The Pursuit of Social Democracy

Barack Obama won the 2008 Presidential election on an agenda that tilted him further leftward than most recent Democratic nominees on nearly every issue. The one big exception was taxes, where he ran to the center, offering what was arguably a larger middle-class tax cut than the Republican candidate, and promising that the only tax increase he contemplated would fall on the richest Americans, and merely return tax rates to the levels of the Clinton years. This maneuver helped win him the election, by blunting the GOP's attempts to paint him as a tax-hiker - but it left him well short of a mandate for the kind of social democracy that many liberals see as their goal. That's because, as commenters across the spectrum agree, you can't fund social democracy just by making the tax code ever more progressive: At some point, you need to raise revenue from the middle class.

What Obama does have, though, is an atmosphere of crisis and a massively-unpopular opposition party, which grants him an unparalleled political opportunity to pass whatever spending the Democratic Party likes, and damn the short-term cost. And what you see in his budgeting proposals, I think, is the liberal equivalent of the conservative attempt to "starve the beast." In both the Reagan and Bush eras, Republicans passed tax cuts and ran up large deficits while hoping that by starving the federal government of revenue they would curb its long-run growth. Obama's spending proposals would effectively reverse that dynamic - they would create new spending commitments and run up large deficits, in the hopes that the dollars poured into health care and education will create a new baseline for government's obligations, which in turn will create the political space for tax increases on the middle class. Like the starve-the-beast approach, the Obama strategy puts off the hard part till tomorrow: Give them tax cuts today, conservatives said, and they'll swallow spending cuts tomorrow; give them universal health care, universal pre-K, subsidies for green industry and all the rest of it today, liberals seem to be thinking, and they'll be willing to pay for it tomorrow.

The fact that starve-the-beast didn't work out as well as small-governmenteers hoped doesn't make the Obama strategy misguided. Both political parties are living in the shadow of the hard choices that are going to be imposed by the insolvency of America's entitlements: At some point soon, liberals are going to have to accept somewhat less spending than they'd like, and conservatives are going to have to accept somewhat higher taxes. And if you can change the baseline of social spending that Americans expect from their government before that day of hard choices arrive - and once created, government programs are awfully hard to get rid of, whether they're actually effective or not - then you've tilted the landscape of negotiation in liberalism's favor, and ensured that a post-Obama entitlement compromise will look a lot more like social democracy than a pre-Obama compromise would have.

But of course none of this will work if the American economy doesn't escape its current downward spiral. If you're running enormous deficits and don't have any economic growth to show for it, it doesn't matter how popular your social-spending programs are in the short run, as more than a few ex-Latin American leaders will be happy to attest. And what does make the Obama strategy misguided is that it looks increasingly like a substitute for a depression-fighting strategy - and what's worse, a substitute that has the potential to actually make matters worse, when Obama, liberalism, and America all desperately need things to get better.