It was one of the shortest eras in American history, the great moderate era proclaimed with such vigor by Time and Newsweek lasted about 72 hours. Today, the US is back on its march towards a more divided and parliamentary system of government. Tom Tomorrow satirizes, or should I say, quotes publicly, the attitude from the right wing. Fox and CNN's talk hosts were still engaged in heavy headbanging slurs and sneers, with either nerry a liberal in sight, or the host and frequent guest trying to gang up on the token Democrat. It didn't always work out so well, as Ari Melber managed to insist on facts and civility despite repeated attempts by the regulars to turn the segment he appeared on into a televised food fight.

The dead give aways of a Republican Party deciding that this is really just a long recess in a Republican Congress, and not a sea change in American government are everywhere in evidence.

That political pundits are clueless can be seen from Dan Balz who seems to think that David Gergen is a Democrat when he says "Democrats have been quick to claim that 2006 will be remembered as the end of a conservative era." No Gergen is a Republican, and he was the first person to ennunciate this in the wake of early returns, on national television no less. The Democratic position, ennunciated by Simon Rosenberg is not merely that the conservative era is over, but that the progressive era has begun.

Another sign of cluelessness is counting numbers of seats in the mid terms to argue against a Democratic wave. Let us point out the obvious - both chambers of Congress flipped in this election, which means that it joins 1994 as the only realignment on the Congressional level in a generation. It is also buttressed by broad gains in governorships and state legislatures, all of which points to a fundamental rejection of the Republican theory of governance that goes beyond merely Iraq.

The conservative punditocracy is already sharpening the time honoured "stabbed in the back" narrative, as they call for more troops this "if stupidity got us into this mess, more stupidity can get us out" theory is held by the fourth biggest loser of the night - behind Bush, Hastert and Rumsfeld - John McCain, who is now about to embark on a political death spiral that will take him out of contention for the Presidency in 2008 should he not pull out of it.

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The sign that Bush pays no more attention to elections than Presidential Daily Briefings came in the form of the Bolton renomination, and the open trial balloon speculation of forcing him through with a second recess appointment. It was the kind of action which flips the bird at Congressional critics. When followed up with Bush's statement that he is willing to consider "fresh ideas", but unwilling to change course, tactics, objectives or timetable - as if he just appointed Nancy Pelosi to some junior DoD flunky position, and Harry Reid to undersecretary at Foggy Bottom - it added to the weight that this Administration listens to the entire political spectrum from W to Z.

With the right wing of the American political spectrum - the top down media, the right wing Congress and the Bush executive - offering a range of options that varies between "give Bush more power" and "appoint some handlers from his father's era" - it seems clear that there is no doing business with the right wing. They simply refuse to admit that invading Iraq was a failure on the road to a fiasco that has led to disaster.

Instead the adminstration treated this election as if the Republicans had lost a few seats, but retained control of Congress. Rumsfeld was sent packing, but was not replaced with a figure from the center, but instead by Gates, who is a long time Bush family apparatchnik. In short, the same club that has run the Republican executive branch for all but 12 of the last 36 years is still in place.

Between the talk shows, and Bush's talking for show, it is no surprise that the word from the hill this morning is that Pelosi is moving to consolidate her position and is preparing to press for a phased withdrawal from Iraq.

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The reality is also reaching Iraq, where Nouri al-Maliki reads the handwriting on the wall and reshuffles his cabinet. With violence raging in Iraq - Baghdad is now a war zone - and with sectarian forces growing in strength and number, his moves clearly show that his position is under pressure from militia leaders, and that his security forces are struggling with trying to stay ahead of the kidnappings and murders with little success.

These two political realities on the ground - that the Iraqis have descended into civil war, and the Democrats do not want to be caught in the middle of what David Neiwart labelled in 2004 a "vast apocolyptic playground" - are not sufficient to dislodge the unlimted sense of self and messiahnic certainty which the current inmate of 1600 Pennsylvania Avenue feels. Instead he is following his pattern from business: first wade in to a get rich quick scheme, then stop anyone else from doing anything until he has all the power - this was 2001-2004, when it goes sour, first call in daddy to patch it up, without changing course or admitting mistakes - and finally unload the whole mess on a friendly buyer. However, as any Private Equity guy will tell you, when you go in, plan on a strategic sale, and make sure there is a fool with deep enough pockets to buy the asset. There's no one on the planet who can afford Iraq.

What all of this means is that Iraq is continuing to head for a de facto partition - Kurdistan, Shiastan, al-Anbar and Baghdad as the football in the middle - simply because various interests can control their territories, and there are outside interests capable of ripping a chunk off. While everyone agrees that de facto partition would be the worst solution, worst case scenarios are the product of circumstances where pessimalization is the only option left on the table.

