A New Era for the Center-Left
Part 9.
As you can see from this chart of the maximal tax rates, the era of high-income tax has been over since 1981 when Reagan was elected as president and then in two waves caught the income tax for individuals to 30% though it would be raised to 40% for being dropped back down to 30%. This era of neoliberal economy has endured both through Republican presidents and Democratic ones, so we cannot even vote for it to the changed. The old donk party may rumble in the background for this to be removed but in practice, they are perfectly happy to continue on with effectively the same tax rate.
It might seem that centrist Democrats will be in the same mold, but this is not the case. Let me explain why.
The old Democratic party, the one of Clinton and Obama, realized that it needed to shift its priorities from the working class to a mixture of the working class, small proprietors, and professional class. This was necessary and completely natural because it had new ideas that were solidly liberal but a mixture of liberal and conservative ideas. That means they gave time to both @rbreich.bsky.social and Robert E. Rubin. meant that Clinton went against the unions on NAFTA but pushed the maximum tax bracket up slightly - it was a more conservative Democratic party for a more conservative age.
But this is also about the people as well as the ideology, considering that the majority leader outgoing, Sen. Chuck Schumer was Representative Schumer from New York. He has been a middle-of-the-road old Democratic party stalwart since he was a representative and we can see this by looking at his voting record in 2020 and 2022. The old Democratic Party was the responsible party that made consistency in its mantra and loyalty its test.
When Obama ran for president it seemed to many activists that he would turn back the clock to the age of FDR and JFK. But looking at his work at the University of Chicago, and his upbringing, painted a different story: he was a socially liberal president but was only willing to give pieces of what every other country in the developed world already has: universal health insurance. He was the definition of socially liberal and economically conservative. Again, this was a more conservative age.
What was happening at the same time however was that the Republican Party was going to be right, from a conservative party to a reactionary party. What do I mean by this? Conservative party wants to push things in increments while a reactionary party sees that large segments of the society that they live in must be washed away and replaced with a new version that will be dedicated to the top of society, and by top I mean the .001% this vision secured enough people in various states to work because there were large sections of the population which wanted socially conservative values: for example, the state determines whether or not a woman carries to term a pregnancy. It also means that technology is a subsidiary of culture: the socially conservative voter does not care about the technology if it degrades the conservatism of culture that they wish for even more. An example would be the ban on TikTok - the liberation that the platform offers is less important than control of what is allowed. And for the conservative wing-minded voter control, so long as it is the conservatively minded voter of the correct stripe, is more important than liberty.
An example is in the healthcare package that Obama passed: it was generous compared to what happened before to the US consumer, but when measured against the developed population of the world, a very different story appeared. The United States paid the highest portion of their income to health insurance, got the least in return, and there was a major section of the population that was not covered at all. This is not a liberal universal healthcare plan, but more like the retirement insurance plan offered by von Bismarck: it is better than nothing but it still does not measure up to what could be done. But this is because the old Democratic Party was an alliance between the working class and the official and small business class: it wanted to give some balance to all of its electorate. Again the liberals might grumble, but a solidly liberal party would not have been able to achieve the Presidency and probably not the Senate. The Liberals may rumble about the Democratic Party being nothing more than that other Republican Party, but those were the cards that were dealt and Obama played them extremely skillfully and managed two terms.
But what the old Democratic party was doing was sacrificing individual pieces of the liberal program in order not to fight battles with the Republican party. This was seen in social liberalism: in the 1970s women had more rights to control their healthcare than today. This is a fact. However social liberalism also cuts the other way, because now marriage is to be determined by the participants rather than the state. So socialist liberalism is somewhat of a wash but economic liberals were bought to pay for it.
The reason for this is that the fossil fuel economy was still in place. This means that a temporary imbalance in the 1970s has become a permanent problem. The reasons for the lack of liberal solutions to the 1970s were based on the failure of the Phillips’ Curve and on the topping out of the oil industry in the United States - both in terms of the level of control that the United States had over foreign governments and over the control of the corporations which supplied the crude oil. Essentially, the design was of domestic oil production moving towards a situation where we were a consumer rather than a producer. This meant that in 1939 leaves were the swing oil producer in the world whereas in 1974 we were the oil consumer. But that meant that the Phillips curve did not work as it did when we were the domestic producer of oil. This led to a neoclassical version of economics and a retrenchment of a more conservative social environment as well. One measure of the retrenchment is that the GINI curve was accentuated as can be seen by the difference between the average and median wage.
