Libertarian disaffection should come as no surprise. Despite the GOP’s rhetorical commitment to limited government, the actual record of unified Republican rule in Washington has been an unmitigated disaster from a libertarian perspective: runaway federal spending at a clip unmatched since Lyndon Johnson; the creation of a massive new prescription‐​drug entitlement with hardly any thought as to how to pay for it; expansion of federal control over education through the No Child Left Behind Act; a big run‐​up in farm subsidies; extremist assertions of executive power under cover of fighting terrorism; and, to top it all off, an atrociously bungled war in Iraq.

This woeful record cannot simply be blamed on politicians failing to live up to their conservative principles. Conservatism itself has changed markedly in recent years, forsaking the old fusionist synthesis in favor of a new and altogether unattractive species of populism. The old formulation defined conservatism as the desire to protect traditional values from the intrusion of big government; the new one seeks to promote traditional values through the intrusion of big government. Just look at the causes that have been generating the real energy in the conservative movement of late: building walls to keep out immigrants, amending the Constitution to keep gays from marrying, and imposing sectarian beliefs on medical researchers and families struggling with end‐​of‐​life decisions.

As a string of recent books attests, the conservative embrace of a right‐​wing Leviathan has left libertarian‐​minded intellectuals feeling left out in the cold. Bruce Bartlett, a Treasury Department official in the Reagan and Bush I administrations, blasted Bush II in Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (and got fired from his conservative think tank for his efforts). Cato Institute scholar Stephen Slivinski followed up with Buck Wild, an exposé of GOP fiscal incontinence. In The Elephant in the Room, New York Post columnist Ryan Sager bemoaned the rise of big‐​government conservatism and warned that excessive pandering to evangelicals would rupture the movement. And, most recently, The New Republic’s own Andrew Sullivan denounced the right’s fundamentalist turn in The Conservative Soul: How We Lost It, How to Get It Back.

Libertarian‐​leaning voters started drifting away from the GOP even before Katrina, civil war in Iraq, and Mark Foley launched the general stampede. In their recent Cato‐​published study “The Libertarian Vote,” David Boaz and David Kirby analyzed polling data from Gallup, the American National Election Studies, and the Pew Research Center and concluded that 13 percent of the population, or 28 million voting‐​age Americans, can be fairly classified as libertarian‐​leaning. Back in 2000, this group voted overwhelmingly for Bush, supporting him over Al Gore by a 72–20 margin. By 2004, however, John Kerry–whose only discernible libertarian credential was that he wasn’t George W. Bush–got 38 percent of the libertarian vote, while Bush’s support fell to 59 percent. Congressional races showed a similar trend. In 2002, libertarians favored Republican House candidates by a 70–23 spread and Republican Senate candidates by a 74–15 margin. Things tightened up considerably in 2004, though, as the GOP edge fell to 53–44 in House races and 54–43 in Senate contests.

To date, Democrats have made inroads with libertarian voters primarily by default. Yes, it’s true that Markos Moulitsas of Daily Kos fame caused something of a stir by proposing the term “Libertarian Democrat” to describe his favored breed of progressive. And the most prominent examples of his would‐​be movement–first-term Governor Brian Schweitzer of Montana, fellow Montanan Tester, and Virginia Senator‐​elect Jim Webb–have sounded some libertarian themes by being simultaneously pro‐​choice and pro‐​gun rights. At the same time, however, their anti‐​nafta, Wal‐​Mart‐​bashing economic populism is anathema to free‐​market supporters.

In short, if Democrats hope to continue appealing to libertarian‐​leaning voters, they are going to have to up their game. They need to ask themselves: Are we content with being a brief rebound fling for jilted libertarians, or do we want to form a lasting relationship? Let me make a case for the second option.

Since the late ‘60s, and especially the mid-‘80s, torrents of words have been spilled urging Democrats to move toward the center of the political spectrum. Most such efforts, however, have advanced one compromise or another between progressivism‐​as‐​usual and conservatism-as-usual–a few more items from Menu A here, a few more from Menu B there.

