You've probably been following this conversation, but here's Will Wilkinson's response to Jonah Goldberg and John Hood on the question of what happens to the Wilkinson/Brink Lindsey theory of "liberaltarianism" in the age of Obama:
I'll let Brink speak for himself, but I'm not that interested in short-term partisan politics. I'm interested in a much longer-term project. I want to help create the possibility of a popular political identity that takes the value of human liberty, in all its aspects, really seriously. As I see it, this project involves an attempt to reunify the separate strands of the American liberal tradition. I'm not sure what it is about that project that would that lead Jonah to think Brink or I should be vexed by the behavior of the Democratic Party and it's operatives...
I think ... the romance of transformative hope is going to wear off pretty quick as all-but-uncontested Democratic policy deepens and lengthens the recession. There's a lot of culturally and psychologically liberal people out there who are, and are going to be, interested in a liberalism that actually works. I want to use this time of ferment to work on developing the missing option in American politics: an authentically liberal governing philosophy that understands that limited government, free markets, a culture of tolerance, and a sound social safety net are the best means to better lives.
So "whatever happened to liberaltarianism" is that it's an ongoing project to change who talks to whom, to freshen the stale dialectic of American politics, and to create new possibilities for American political identity.
This is consonant with what Will's written before on the subject, and as a fan of long-term, slightly quixotic political projects I wish him well. That being said, to become a viable form of political identity, as opposed to a theoretical one, liberaltarianism would need some actual liberals to jump on board the Rawlsekian train. It doesn't have to happen immediately, but it needs to happen at some point - and in that regard, the leftward trajectory of American liberalism at the moment ought to be at least somewhat discouraging to Wilkinson and Co. Yes, maybe when the Obama Administration fails to deliver the eschaton, there will be renewed interest on the American center-left in a libertarian-infused "liberalism that works." But sometimes statist failures only breed more statism. And just as I often fret that my hopes for a right-of-center majority lie somewhere back in the wreckage of the Bush years, I think the liberaltarians ought to worry, just a little, that their moment actually arrived in the Clinton years, and that it's already behind them - somewhere back in the vast obscurity of the political past, where the dark fields of the republic roll on under the night.