However, Iraq is not the end to the disintegration of Bush's authority. It is not a coincidence that days after the election China is signalling that it is going to continue to move out of US Treasuries - with the dollar already within breathing room of being only half a pound - and that South Korea is set to turn down the Bush North Korea initiative.

This collapse of authority threatens to make ticklish problems worse - for example the need for a lending of last resort system for US Treasuries to prevent market failures as chains of loaned bonds snap. With volatility heading up, and bonds at very high, indeed recessionary signal, levels, these kinds of nuts and bolts actions are often the first to be sacrificed when a pig headed administration decides to dig into the hog wallow a bit deeper.

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A key area where the collapse of authority is having global reverbations is in the area of trade negotiations. The present US Congress is almost certain not to approve fast track authority for George Bush, this will essentially doom the already brutally failed Doha round of trade talks. Whether good or bad, it puts on hold much needed structural decisions, and creates a climate where leaders in Europe will begin to open question whether US leadership can be counted on for anything at all during the Bush lame duck period. With accounting scandals claiming a victim a week in the corporate world - as one Republican lawyer friend of mine cackles if you want to break the law, there are legal ways to do it - these kinds of issues could pile up to a much larger price tag for a clean up than the public has yet realized. These aren't left or right issues, but instead like scheduled tune ups, a matter of whether you like your engine running or not.

The calls for economic centrism pointing to Bob Rubin as the example, have to come to grips with a reality that Rubin himself has pointed out over and over again - to balance the budget requires increases in revenue. Period. Rubin is right, what this economy needs is a good tax increase to shake a great deal of parked money out of progressively more complex derivative schemes and arbitrage seeking, and into productive investment. The problem is that in today's very complex world, corporations do not have an expectation of being able to recapture the value of research and development - R & D spending. Thus public investment is needed. For public investment to recapture, there must be taxes on the finacial system and on capital gains. This is not a new position for the former treasury Secretary. Recent economic history, as Hale Stewart outlines, seems to bear him out.

What we have here is a situation where "centrism" and "moderate" are contradictions in terms. Either one can compromise with an administration, party and movement on the right which believes in the maxim "Be reasonable, do it my way", or one can take steps which are designed to benefit the broad majority of Americans, dealing head on with problems before they become situations.

The Bushplosion means that at some point these actions will be taken - there must be tax increases, or there will be protectionism. Macro-economics teaches us that protectionism is a regulator way of achieving higher income growth by restricting competition, while tax increases are a fiscal means of generating higher job productivity through value added.

It also says, rather unequivocally, that public investment is better than regulation for achieving the long term goal of improved incomes, since there is a great deal less economic friction involved. While monetary policy is better in the short run at producing investment gains, monetary policy is only a free variable with open trade provided one can maintain the stability of currency. Let me spell that out - low interest rates are good, but only if you can export enough to keep your currency from falling too far. Since the United States is currently addicted to imported oil, low interest rates are not an option.

This means that the second best option - fiscal policy - is required, because fiscal policy can direct growth to areas which do not degrade, as much, the balance of trade. Worse than either of these is overt protectionism. For those who want open trade and the benefits that it brings, the challenge is to have intellectual conviction - as Bob Rubin does - and state that the price of Free Trade is Fair Taxation. While the imbalance in global growth and the rewards that it has brought are a subject of constant commentary from various international institutions, we hear no great roar coming from those calling this a great moderate victory to bite the bullet and raise taxes while cutting spending. Instead, it seems that the people calling themselves moderates are neither willing to admit that the Iraq is a pure sink on our fiscal position, and that raising revenue is not optional.

Thus, if you want to know why, regardless of the short term narrowness of the Democratic majorites, that progressive, rather than moderate, government is in the cards, it is that progressives have the courage to go out for their goals, explain how those goals improve the general welfare, and hang tough while fighting for them - both in the internal fights and in the external ones as well. Progressives have common cause with genuine centrism, because both are realistic. Conversely both groups are going to end up undercutting the the idea that what we just watched was a Republican Primary election victory by George Herbert Walker Bush over George Dubya Bush - simply because this idea is unrealistic and impractical in its policy perscriptions.

The cold reality is that the present mesoëconomic distribution of wealth and savings is unstable. Those who should be saving are not, wages are not keeping up with the claims on future revenues from those wages, and the balance of currencies does not reflect the balance of trade and fiscal circumstances. Changing this distributive problem - some 30 years in the making - will not come about by sitting and watching, or by merely slowing down a forced march in the wrong direction. Instead, it is going to require bold and dramatic action, action which will not happen under the present administration.

Which means, as is actually clear, is that 2008 is about ideas, and the political viewpoint which has ideas to offer the public will be on the road to being the governing political ideology if those ideas deliver.