It's time for the progressive movement and the Democratic Party to show that it is worth a dime. I mean that exactly – because, you see, there is this guy we put on the dime, because most people believe he was a pretty good President. He presided over a government that included Republicans, conservative southern Democrats, progressives, socialists, communists, industrialists, social radicals and political partisans. There is no politician in the Democratic Party who is as conservative as FDR's Vice President. If the progressive movement and Democratic Party of today can't hold together the coalition of the present, think how badly we would have done with the state of the Democratic Party in 1933.

While the jostling is normal, and to some extent to be expected, part of it comes from fear – different groups attacking shibboleths of the others – without realizing that the Progressive movement has put forward three powerful critiques of the Republican, conservative and reactionary era which are, in fact, branches from the same trunk.

These critiques are that the era just ended is profligate, unjust, and short sighted.
The Three Critiques

The first critique comes from people like Bob Rubin, and it is rooted in macro-economic reasoning. It's the easy to make, because it relies on simple, widely published, numbers. The Federal Government from Reagan to Bush II has issued trillions of dollars of debt, and more and more of that debt is held by foreigners and special interests.

This critique has additional advantages – first, it is emotionally appealing, second it right flanks the Republicans, and shows them as being hypocrites. The party of "fiscal responsibility" proves to be addicted to borrow and squander policies. Finally, the Democratic Party has proof that doing things the other way – working towards balancing budgets was the basis for the Clinton expansion which was the best peace time expansion for working Americans ever.

This critique warns that continued profligate spending will continue to erode the strength of the dollar, will make borrowing costs higher, and will tie us down to interests overseas. Since all of these things are true, all this critique has to do is draw a trendline of the dollar down, the price of gasoline up and the cost of borrowing higher, and say "There is a a great unravelling coming, any questions?"

The second critique seems, on the surface, a bit harder to make. It is the labor critique of low wage growth and increasing risk being ladled on to the American public. I say seems because this is largely illusory. While the deficit hawk merely needs to point people at the national debt clock, the labor critique has to trace out labor slack indicators, real median wages and variability of income. But this is reversed, the reason these numbers aren't easy to come by is because the government doesn't publish them directly. The reason the government doesn't publish them directly is that the macroéconomic indicators that we do publish are all centered around the question of whether the OPEC oil barons and Asian central banks are willing to hold enough of our dollars. The reason the numbers about how bad the average working person feels are hard to come by, is a direct result of the borrowing binge.

And the labor case is also emotionally easy to make. While the numbers aren't published by the BLS, the average family sees them every time the balance their check book, and find out "how much month they have left at the end of their money." It's an argument rooted in populist politics and the feeling, fully justified by empirical measurements, that people are working harder, getting less, and being exposed to more risk. If the average American wage were a stock, Wall Street would be dumping it – flat real return, well behind the S&P 500, with low earnings growth and rising risk.

The labor critique – namely that a few people are doing very very very well, and most people are treading water – matches with the feeling that people have as they watch their pension funds pillaged, their houses turn upside down, their medical costs spiral upward, and their feeling of possibility closed down. That the Republicans don't publish the hard numbers that show this, isn't really that surprising.

The third critique is that the Republican Party has sunk vast amounts of effort into controlling a commodity, oil, that a wasting asset. That it has failed to invest in the future, and that it is actively hindering the growth of new ideas and new technologies that could help- us grow our way out of the problems we have. Iraq is merely the most obvious, brutal, and catastrophically stupid, example.

This third critique is most powerfully stated by the new political realm. It is the world of internet politics that has made Net Neutrality a signature issue, it is the world of internet politics that has made energy and global warming focal points of their political agenda. It is why, to some extent, Albert Gore has risen from the ashes to become an elder statesman of the party, a figure who has put a stamp on the Presidential race, by not entering it.

This third critique looks at the power of internetworking, social networking and open source society to produce vast wins in terms of culture and happiness. In a society where most people are unhappy with their jobs and their opportunities, people in the electronic world are almost obsessed with their work, they bring it home, and to their coffee houses and to their dreams. The new politics doesn't go home from work, it is home in its work. How long has it been since the rest of society said that?

