bargaining in his state is a good example of the kind of policy conservatives need to champion. Yet this effort has to be connected to a broader narrative about how to make America's communities thrive. Until that happens, urban areas will continue to sink the GOP.
* Fed policymakers support gradual reduction in balance sheet
TOKYO, May 25 The dollar was on the defensive early on Thursday after minutes of the latest Federal Reserve policy meeting were not as hawkish as anticipated, while the euro edged back up towards a 6-1/2-month high.
May 25 The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy.