Having Both Won, Left and Right Need New Big Projects

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By Evan Soltas

If you take a long view of U.S. politics, the current political moment comes down to just two facts.

First, President Barack Obama’s re-election means that most of the provisions of the Affordable Care Act will probably be permanent. It will be the largest expansion of health insurance in a half-century.

Second, the tax burden on middle-class Americans has been cut nearly in half since 1980. The fiscal-cliff deal made that almost entirely permanent. The average American now gives less of his income to the federal government than at any time since perhaps the 1940s or 1950s.

Both developments were among the top headlines of 2012. More important, though, they mark the culmination of two rivaling, decades-long U.S. political projects.

For modern liberals, the Affordable Care Act finished the project of building a U.S. welfare state. Though the act is not everything they desired, it achieved a goal that had eluded liberals: close-to-universal health care. It was the final piece of the safety net they had been creating for years.

Housing assistance passed in 1934, Social Security and federal unemployment insurance in 1935, disability insurance in 1956, food assistance in 1964, Medicare and Medicaid in 1965 and children’s health insurance in 1997. With Obama’s re-election guaranteeing his administration would oversee the implementation of the Affordable Care Act, 2012 brought an end to an almost 80-year liberal political effort.

The major conservative project was completed in 2012 as well: reducing federal taxation. The fiscal-cliff deal was the largest tax cut in U.S. history, even though it raised marginal tax rates on high incomes, capital gains and estates. For the vast majority of Americans, the reduction in their average tax rates is now permanent -- President George W. Bush’s cuts were temporary and set to expire after 10 years. What isn’t permanent, the five-year extensions of a number of refundable tax credits targeted for low-income households, has long-term support from both Democrats and Republicans.

Victory for the conservative project, which began under President Ronald Reagan, looks like an federal tax rate of about 10 percent for the average U.S. household. Before Reagan, such households paid almost 20 percent of their income in taxes.

For both parties, coming to the end of a political project means having to find a new one. For liberals, administering the welfare state isn't a political task; it's an administrative and technocratic project. For conservatives, any further cuts to middle-class tax rates will "starve the beast" so severely it will mark an effective return to the political project conservatives abandoned in the 1950s, when Senator Robert A. Taft died and Dwight D. Eisenhower became president: undoing the New Deal.

This crossroads is something members of both political parties understand. Republicans have entered into a period of disarray and internal debate not only because they were forced to accept a relatively small increase in federal taxes, but also -- and perhaps more so -- because they legitimately do not know what the Republican Party will fight for in the coming years.

The same rethink is happening, though it produces less tumult, for Democrats.

Exhibit A is a president who often styles himself a principled pragmatist, a nonideologue who puts results before dogma. His renomination address to the Democratic National Convention, for instance, lacked what President George H. W. Bush once called "the vision thing." Obama offered a few policy ideas, for sure, but no overarching mission for a new liberal political project.

Though neither liberals nor conservatives have embraced new goals as large as creating a welfare state or cutting taxes, both are beginning to propose the outlines of such agendas.

Liberals seem to be weighing a "War on Poverty"-type effort against inequality of economic opportunity. That was Obama’s focus in his re-election victory speech, which analysts found substantive precisely because it began to articulate anew the goals of the liberal project.

But we can also see alternate claimants for the liberal focus. One is the environmental effort. The Obama administration entertained this agenda item in his first term without ever incorporating it into his governing plan. Another option might focus on social inequality and civil rights: improving the status of immigrants, expanding gay rights and improving minority access to quality education.

Conservatives are contemplating their own options. Some within the Tea Party caucus want to take up Taft’s abandoned battle against the spending side of the welfare state, and House Republicans, especially Budget Committee Chairman Paul Ryan, will have to define what they want from “entitlement reform.”

Or Republicans could recast themselves as libertarians in support of marijuana legalization, patent reform and "pro-market, not pro-business" economic policy, as New York Times columnist David Brooks has written. Alternatively, they might take a communitarian path, working to rebuild degraded social and economic institutions that supported advancement and opportunity for the lower-middle class in the past, as Brooks’ colleague Ross Douthat has argued.

The next several years will probably be political chaos. Some of that can be explained by congressional use of fiscal ultimatums in discussions on the fiscal cliff and debt ceiling. Much of it, though, will be thanks to the messy process of rediscovering political projects.

(Evan Soltas is a contributor to the Ticker. Follow him on Twitter.)

Read more breaking commentary from Bloomberg View at the Ticker.

-0- Jan/08/2013 22:52 GMT