But the real problem with our politics today is that the prevailing ideological categories are intellectually exhausted. Conservatism has risen to power only to become squalid and corrupt, a Nixonian mélange of pandering to populist prejudices and distributing patronage to well‐​off cronies and Red Team constituencies. Liberalism, meanwhile, has never recovered from its fall from grace in the mid-‘60s. Ever since, it has lacked the vitality to do more than check conservative excesses–and obstruct legitimate, conservative‐​led progress. As a governing philosophy, liberalism has been moribund: When Jimmy Carter and Bill Clinton managed to win the White House, they did so only by successfully avoiding the liberal stigma.

Today’s ideological turmoil, however, has created an opening for ideological renewal–specifically, liberalism’s renewal as a vital governing philosophy. A refashioned liberalism that incorporated key libertarian concerns and insights could make possible a truly progressive politics once again–not progressive in the sense of hewing to a particular set of preexisting left‐​wing commitments, but rather in the sense of attuning itself to the objective dynamics of U.S. social development. In other words, a politics that joins together under one banner the causes of both cultural and economic progress.

Conservative fusionism, the defining ideology of the American right for a half‐​century, was premised on the idea that libertarian policies and traditional values are complementary goods. That idea still retains at least an intermittent plausibility–for example, in the case for school choice as providing a refuge for socially conservative families. But an honest survey of the past half‐​century shows a much better match between libertarian means and progressive ends. Most obviously, many of the great libertarian breakthroughs of the era–the fall of Jim Crow, the end of censorship, the legalization of abortion, the liberalization of divorce laws, the increased protection of the rights of the accused, the reopening of immigration–were championed by the political left.

Furthermore, it has become increasingly clear that capitalism’s relentless dynamism and wealth-creation–the institutional safeguarding of which lies at the heart of libertarian concerns–have been pushing U.S. society in a decidedly progressive direction. The civil rights movement was made possible by the mechanization of agriculture, which pushed blacks off the farm and out of the South with immense consequences. Likewise, feminism was encouraged by the mechanization of housework. Greater sexual openness, as well as heightened interest in the natural environment, are among the luxury goods that mass affluence has purchased. So, too, are secularization and the general decline in reverence for authority, as rising education levels (prompted by the economy’s growing demand for knowledge workers) have promoted increasing independence of mind.

Yet progressives remain stubbornly resistant to embracing capitalism, their great natural ally. In particular, they are unable to make their peace with the more competitive, more entrepreneurial, more globalized U.S. economy that emerged out of the stagflationary mess of the 1970s. Knee‐​jerk antipathy to markets and the creative destruction they bring continues to be widespread, and bitter denunciations of the unfairness of the system, mixed with nostalgia for the good old days of the Big Government/​Big Labor/​Big Business triumvirate, too often substitute for clear thinking about realistic policy options.

Hence today’s reactionary politics. Here, in the first decade of the twenty‐​first century, the rival ideologies of left and right are both pining for the ‘50s. The only difference is that liberals want to work there, while conservatives want to go home there.

Can a new, progressive fusionism break out of the current rut? Liberals and libertarians already share considerable common ground, if they could just see past their differences to recognize it. Both generally support a more open immigration policy. Both reject the religious right’s homophobia and blastocystophilia. Both are open to rethinking the country’s draconian drug policies. Both seek to protect the United States from terrorism without gratuitous encroachments on civil liberties or extensions of executive power. And underlying all these policy positions is a shared philosophical commitment to individual autonomy as a core political value.

The central challenge in cementing a new fusionist alliance–and, make no mistake, it is a daunting one–is to elaborate a vision of economic policy, and policy reform, that both liberals and libertarians can support. Here, again, both sides seek to promote individual autonomy; but their conceptions differ as to the chief threats to that autonomy. Libertarians worry primarily about constraints imposed by government, while liberals worry most about constraints imposed by birth and the play of economic forces.

The basic outlines of a viable compromise are clear enough. On the one hand, restrictions on competition and burdens on private initiative would be lifted to encourage vigorous economic growth and development. At the same time, some of the resulting wealth‐​creation would be used to improve safety‐​net policies that help those at the bottom and ameliorate the hardships inflicted by economic change. Translating such abstractions into workable policy doubtlessly would be contentious. But the most difficult thing here is not working out details–it is agreeing to try. And, as part of that, agreeing on how to make the attempt: namely, by treating economic policy issues as technical, empirical questions about what does and doesn’t work, rather than as tests of ideological commitment.