The Fall of the Republic of Fear

Within these three critiques there are sharp disagreements about specific issues such as balanced budgets and free trade. But how much of this is real? The Republicans haven't been the party of free trade, instead they have systematically exposed Democratic constituencies to global competition, while secluding Republican constituencies. Housing, health care and homeland security are all industries that have little outside competition. They are also the three growing industries in America.

What about budgets? Many people on the labor side of the arguments over policy have been seared by decades of ravenous Republican fundamentalism on "a balanced budget" being used as a catch all excuse to nix any spending, however slight, on any program, how ever worthy. But the reality is that what the Republicans really meant was that we shouldn't spend money saving poor people, so that we could spend it killing arab people. I'll omit elaborating on how there is a clear racism in how the Republican Party has chosen to cut spending in certain areas, and raise it in others. I will let people look at the tobacco buyout and do the numbers for themselves.

It isn't that Democrats should fear fiscal responsibility – if we believe, and can prove, that what we want to spend money on is worth the public's hard earned dollar. All over the country school boards are finding that there is much more willingness to spend money on education than ever before. The American people are willing to invest in their children, their communities and their future – and even if that money is borrowed, it isn't the same as deficit squandering.

It is also time to realize that free trade fundamentalism - the belief that just pursuing larger trade volumes to the exclusion of all else - does not work as advertised. The reason for this is simple, our trade policy isn't free trade, and we can't trade goods and services if we are busy building nuclear powered aircraft carriers, replacing M-1A1 tanks and slapping up McMansions to flip. Wanting free trade without having something to trade is like wanting to eat steak without having any teeth.

These critiques are so deep, that at first it seems impossible to understand how they could have been pushed to the margins. The answer, of course, was fear itself. The very failures that the Republicans caused created a fear that was exploited to keep Republicans in power. Hopelessness and crime became excuses for fear and sprawl. Lack of wage pricing power became an argument for "a tax cut is a pay raise". The alienation of government from people, became an argument that the government is somehow a "them" that takes "your" money.

While various media organs such as Fox fed these fears, and Republican campaigns feasted on them at the ballot box, the basic economic cycle was what enflamed these fears – to explode into a Mona Lisa Overdrive of hysteria after 9/11. Periodically the American people would choke on the downward march into the pit – but in each case, the Democratic Party and the liberal/progressive movements were not quite able to stem the tide or bury the fears, and so, in each case, America slid further down into the dark spiral.

That is, until Iraq, with its crass failure, and the inflexible, even messianic, fanaticism which the Bushites required of the country. The country has again, convulsed at the costs of the Republic of Fear, and this time, we have our last, best, hope of laying it to rest.

This is so because George Bush managed, at long last, to violate the FDR standard for a war or great change in policy. FDR asked Americans in the early 1930's which freedoms they felt they had lost, and if they found that there were none, then it was clear that while government was broader and more far reaching, it had left their basic liberties in tact. While Nixon impinged, and Reagan eroded basic rights, and there was a continuous suppression of those at the margins of what the mainstream could accept – in general, people did not feel they had lost liberties.

The "War on Terrorism" by being the War on Drugs on Steroids, managed to break this barrier – with First Amendment Zones, vote fraud and suppression, warrantless domestic spying and, finally, suspension of habeus corpus. Bush made the real cost of bad economic policy clear. Your oil, or your rights.

To be blunt, Iraq has shown Americans that what we borrowed in dollars, we are now repaying in blood and liberty. It has shown Americans that shackles of debt and duty, imposed to stave off the chaos of the 1960's, had become a noose around our necks. That in order to save the America of 1950, they had destroyed the America of posterity.

The End of the American Thermidor

The reality is that all three critiques of the conservative era fit together tightly. The budget hawks point out how money is fleeing overseas – and this is what causes the lack of investment that has hammered American wages. How can we pay people more money, if we aren't making new things, but merely the old ones? How can we tell people to get education, when all it does is allow them to tread water. Saying to someone "if you go into hoc for a degree, why, you have a great chance of not watching your life fall apart." Not a great sales line.

