What’s a Few Hundred Billion Between Friends?

As Krugman points out, the amount of revenue forgone by lifting the top bracket from $250k to $450k is practically a rounding error, at least in budget terms. And while tax rates on investment income (capital gains, dividends) are still too low, at a time when the Fed is trying to use asset inflation as a backdoor out of the liquidity trap, should fiscal policy really be pushing in precisely the opposite direction?

More to the point, it escapes me why people who claim to understand that the primary economic risk right now is austerity, not a lack of it, are howling for tax increases—on anybody.

If you need to have something in the deal to be indignant about, how about the payroll tax hike? Not only will it put more than million people out of work, the tax itself is about the most regressive and destructive one imaginable. In a sane society we’d be talking about how to replace it, not raise it. But I digress.

Look, I understand the argument for raising the mortality rate on the Bush tax cuts: Over the long run, the federal government needs that money to safeguard the social safety net and keep the deficit boogey monster at bay.

Leaving aside the fact that the deficit monster (even the king-sized version allegedly lurking in the out years) might be a lot less scary than our indoctrinated media portends, the bottom line is I’m with Keynes: In the long run, we’re all dead. That being the case, I don’t think we should sacrifice the economically vulnerable to our fears for the future, including our fear that taxes might be hard to raise in that future.

The idea that the remaining Bush tax cuts are now “permanent” may be clever GOP marketing spin, but that doesn’t make it true. Does anything about the fiscal history of the United States, or even the post-Reagan era, suggest marginal tax rates are immutably carved in stone? Nothing is permanent—“nothing is written,” to quote Lawrence of Arabia (or actually, Peter O’Toole playing Lawrence of Arabia).

Recreating a Party of the Left

In that sense, I guess maybe I don’t stand with Keynes: I plan on sticking around for awhile, and I suspect most of you do, too. And, like you, I intend to go on fighting for the society I want my children—and their children, if I’m lucky—to live in.

That being the case, how you feel about this deal—or the debt limit deal to come, which almost certainly will smell even ranker—logically should depend on how immediate you think the harm will be, and what the chances are for fixing the bad stuff before it seriously damages the social safety net.

That, in turn, should depend on where you think we stand in the political cycle that more or less began with the election of Ronald Reagan almost a third of a century ago.

The point I’m getting to, at last, is that this is about much more than Obama and his alleged sociopathology. This is about the future of the Democratic Party, and, for that matter, about what we dare to call the progressive movement—which, let’s be honest, to past generations of progressives, wouldn’t look very progressive at all.

Conservative apostate Bruce Bartlett (last seen in this space getting his hide ripped off by Markos for daring to compare the modern Democratic Party to the segregationist Dixiecrat party of old) puts it this way:



the nation no longer has a party of the left, but one of the center-right [i.e. the Democrats] that is akin to what were liberal Republicans in the past—there is no longer any such thing as a liberal Republican—and a party of the far right.

Can anyone deny this? It’s not even new: Readers of Bob Woodward’s book about the Clinton economic plan,may recall the scene where Bob Rubin informs the president that the plan is for him to kneel down and suck Wall Street’s dick (instead of the other way around), and an exasperated Clinton shouts: “I hope you're all aware we’re the Eisenhower Republicans here!”

Truer words never spoken. And it took a bunch of guys like Newt Gingrich, Dick Armey and Tom DeLay to make us all fully appreciate the enlightened liberalism of Dwight D. Eisenhower.

But I’m here to argue that the “liberal Republicanization” of the Democratic Party, currently on full display in the ongoing fiscal talks, is actually evidence of success, not failure. It is a success that could—not certainly, not probably, but just possibly—lead to a more progressive future. But getting from here to there obviously isn’t going to be easy.

Obama’s Not the One

My analysis starts with the observation that there are some striking similarities between the current political cycle (the Age of Reagan) and the previous one (the Age of Roosevelt).

A short-hand way of explaining those similarities—and their significance—would be to say that I look at Obama as the Democratic Nixon.

I realize that probably doesn’t go down well with the Obama fans out there, so let me add immediately that it isn’t meant to be taken literally. Nixon really was a sociopath, if not a psychopath—a criminal of monstrous dimensions (See: Hanoi, 1972 Christmas bombing of). And that’s not even bringing Watergate into the discussion.

Unless Michelle Bachmann’s paranoid fantasies about Solyndra are actually true, or the drone program is much worse than we now know, Obama isn’t even close to being in Nixon’s league. He actually seems to be a pretty good guy, for an Emperor.

