An Imperative For Re-Definition

In his response to President Obama’s State of the Union address, Congressman Paul Ryan of Wisconsin intoned ominously that unless America put its fiscal house in order, we would face the harsh austerity measures currently in vogue in Europe.

“You want those austerity measures!” A friend of mine exclaimed.

“It’s on your website!”

Until recently I thought Ryan’s doubletalk was the fishy part, but since the protest tradition has been reinvented in Madison, Wis., I’ve figured out what was really going on. Paul Ryan can predict the future. The protests and debates over the private and public sectors that have rocked Europe’s streets have arrived in Middle America.

A few months ago, we wondered if Europe was a vision of the future. Now it’s clear Europe is a vision of the present. States across the country are in a position similar to Wisconsin’s. Their budgets are imbalanced and fiscal crises loom. Budget cuts and tax hikes are necessary and shared sacrifice is an imperative.

Strangely, only one side of the political equation calls for shared sacrifice. Progressives have recognized that any solution to fiscal crises will require spending cuts as well as higher taxes on the wealthiest. In Wisconsin, the public employees unions made concessions to hold up their end of the bargain. Their goodwill went unrequited by Republican Governor Scott Walker.

Conservatism is doubling down on its normal dose of austerity measures that leave the budget-balancing burden on ordinary people while leaving the richest untouched. Our nascent economic recovery hangs in the balance as well. It’s clear that conservatism will not be adapting its ideas to the moment’s needs anytime soon.

Should liberalism adapt instead? Out of this crisis could come a reimagining of liberal progressive ideas about the state and society. A new conception of how the public and private sectors interact could be the right move for “the stormy present,” as Lincoln called his age of turbulence, but also for the decades that lay beyond the horizon. These future decades will likely be ones of great fiscal turmoil.

The preceding few decades explain the next few. In the mid-Twentieth Century era of the New Deal and the Great Society, America made a choice. We would be a capitalist democracy devoted to free enterprise and policies encouraging growth and investment. We would also have a social safety net and a welfare state so that in old age, or in moments of desperation, we could all be saved from the free market’s unforgiving logic.

Promoting growth and social safety seemed like a good combination. Millions were raised out of poverty and into the middle class through this dynamic arrangement of national mutual benefit and the country experienced economic booms in the ’50s and ’60s.

This arrangement was sustainable in good economic times. It required “fat years” because it needed funding to fulfill its promises. Generous pensions, high union wages, and social welfare all came at a cost. As long as private coffers were continually flush, so were public coffers.

Then globalization happened. Countries around the world started making textiles and steel and other products much cheaper than America. By the 1970s we had lost our economic edge in the world and the situation was compounded by stagflation. We faced a slowdown that seemed possibly permanent.

Although economic good times returned in the 1980s and again the ’90s, a realization emerged. We may have over-promised. Our welfare state and generous pensions, public and private, might be unsustainable in a new economy where middle class income (that is, taxable income) is stagnant relative to overall economic growth.

The rise of a right wing that views with utter horror raising the top marginal income tax rate only a few percentage points from a historically and comparatively low 35 percent does not help matters.

Indeed, the charts for the next few decades are ominous. Federal spending on Medicare and Social Security continues to rise. The tax revenue to fund these programs and others like them, however, climbs at a much slower rate. Borrowing to fund these programs will eventually constitute 200 percent of GDP, an unprecedented nightmare rate so high that no one knows what will happen if that point is reached.

This menacing situation is an opportunity to be seized. Liberalism can redefine itself. It can go centrist and join the GOP in pursuing cuts, becoming the advocate of austerity-lite. The political risk of this strategy is that when presented with GOP or Diet GOP, voters will choose the real thing every time.

Liberalism can go traditional and begin making a strong and affirmative case for capitalism with a safety net. Conservative genius over the past 40 years has been to paint their colors in bold hues, not drab pastels, as Ronald Reagan characterized it. By presenting a clear alternative to conservatism, liberalism may regain long-term electoral strength. The problem remaining is how to make the new fiscal math add up with an old-time liberal gospel.

A third way is an imaginative and novel liberalism with a new conception of government and society. It would be neither traditionally left nor right nor centrist but would instead be unprecedented and, as of now, unseen. This reinvention will need some bold thinkers to come along soon in order to work.

However Democrats and Republicans choose to lead, they better figure it out soon. The crowds are at the barricades.