The three pieces of this critique fit together because there is one vicious circle involved: borrow and squander policies lead deficits. Deficits lead to lack of investment in disruptive and far reaching technologies and improvements in basic standard of living. Lack of investment in new technologies and human capital leads to lower wages, and lack of incentive to get education. Lack of higher wages creates incentives to pour effort into the sprawlconomy and turning gasoline into real estate profits. Which leads to importing more oil and borrowing more money. Which leads back to borrow and squander. The result is an America which circling the drain.

That the Democratic Party, the left and the progressive movement have identified the parts of the vicious circle of the Republican era is a first step forward towards solving the deep problems of the age. However, alone, the pieces are not enough. Balancing a budget, without having something to invest in, does no good by itself – it is only creating a fictional surplus for some Texas Governor to give out as a tax cut for the rich. Without fiscal responsibility, there is no investment to create the better jobs at higher wages. Without better jobs and higher wages, there is no way to get the demand for new goods and services. And around it goes. No one piece, by itself, solves the problem.

It will only be by turning a cacophony of points of view, into a interconnected ecosystem of politics, economics and society, that the Democratic Party will be able to turn the words "New Direction" into something other than an election slogan.

Is there a solution? The key to any vicious circle is to break the dominant strategy that pumps it around again, that part where one actor can make their position better by dumping problems on to others, who pass their problems on to others, who pass them on in return.

The straight forward Keynesian solutions to wages, risk and incentive are blocked because of the flow of money out to pay for oil, that only flows back in in the form of money being rolled over. This is compounded by the incentive to allow neo-mercantilist manufacturing states. In both cases, the US needs the commodity more than the trading partner needs anything we have. We need the oil, and we need the deflation. To end the cycle means to both reduce our dependence on imported energy and imported deflation, and to tax the asset holders, shifting their spending from rolling over money, to buying goods and services.

In short, we must unblock the imbalances in the global economy, so that we can apply the tested, and successful, liberal solutions that are available to us. This is why we will need fiscal discipline, and a labor revival, and new direction in industrial and economic policy – each one supports and enables the others.

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Richard Nixon, Ronald Reagan, George Herbert Walker Bush, George Walker Bush have all presided over a counter-revolution, designed to stop and destroy the results of the "revolution at the ballot box" of FDR, Truman, JFK, LBJ – and even, in his own way, Dwight David Eisenhower. The French Revolution's counter-revolution is called "Thermidor" after the month it took place in – the "month of heat". But it is doubly appropriate in our age, since it is the instability of energy and its relationship to our monetary system which has been the key factor in Republican dominance. It is the breaking of the inflation of the 1970's which stands as the signal achievement of the conservative shock wave that rolled across the Western Democracies in the 1970's and early 1980's, and the root of this accomplishment was ending the overheating of the economies from an inflationary spiral driven by energy prices.

The last generation has been our American Thermidor.

The basic problem is that those who sold energy, wanted nothing other than places to park the profits, and in doing so, distorted the rest of the returns in the global economy.

The reason that Iraq was invaded is that it was an insane solution to this basic problem. Steal the oil, and pressure Arab states to have to keep an electorate happy. This is why Hank Paulson – one of Wall Street's giants – is reduced to jaw boning other nations to buy more American goods. He can't do much else.

The sane solution is going to require that America bite the bullet and tax, both its own rich, and the dollar holders of other nations. This will not be accomplished by a single policy, because no one taxing step is large enough. This isn't really a new idea – after all, the internet boom was a kind of tax on those who held older assets – buy Amazon.com, or be left behind. A new economy boom in sustainable energy and social technology is one part, but so too, among other policies, will be a Pigou-Tobin tax.

What's that? A Pigou tax is a tax that is against externalized costs. That is, when someone makes money and passes some of the bad effects on to others, he is said to externalize costs. One example would be mining gold, using mercury to anneal it, and letting the local river carry the mercury down stream, where other people and animals are poisoned by it.