But in the current political cycle, Obama sits right there in Tricky Dick’s spot—after the Democratic Eisenhower (Clinton) but before the Democratic Reagan, i.e. the one who will free the Matrix and bring balance to the force.

A long time ago, back at my old blog, I wrote a couple of long posts about the dialectics of American politics—the back-and-forth flow of power between the two major parties—and how the parties themselves are constantly being changed thereby.

This reflects the reality is that in a democratic (well, quasi-democratic) system, victories and defeats, even big ones, are never final. Rather, they set in motion the partisan changes that eventually drive the next cycle.

In the American system, this process can be very deceptive, since it usually (but not always—just ask the Whigs) results in the transformation of the two existing parties, rather than their replacement by new ones.

So it has been both in the Age of Roosevelt and the Age of Reagan.

The coming of the New Deal hived off big chunks of the old Republican coalition (Midwestern farmers, small business owners, blacks), turning the Democrats into the majority party. To survive, the GOP was forced to adapt, and did so by becoming the “New Deal Lite” party, much to the fury of its own conservative base. The moderates—i.e. the Eisenhower Republicans—prevailed because they knew how to win elections in a typically hostile environment.

But majorities are inherently fractious and hard to manage—and even harder to reform. Through the ‘60s and ‘70s, the competing demands of old and new Democratic constituencies first undermined and then shattered the New Deal coalition.

The GOP, meanwhile, grew increasingly receptive both to conservative ideas (in an era of New Deal failures, being the New Deal Lite party was no longer advantageous) and to disaffected Democrats, especially those who could be persuaded to overlook their economic interests with cultural and/or racial appeals.

Once Reagan had consolidated these forces, the way was clear for the GOP to demolish the Democrats in the 1980 and 1984 elections and emerge as the new majority party.

The Nixon Transition

But between Eisenhower and Reagan there was Nixon: By political pedigree, an Eisenhower Republican (Ike’s veep), but by personal style a conservative—not least in the way he drove the liberals of the time absolutely ape shit.

A transitional figure, in other words, not a transformative one—acceptable to both wings of his party at key moments (like the 1968 primaries), but not really trusted by either of them.

In terms of domestic policy, economic policy in particular, Nixon was also something of an enigma—in part because he didn’t care much about it, but also because he and his political team were wary of alienating the Democratic crossovers who had put him in the White House. This meant he lacked the political strength to challenge an orthodox Democratic Congress, as Reagan would and could do a decade later.

On the other hand, Nixon’s rhetoric very much prefigured Reagan in its contempt for Ivy Leaguers, liberal bureaucrats, and welfare queens—the Satanic trinity of the conservative imagination. And he wasn’t entirely impotent when it came to policy: He was able to kill or cripple the more progressive, activist elements of LBJ’s Great Society program—but only because conservative Democrats helped him do it.

If you flip that story over, so that you’re looking at the reverse image, you can see the Democratic Party, and its leader, as they stand today.

It definitely isn’t the party of my childhood, which rested on a four-legged stool of industrial unions, minorities, Southern whites, and a smattering of liberal professionals. The first leg has been whittled to a toothpick by globalization and white flight, the second is now painted in rainbow colors, not basic black, the third detached and joined itself to the GOP's stool, while the fourth has grown by leaps and bounds—almost to the point where the party now looks more like a leg of the stool that educated and affluent liberals sit on, rather than the other way around.

On the other hand, those changes also put the Democrats in a position once again to credibly claim to be the nation’s majority party—on cultural and demographic grounds, at least.

Between Past and Future: Obama in the Middle

But the process isn’t complete, and the Democrats still bear the scars of their years in the minority, just as the GOP did in Nixon’s time. The formerly GOP-leaning suburbs that voted for Obama twice are still largely Republican in their local politics, and battlegrounds at the congressional level. To a certain extent, Democrats are still looking over their shoulder, nervous that their new suburban supporters will abandon them.

These are the political realities that have shaped Obama’s presidency, and his economic positions. The Democratic Party has always had a fiscally conservative wing, sympathetic with (if not wholly owned by) Wall Street. The influx of affluent professionals into the party, and the parallel collapse in labor power, have greatly empowered that wing.

Where we stand now isn’t exactly the inverse of the positions of the two parties in Nixon’s day (history may rhyme; it never repeats) but it’s close enough for government work, so to speak.

