Everything New Democrat Is Old Again

The Third Way has become the Third Rail, but have the Dems really abandoned the free market?

"The extreme philosophy that has defined his party for more than 25 years, a philosophy we never had a real chance to see in action until 2001, when the Republicans finally gained control of both the White House and Congress. Then we saw what would happen to America if the policies they had talked about for decades were implemented."

That was former President Bill Clinton speaking to the Democratic National Convention last night, condemning John McCain, but also curiously turning his back on his own glory days, when Clinton himself succeeded by embracing more than a few elements of that extreme philosophy.

For those of us who look back fondly on the economic vigor of the Clinton era, the change is jarring. How does supportive husband Clinton now define the triumph of the kind of fiscal conservatism President Clinton once mastered? Read on:

"They took us from record surpluses to an exploding national debt; from over 22 million new jobs down to 5 million; from an increase in working family incomes of $7,500 to a decline of more than $2,000; from almost 8 million Americans moving out of poverty to more than 5 and a half million falling into poverty—and millions losing their health insurance."

Standard convention boilerplate, but it carries a strong message: If even Bill Clinton, the gold standard of "third way" politicians, is trading in classic Democratic Party populism, it really is over for the what used to be called New Democrats.

To get a sense of how things have changed since the New Democrats charged into the 1990s promising to ditch the party's economic-interventionist baggage, here's an interesting convention factoid. The New Democratic Network, a "moderate" group started by Simon Rosenberg and sporadically affiliated with Howard Dean's "Democratic wing of the Democratic Party," has held six high-profile events, on topics ranging from "new politics" to climate change to "true patriotism." By comparison, the Democratic Leadership Council, the leading New Democrat think tank of the Clinton era, hosted one—and that was on rebuilding infrastructure, a classic big-government interest.

Now the New Democratic Network isn't calling for wage and price controls, nor did the DLC in its heyday show any real interest in weaning the party from its dependence on labor and regulation. (Libertarians with long memories may also shudder to remember Clinton's decidedly old-school views on the Fourth Amendment, the drug war, and the death penalty.) And you can't blame the Democrats for trying to cash in on President Bush's mid-20 percent approval rating. The Democratic Party these days is not in the hands of left-leaning ideologues but left-leaning utilitarians.

But there's a palpable sense of relief in the air in Denver this week. Finally, proof of what we knew all along: The free market really doesn't work! What joy and excitement the convention has generated has rested largely on three points: the need to replace Bush's foreign policy with "cooperation" and "good judgment"; Barack Obama's inspiring biography; and the nation's purported loss of faith in deregulation and open markets.

For all the vacuousness of Hillary Clinton's references to "green collar jobs," "universal, high-quality, affordable health care," an end to "dead-end jobs" and so on, her speech was a reminder that the Clintons never abandoned their commitment to interventionist government (and a reason to be glad she didn't get the nomination).

There are other reasons to worry about utilitarians. Two executives in the state of California, one Democratic and one Republican, reveal the limits of post-ideological politics. Gov. Arnold Schwarzenegger rode into office on promises of performance review, zero-base budgeting, and the like, but he is now pretty much guaranteed to leave behind a legacy of new regulations and a massive health care overhaul that failed as spectacularly as Hillary Clinton and Ira Magaziner's universal health care plan in the 1990s. In Los Angeles, Mayor Antonio Villaraigosa brought his own raft of nuts-and-bolts ideas into office (repairing 35,000 potholes, expanding gang prevention, and most amusingly, planting a million trees in the bone-dry city), but his agenda too has gotten lost in a thicket of union strong-arming and his own personal vapidity.

Still, none of these people are running for president. Barack Obama is, and one of the things to watch for in his acceptance speech this evening will be how much lip service he pays to unfettered liberty in economic, political, and personal life. It would be foolish to hope for much, but don't underestimate Obama's Zelig-like ability to reflect back the image the viewer wants to see.

That is to say, expect any calls for re-regulation to be preceded by lip service about the power and benefits of trade and markets. It may not be sincerely meant, but it's nice that the Democrats feel compelled to offer it. Obama's rhetoric about fiscal responsibility and making the rich pay their fair share has been balanced by a reality about how an economy works. During an endorsement interview I attended early this year, he spoke about how his path had brought him into circles of wealthy people, and acknowledged that overburdening the rich diminishes opportunities for the poor.

The New Democrats are finished. In their place there appears to be a new breed of Democrat, less driven by a vision of dumping leftist junk from the party's agenda, but benefiting from a nearly two-decade period in which the benefits of free markets have become conventional wisdom. That's a change, but it will take more than a good speech to make it one we can all believe in.