Allow me to hazard a few more specific suggestions about what a liberal‐​libertarian entente on economics might look like. Let’s start with the comparatively easy stuff: farm subsidies and other corporate welfare. Progressive organizations like Oxfam and the Environmental Working Group have already joined with free‐​market groups in pushing for ag‐​policy reform. And it’s no wonder, since the current subsidy programs act as a regressive tax on low‐​income families here at home while depressing prices for exporters in poor countries abroad–and, to top it off, the lion’s share of the loot goes to big agribusiness, not family farmers. Meanwhile, the president of Cato and the executive director of the Sierra Club have come out together in favor of a zero‐​subsidy energy policy. A nascent fusionism on these issues already exists; it merely needs encouragement and emphasis.

Tax reform also offers the possibility of win‐​win bargains. The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption. Go ahead, tax the rich, but don’t do it when they’re being productive. Tax them instead when they’re splurging–by capping the deductibility of home‐​mortgage interest and tax incentives for purchasing health insurance. And tax everybody’s energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation–plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill. Here again, fusionism is already in the air. Gore has proposed a straight‐​up swap of payroll taxes for carbon taxes, while Harvard economist (and former chairman of George W. Bush’s Council of Economic Advisers) Greg Mankiw has been pushing for an increase in the gasoline tax.

Entitlement reform is probably the most difficult problem facing would‐​be fusionists. Here, libertarians’ core commitments to personal responsibility and economy in government run headlong into progressives’ core commitments to social insurance and an adequate safety net. Yet a fusionist synthesis is possible nevertheless, for the simple reason that some kind of compromise is ultimately unavoidable.

With millions already dependent on the current programs, and with baby boomers beginning to retire in just a couple of years, libertarians’ dreams of dramatically shrinking federal spending are flatly unrealizable for many years to come. But liberals must face some hard facts as well. Spending on Medicare, Medicaid, and Social Security is now projected to increase from about 9 percent of GDP today to approximately 15 percent by 2030. Already, spending on the elderly consumes more than a third of the federal budget, and the fun is just getting started. If a fiscal crisis is to be averted, if economic growth is to be sustained, and if there is to be any money left to fund domestic programs for people under 65, the federal safety net is going to have to be recast.

One possible path toward constructive compromise lies in taking the concept of social insurance seriously. Insurance, to be worthy of the name, involves the pooling of funds to protect against risky contingencies; “social” insurance fulfills the same basic function but makes the government the insurer. Unemployment insurance is a species of legitimate social insurance; wage insurance, much talked about, would also qualify. But Social Security and Medicare as currently administered are not social insurance in any meaningful sense, because reaching retirement age and having health care expenses in old age are not risky, insurable events. On the contrary, in our affluent society, they are near certainties.

We can have true social insurance while maintaining fiscal soundness and economic vibrancy: We can fund the Earned Income Tax Credit and other programs for the poor; we can fund unemployment insurance and other programs for people dislocated by capitalism’s creative destruction; we can fund public pensions for the indigent elderly; we can fund public health care for the poor and those faced with catastrophic expenses. What we cannot do is continue to fund universal entitlement programs that slosh money from one section of the middle class (people of working age) to another (the elderly)–not when most Americans are fully capable of saving for their own retirement needs. Instead, we need to move from the current pay‐​as‐​you‐​go approach to a system in which private savings would provide primary funding for the costs of old age.

These are only suggestions, meant to start conversations and debates. If a new kind of fusionism is to have any chance for success, it must aim beyond the specifics of particular, present‐​day controversies. It must be based on a real intellectual movement, with intellectual coherence. A movement that, at the philosophical level, seeks some kind of reconciliation between Hayek and Rawls.

If such an exploration could be launched, liberal and libertarian thinkers would begin talking with one another and engaging one another regularly. Over time, they would come to see themselves as joined in a common endeavor. And, in the shared identity that would emerge, there would be plenty of room for continuing disagreements, even sharp ones, just as there is in any robust political movement.

Can liberals and libertarians really learn to work together? I don’t know, but their alternative is most probably to languish separately.