Making Stale Debates Fresh Again: The Defense of Ideology as a Regime Imperative

From the late 1970s until the recent near collapse of the global financial system, the American way of political economy or "variety of capitalism" had been steadfastly, even joyously, market oriented. Taxes on the wealthy, rechristened job-creators, stayed well below levels of the early postwar era, regulatory relationships between business and government were broadly expected to be cooperative not antagonistic, and the trend in social welfare policy even when a Democrat was in the White House was in favor of programs that promoted and valorized private-sector employment. By seemingly forcing ideology-challenging stimulus packages and bailouts, the financial crisis posed a grave threat to this set of norms and expectations. For Democratic President Barack Obama, this crisis seemed a remarkable opportunity. The time had at last arrived, or so it seemed, to throw off the shackles of neoliberalism and reintroduce the American people to the virtues of government. It was time, Obama prophesied in his First inaugural address, for Americans to look beyond "stale" debates about the size of government and abandon magical thinking about the self-healing properties of unfettered markets. By the time Obama took the oath of office to begin his second term, it was plain that the high hopes expressed at his first inauguration were not to be fulfilled. Despite the president's reelection, a cadre of true-believing free-market conservatives within the Republican majority in the House of Representatives exerted enormous influence in setting the terms of debate within the nation's capital, forcing Democratic office holders to argue over how much and where to cut government spending. The president, heading into his second term, fought tenaciously to preserve the life of his signature program--"Obamacare"--but had long since given up the fight for renewed macroeconomic stimulus. On the defensive, he veered between homilies on government as a force for good and me-too attacks on bloated bureaucracy and wasteful government spending. The purpose of this article is to explain the sources and consequences of the effective reassertion of neoliberal orthodoxy in the aftermath of the financial crisis. The burden of the argument is that the ideological tenor of American politics today reflects not so much ideational "polarization" as a one-sided battle to restore the political authority of an anti-Statist cultural predisposition that remains strong. Anti-Statism, in its neoliberal form, is a core element of a political and policy regime that was shaken, but hardly dismantled, by the recent crisis. Those, like President Obama, who foresaw an opening to move beyond "stale debates" about the relative virtues of the government and the market greatly underestimated the power of anti-Statism within contemporary American politics, and misread the conditions under which paradigm shifts occur in American politics. A comparison of Obama's situation with that faced by Franklin Roosevelt (FDR) in the New Deal era will highlight Obama's limited room for maneuver. In conclusion, we will speculate on whether perhaps more room for maneuver might open up, as it might if "True Believers" on the right place a political burden on anti-Statism that it cannot bear. First, however, we need to establish the chronology of events and explore how and why the greatest economic crisis since the Great Depression gave rise to such a curious response--bipartisan pragmatism followed by overblown hope for a restoration of old-liberal values succeeded quickly by an aggressive reassertion of neoliberalism. From the Government Rescue of the Economy to the Anti-Statist Backlash In the earliest stages of the 2007-08 financial crisis, the usual suspects took the usual positions. President Bush said that declines in the housing market should be seen as a natural market correction. As for disquiet among ordinary citizens worried about the value of their assets, "Do you think they feel disquiet now? …