Oregon as Antidote to Massachusetts: There's More than One Way to Send a Message

There was no nude Cosmo shoot in Oregon, no old truck, no confusion over whether a former Red Sox pitcher is a Yankee fan. But Oregon did have an election last month and the result -- support for $733 million in tax hikes -- was as startling as Republican Sen. Scott Brown's victory in Massachusetts. Democrats should take a closer look at Oregon. What they see might help them stiffen their spines.

The Bay State election has been interpreted and over-interpreted beyond reason by gleeful Republicans and panicked Democrats. And to be sure, there was a man-bites-dog aspect to a Republican winning the seat the Kennedys had occupied since 1953. Yet before last week, Oregonians hadn't approved a statewide tax increase since 1931. That surely qualifies as "man at least nips at dog," nonpartisan Portland pollster Tim Hibbitts told me.

Specifically, Oregonians voted to raise corporate taxes and raise the income tax on families that make more than $250,000 ($125,000 for individuals). At first glance it looks like the Boston Tea Party in reverse (raise our taxes, please) except that 97 percent of voters won't see a tax increase themselves. The more relevant takeaway is anger -- at wealth, at corporate privilege, at the status quo, at general unfairness, and at the prospect of further erosion of public services that are already cut to the bone.

If you read the Oregon tea leaves as intensively as the ones in Massachusetts, what emerges is an affirmation of Democratic economic policies. President Obama and his party are funneling money to states to help them keep their teachers, cops and social services. This year, they will allow to expire George W. Bush's tax cuts for corporations and households making more than $250,000 -- the same groups hit up for help in Oregon. They are considering in ongoing health negotiations a House-passed "millionaire's tax" that could help finance expanded insurance coverage in a final bill, if there is one.

For Democrats who would dismiss the Oregon results as pre-ordained, because, come on, it's Oregon, look again. First of all, the state is not as knee-jerk blue as its image. The Legislature was under GOP control until the mid-2000s. Nor has history shown Oregon to be particularly tax-friendly. The last 11 attempts to raise taxes failed, according to Ryan Deckert, president of the Oregon Business Association. That's consistent with the state's populist, anti-establishment streak. Ross Perot received nearly a quarter of the Oregon vote in 1992, and it was a top 10 state for Ralph Nader in 2000.

What happened last month was the culmination of a bad bet by Oregon business. The Legislature, now controlled by Democrats, wrote the tax hikes into a law. Assuming past patterns would hold, the business community gathered enough signatures to put the two tax provisions on the ballot as Measures 66 and 67. But instead of vetoing them, voters ratified them by a solid 54 percent to 46 percent.

"They thought people would vote no. Looking at history, they were exactly right. Looking at reality, it didn't work out that way," said Jim Moore, a political scientist at Pacific University.

Associated Oregon Industries led the petition drive to put the tax hikes to a vote. "We had no choice," AOI president and CEO Jay Clemens told me, because of prospective damage to Oregon businesses and jobs. The editorial board of The Oregonian agreed with AOI and urged residents to vote no, as did a business coalition called Oregonians Against Job-Killing Taxes. Clemens blames the defeat on a distorted message from public employee unions. They "created a crisis atmosphere ... that some people bought into," he said, and spent a lot more getting out that message than the $4.5 million he says was spent by his side.

The "Vote Yes for Oregon" campaign, a coalition of 300 unions and advocacy groups pushing for the tax hikes, spent nearly $7 million, according to director Kevin Looper. The centerpiece of the campaign was the $10 minimum corporate tax, which had been unchanged since 1931. One ad managed to tie together Depression-era footage, hard times for contemporary families, and contempt for Wall Street banks and credit card companies. "Corporations getting away with paying $10 should be a thing of the past," it said.

That was half the pitch. The other half stemmed from fiscal realities. Social services were on the line, including care for the mentally ill and the working poor. Counties had been asked to plan for more cuts. Even for the middle class, the impact of the recession on daily life has been hard to miss, starting with four-day weeks and shorter terms in some Oregon school districts. "We were able to make a case here of equal parts need and fairness. You couldn't just go out there and say soak the rich," Looper told me.

Need and fairness would be good, clear, simple starting points for Obama and other Democrats if they ever get to the stage of having to sell a new health reform law. But the Oregon experience offers more than simply a message for health reform. It shows the way to win, and the polarized aftermath of winning.

Proponents of the Oregon tax hikes began with "a very skeptical electorate and a long series of failed attempts," Looper said. That sure sounds like the national health care battle. But then there are these elements of success: Looper's group generated a base of support by making a strong, stark case for their position, and that produced polarization.

"There is no way to have any meaningful discussion about the direction of the state or national government without being polarized," Looper told me. "Those who like their politics antiseptic will find this distasteful. But if you're going to fight for something, it turns out you're actually going to have to fight."

Oregon offers various business tax credits and has no sales tax, and its overall business tax burden remains among the lowest in the country. Still, as a result of the referendum, some specific taxes are now among the highest. Already, various parties on all sides are talking about modifications and in some cases already are working with each other toward them. There is also much talk about the need for comprehensive state tax reform to avoid structural deficits in the future. People are now moving forward, past division, toward what comes next.

Democrats in Washington are still far from an afterglow or even an aftermath, far from the post-passage phase when laws can be tweaked and improved. The hard part -- believing in themselves and their goals -- will have to come first.

(Note: This story has been updated to clarify that Oregon's overall business tax burden is relatively low)