This is why it shouldn’t come as a big surprise that Obama, the transitional leader of a coalition in transition, is governing from the center or even the center right, his progressive campaign rhetoric notwithstanding—just as Nixon often appeared to be governing from the center or center left, his conservative rhetoric notwithstanding.

But it’s also important to recognize that Obama, for all his policy centeredness, still represents a break with the “Eisenhower Republican” phase of the Democratic Party revival.

Whatever you think of Obamacare, it marked a shift to the left from the Clinton program (or at least the Clinton accomplishments). So did the stimulus, Dodd-Frank, the auto bailout, and the Obama NLRB.*

*It's funny how almost all of the recent coverage of the NLRB that I can find on Google is from the right-wing press. Don't progressives care about this stuff any more?

These weren't just products of the financial meltdown (after all, the Democratic Congress that approved them was elected two years before the crisis hit). They were early signs that the political cycle has turned.

Emphasis here on the word "early." Every political trend has its counterfactuals. The 1974 post-Watergate blowout election, for example, looked like a GOP death blow at the time, but merely postponed the party’s triumph for a few years. It’s a lesson the teabaggers of 2010 are now chewing over in the wake of 2012—although I don’t expect them to digest it any time soon.

Looking for Hope Without the Proles

But while the Democratic tide seems to be rising again, we’ve no way of knowing if it will turn into a progressive flood that eventually washes away the remnants of the Reagan coalition and changes the “center right” party that Obama inherited into a center left (or just plain left) party that a Democratic Reagan might lead.

Certainly, there are plenty of reasons why it won’t, and can’t. One is the enduring power of the corporatist wing of the party, and the corresponding weakness of organized labor: the traditional powerhouse of progressive economic policy.

God knows I don’t want to be accused of being an optimist here—I have a reputation to protect. It’s laughably easy to imagine a majority party that staunchly backs a woman’s right to choose, supports gay marriage, appeals to African Americans and Hispanics with a carefully selected set of valence issues—and quietly cooperates in dismantling the social safety net under the guise of “reforming” it.

It’s easy to imagine such a party because we already have one.

On the other hand, the economic trends don’t appear very friendly to such a party. Prospects seem dim for a growth resurgence that would take the edge off high unemployment, stagnant wages, and rising income inequality. At some point, being the pro-choice, pro-immigrant, pro-racial sensitivity party might not be good enough.

If there is hope, Orwell said, it lies with the proles. I’m not that naïve. (In any case, in a globalized economy, the old industrial proletariat mostly lives in China, and doesn’t get to vote, here or there.) But I can think of two specific reasons to think a more progressive Democratic Party might be possible to build:

The Democrats (or at least the Obama machine) has re-learned how to organize, and taken it high tech. If those tools could be applied successfully at the local level, and/or by allied forces (unions, nonprofits, etc.) maybe the party itself could develop the grassroots muscle the unions once provided—which in turn could be used to advance an economic agenda, not just win elections.

The white-collar professionals and paraprofessionals who have defected to the Democrats on cultural grounds are also now in danger of being proletarianized. Technology is rendering their skills (e.g. medical diagnostics, legal research, engineering design, etc.) obsolete. This might make them amenable to a more progressive economic approach.

Don’t Mourn, Organize

We all know the obstacles: A sluggish, corporate-controlled media that likes the status quo just fine, thanks; billionaire donors with money to burn (almost literally, in Sheldon Adelson’s case); a largely de-unionized white working class that clings to the GOP even more tenaciously than it does to its guns and religion.

Modern technology notwithstanding, there are no magic wands, just updated versions of the same old democratic (small d) tools: organize, agitate, contribute, vote. But it might not hurt to remember that the original progressives, the people who built the unions and fought for the New Deal, did what they did with those same tools.

In any case, we have to try. Sooner or later, the Republicans are going to learn how to adapt, and will find their own tools for chipping away at the Democratic coalition. The GOP won’t always be held hostage by the teabaggers.

Or, even worse, an economic crisis—one that corporate Democrats have no answers for—will drive otherwise sane and rational voters into the arms of the teabaggers, fueling a resurgence of angry right-wing populism. And if you’re not worried about where that could lead, you haven’t been paying attention.

Either way, if progressives just bitch about Obama, instead of trying to shape his Democratic Party to their own ends, we may wind up looking back on his presidency, and his crummy budget deals, as the progressive Golden Age—or as close as we ever came to one.