Liberalism Is Alive and Well—America May Be Doomed

Moneybox
A blog about business and economics.
Jan. 3 2013 11:23 AM

Liberalism Is Alive and Well—America May Be Doomed

Ross Douthat says that President Obama's inability to persuade Republicans to agree to a larger tax increase shows that liberalism is doomed since clearly the political will just isn't there to raise the tax revenues necessary to fund the welfare state.

The trouble I have with this case is that it didn’t really test tax hikes versus spending. What Democrats found is that, when the question is raising taxes to reduce the deficit versus not raising taxes to reduce the deficit, the political going is tougher than liberals would like. But that tells us very little about sustaining Social Security and Medicare.
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I actually think we learned a lot about sustaining Social Security and Medicare here. A an awful lot of post hoc analysis of the fiscal cliff deal is acting as if the issue was that the White House wanted tax revenue to shore up retirement programs and Republicans didn't want to give in. What actually happened was that the White House wanted a big tax hike paired with big spending cuts in order to achieve major deficit reduction and Republicans didn't want to do any of those things.

In deference to GOP wishes, we didn't cut retirement programs at all, we only raised taxes a little, and the basic fiscal picture didn't change very much.

What we learned, in other words, is that even with a Democratic President in the White House who's eager to cut spending on retirement programs they still don't get cut. That's how robust the welfare state is. Recall that the last time we had a Republican President in the White House what he did was make Medicare benefits significantly more generous. Recall also that Mitt Romney ran on a pledge to increase Medicare benefits for ten years and then offset that by cutting benefits for younger people in the future. That's how robust the welfare state is. Concern trolling about Democratic senators' willingness to blink on taxes is neat, but all we're seeing again and again is confirmation of Paul Pierson's thesis from Dismantling the Welfare State?, namely that dismantling the welfare state is incredibly difficult.

If you want to worry about something, worry about the United States of America. What we've seen time and again for the past five years is a breakdown of responsible party government in the United States. Nobody gets their way legislatively, so nobody has to take the fall when things work out poorly.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.