02/28/2011 11:02 am ET | Updated May 25, 2011

Confrontation Between the Old and the Nostalgic

The current struggle for America's soul is between a Coolidge/Hoover coalition that wishes to use current budget deficits to eliminate as much of the Great Society and the New Deal as it can and a reactionary liberal faction represented by much of the Democratic party that fights primarily to prevent this from happening. The Nostalgic are right to do so, but that will not restore economic health.

The Old stretches from antique FDR haters to present day anti-government know-nothings using, as I strongly believe, deficits purposely trumped up by "supply-side" tax cuts (not to say also two expensive, prolonged wars) to justify returning us to pre-Depression America with no ladders of opportunity, safety nets for the elderly and the young, and regulations to protect food, workers, consumers, and the environment.

The Nostalgic are those in the Democratic party now bargaining with the Old as to how much of this to permit. A number of Democratic leaders are complicit in the tax cuts for the wealthy and the Iraq war (see The Courage of Our Convictions), so they are prevented from assessing blame. Most people think of "liberal" as innovative. But I was involved in a national nomination campaign more than a quarter century ago where the party opted to protect its traditional policies rather than prepare for a dramatically changing world of globalization, information, energy security, and military reform. It is possible to be "liberal", in the sense of the left, and still be reactionary when the choice is to protect the past or to innovate for the future.

The only way to make any serious dent in the federal deficit by spending cuts is to abandon the New Deal safety net (which primarily benefits the middle class) and the Great Society ladders of opportunity (Head Start and so forth). This is the project of the Old. The other option, tax increases, is not feasible in an economic downturn and when the right has made paying for the government people want seem socialistic.

The most viable option is to make the economy grow again, but not at the old levels and not merely by manipulation of money, which is what passed for growth for the past two or three decades. I mean real growth based on an explosion of innovation in the technology sectors (including medicine), in energy creativity (fusion), in services (requiring US workers, not Indians and Pakistanis to provide them), in transportation (fast trains), in new food production techniques (vertical farms), in construction (synthetic materials), in water (desalination), in carbon replacement, in about every sector of the global economy where American innovation still can lead.

While Wall Street waits for these innovations to prove profitable before investing, and the Old and the Nostalgic struggle to clean up the mistakes of the past, the real role for government in the 21st century is to stimulate a cascade of innovation, which is the only way to put our economy back on its feet, to make it grow, and to provide the revenues to maintain a truly civilized society.

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