This neoconservative version of economics can be seen in the textbooks produced at the time for example macroeconomics – Manikew’s Principles of Macroeconomics ( is a good example of the conservative’s retelling of what was once the liberal’s argument against all kinds of neoconservative ideas. While there is some merit to the argument that neoconservative economics was the mainstream, large parts of the problem came down to that the liberal arguments were flawed in the 1970s. This meant that the turn towards conservatism dated not from the inauguration of Reagan but in the last year of Carter, specifically with the irruption of 79Q3, when the then chairman of the Federal Reserve, Paul A. Volcker unleashed an interest rate raising that peaked with the interest rate being just shy of 20%. It was the fourth interest rate raising campaign from the Federal Reserve but Volcker was more serious about it and peaked much higher than any interest rate raising campaign before.1
In the intervening months, we saw the end of the Liberal coalition which had governed America since 1933. so what came to be called the Thatcher-Reagan regime was originally established by the interest rate campaign of Volcker with Carter as the president. Who, last I checked, was a Democrat.
But this neoconservative regime has a problem, and that is that one of the assumptions that it has lived under is the fossil fuel economy does not work anymore, and rather than addressing this concern they ignore it right down from the President of the US. We can make trillionaires but we can’t make them secure
Instead of tackling climate change and instituting a different economy he doubles down and wants to end the “Green New Deal” as if making a hard change to more oil will solve the carbon dioxide problem that is here. Louder nations about how we can do anything if we put our minds to it is not a realistic solution to the problems that we face. And other countries will see that they have two compete on the same level which means that the crisis of climate change will get worse, not better. In the black-as-white universe of the current president of the United States, the black gets really black indeed: renewables may be outlawed in Oklahoma and other states if the Oklahoma decision is ratified and judged legally sound.
What is happening in his inaugural address and we can assume by the actions he will take almost immediately is the triumph of a political decision to take the oil before its effects can be instituted in law.
The problem that the old Democratic party had was that there were certain safeguards that were built into the bureaucracy which even a president found difficult to repeal. In the first term of Trump as president, he ran in two these: the bureaucracy itself had a way of doing things and that way was done by science. The old Democratic party had both the bureaucracy and the Supreme Court as bastions, not in making things better but in holding the line on certain decisions and administrative law. In other words, while the bureaucracy and the Supreme Court were not in any sense liberal, they could the counted on maintaining the status quo. However, the old Democratic Party knew this and was then willing to sacrifice the Supreme Court in order not to be able to engage in a fight with the new Republican Party. They were, in a very real sense, sacrificing liberty for security, but as Franklin pointed out one in the end gets neither security nor liberty.
This is repeated in a very old film called The Man for All Seasons, where the protagonist answers that if you cut down all of the laws what happens when the devil turns on you? So in each case, the old Democratic party was willing to let the new Republican Party a few more laws in order to have some temporary security.
But while the political sense was that we should have more drilling more polluting and a hotter climate, cientifically this was not the case and there was a growing sense among the scientific community that the fossil fuel economy was, in fact, borrowing from the future to pay the present. This means that instead of tax cuts, which is what Ronald Reagan offered for cutting taxes on a fossil fuel economy that was essentially completed, these were tax relief paid for by a sector of the electorate that was not yet able to vote and in many cases still not able to vote. One can argue that the higher rate of taxes might have done enormous good, but that was not where the majority of the electorate felt the funds should be spent. This means that the honest liberals were frustrated in their desire to take more in tax revenue and spend it on things that would benefit the majority of the country. It might be a good argument to make but there was free money sitting on the table and the majority of the electorate wanted to grab the money rather than take the benefits.
This is why the road infrastructure is crumbling: we have reduced the taxes on fuel which were to pay for the upkeep. This meant that the rich, who did not have to drive on the distant roads, and the poor who wanted the cash, meaning that the third triangle, that of improvement, was scrimped and cashiered other than a few places where it was truly necessary and tolls had been set up to keep the roads immaculate. The rich were willing to pay for a few roads that they drew over but were willing to let slide roads that they did not drive over. It is a case again that the rich should subsidize the poor for necessities. But the rich realized that while you could not put this proposition before the general public one could offer a little bit of money for deterioration so that the people who got the money would not be indoors alone. This is a basic role of economics: offer anyone some sum of money for deterioration to some people which everyone suffers, and the rich will probably get the right to do that.
However unlike the Reagan revolution of 1980 where he defeated Carter by 50% to 41%, the margin for error under Trump II is not a sweeping victory of a new ideology, but the narrow victory of an old system that wants one more hit on the lever of the old fossil fuel economy. In the last section, it will be put together a sound argument for going a different way with different problems. The problems of the old order make a surreal inauguration speech with problems that do not exist or that will always exist because they are not acute but chronic features of the government, whichever government is in charge.
This means that we have to raise taxes to the level of the liberal democracy because there are resources that we need to fix many of the problems that face us, and there is no fossil fuel economy to allow us to stand instead a new economy based on the green principles which are current president so abhors needs to be instituted.
If this were a less family-friendly page I would say “he had the balls.” But that would be untoward.