Brooks' Crystal Ball

David Brooks imagines the aftermath of the financial crisis:

One the one side, liberals will argue (are already arguing) that it was deregulation and trickle-down economic policies that led us to this crisis. Fears of fiscal insolvency are overblown. Democrats should use their control of government and the economic crisis as a once-in-a-lifetime chance to make some overdue changes. Liberals will make a full-bore push for European-style economic policies.

On the other hand, the remaining moderates will argue that it was excess and debt that created this economic crisis. They will argue (are arguing) that it is perfectly legitimate to increase the deficit with stimulus programs during a recession, but that these programs need to be carefully targeted and should sunset as the crisis passes. The moderates will stress that the country still faces a ruinous insolvency crisis caused by entitlement burdens.

Obama will try to straddle the two camps — he seems to sympathize with both sides — but the liberals will win.

Brooks goes on to say that this will lead to liberal overreach and an eventual conservative backlash. His certainty is hard to justify. It's impossible to say where the financial crisis will end; a Japanese-style lost decade sounds no more or less plausible than a quick recovery in the second half of 2009. As it's very difficult to imagine with any confidence the ongoing circumstances to which the Democratic majority will be responding, predicting which wing of the party will win out is equally problematic.

Furthermore, I am not convinced that the Robert Reich wing will be stronger, whatever the circumstances. The past decade's criticisms of Rubinomics are more related to a lack of positive impact on the middle class, which is an issue separate from the causes of the present crisis. Going forward, Robert Rubin's association with loose derivitive regulation may forever taint everything he believes in, from balanced budgets to low trade barriers; then again, it may not. Right now, it seems like there are enough moderate Democrats and Republicans to prevent the onset of a European-style superstate. I suppose a lot depends on the positions we see from Barack Obama should he win, which is why a meaty economic philosophy speech would serve voters well.