Republican strategist Jude Wanniski first proposed his Two Santa Clauses strategy in The Wall Street Journal in 1974, after Richard Nixon resigned in disgrace and the future of the Republican Party was so dim that books and articles were widely suggesting the GOP was about to go the way of the Whigs. There was genuine despair across the Republican Party, particularly when Jerry Ford couldn’t even beat an unknown peanut farmer from rural Georgia for the presidency.
Wanniski reasoned the reason the GOP was losing so many elections was not just because of Nixon’s corruption, but mostly because the Democrats had been viewed since the New Deal as the Santa Claus party.
On the other hand, the GOP, he said, was widely seen as the party of Scrooge because they publicly opposed everything from Social Security and Medicare to unemployment insurance and food stamps.
The Democrats, he noted, got to play Santa Claus for decades when they passed out Social Security and Unemployment checks — both programs of FDR’s Democratic New Deal — as well as their “big government” projects like roads, bridges, schools and highways that gave a healthy union paycheck to construction workers and made our country shine.
Even worse, Democrats kept raising taxes on businesses and rich people to pay for all this stuff — and those taxes on the rich didn’t have any effect at all on working people (wages were steadily going up until the Reagan Revolution, in fact).
It all added, Wanniski theorized, to the perception that the Democrats were the true party of Santa Claus, using taxes from the morbidly rich to fund programs for the poor and the working class.
Americans loved the Democrats back then. And every time Republicans railed against these programs, they lost elections.
Therefore, Wanniski concluded, the GOP had to become a Santa Claus party, too. But because the Republicans hated the idea of helping out working people, they had to come up with a way to convince average voters that they, too, have the Santa spirit. But what?
“Tax cuts!” said Wanniski.
To make this work, the Republicans would first have to turn the classical world of economics — which had operated on a simple demand-driven equation for seven thousand years — on its head. Everybody understood that demand — “working-class wages” — drove economies because working people spent most of their money in the marketplace, producing “demand” for factory output goods and services.