A Tobin tax is a tax on changing from one currency to another. Its proponents often say "tax money, not people" It is a way of imposing a cost on trade and investment volumes.

However, the real power of this idea is to combine them – in effect, to tax a country for its externalization, by making it more expensive to do business in that currency. The tax could be structured through the IMF and WorldBank and the WTO, with tariffs being levied, or charges imposed, on transactions on the global forex markets based on the CO2 produced per unit of Purchasing Power Parity GDP.

The object to be taxed would be carbon. In effect, make emitted carbon dioxide a "reverse gold standard" – the more you put out, either directly or indirectly in the form of selling carbon based energy – the higher the tax is paid to enter or leave the currency. Countries could be given the option to spend a tranche of their tax charges on reducing carbon in their own country. In effect, "you fix it, or we will". Combined with a global market in carbon credits – countries still in a protected phase could buy carbon from those trying to trade and grow, and then attract investment to reduce carbon – it would mean that the global monetary system would be based on reducing Carbon Dioxide per unit of PPP.

Poor nations could opt out against each other – which since poor nations don't generate much – and nations would have an incentive to generate internal GDP, since this would "dilute" the cost of the tax. China and Saudi Arabia would feel the burn immediately. So would the United States and Canada. However, all four would have options. The Saudis could spend more at home, the Chinese could retire polluting technology and grow their economy, and the United States and Canada could invest in non-carbon energy.

This is going to hurt. However, a great deal of the pain could be ameliorated by realizing that much of what we call "work" in the US is really make work. We don't really need burgers flipped in the profusion we flip them. We don't need Hummers. We do need education, we do need universal health care. The trade off would be fewer Big Macs, for longer life and an end to the fear that an accident or medical condition would lead to bankruptcy. The trade off would also be that more jobs would mean something and would be about the national interest, rather than simply cut throat competition to see who gets to have the most toys when they die.

A Union of Purpose

To summarize – we are in big trouble. If you believe, as I and tens of millions of other Americans do, that we have lived under the worst two term President ever. If you believe that the policies of the last generation have led to lower prosperity for most than otherwise could have been attained, as the numbers unequivocally say is so, and if you believe that America is still a great nation that can overcome the failures of the past with the promise of the future. Then you must believe that only by devoting every ounce of our effort to the future, only by building as broad a consensus of people of good faith, only by using every idea that works, and discarding every idea that does not, can we prevail against the dangers which beset us.

We are not, yet, in as dire a moment as the cold winter of 1933, nor is America, yet, falling apart as it did in the waning days of 1860. But it will only be with broad effort that we will break the downward spiral which threatens to send us depths equally black.

The progressive movement – broadly defined – has identified the three basic errors of the last 30 years – profligate policies, maldistribution of rewards, and a lack of investment supply. Now it is our task to fit them together, and create a tapestry of action to push forward solutions to each, in combination, as quickly as realities will allow. We will often find that in order to cut the debt more, we must raise wages, to raise wages will have to have new technologies. We will often have to temporize with problems in one area while we push forward in others. We will often find that we must ameliorate what we cannot cure, and make sacrifices so that we may wrest our destinies out of the hands of others.

In the course of this there will be many moments where each and every person will have to accept that some treasured policy or some long held belief must be compromised or even abandoned. FDR's era had those who thought that the banks should have been nationalized, we do not live in an ideologically pure world , and often we will have to realize that some work must be left undone, because we are not yet able to do it.

But in the end, what will sustain us is the belief that our fellow Americans, and particularly those who have embarked on this new direction together, are acting in good faith to bring the greatest good to the greatest number, both in our time, and for the times yet to come. Even in the most heated debates, it must be outcomes and ideas, and not position and privilege, which must be the spark of passion. This is so because we have both natural obstacles to surmount, and enemies to defeat. We have those who will be against us because they are misguided, misinformed or mistaken. We will face demons of ignorance and fear, greed and hatred. Both at home, and abroad. Some people will never accept that the crass and crawling world of greed that has dominated the last generation is rapidly being pushed off the stage of history, but most people, when faced with the benefits of the changes that are coming, will embrace the changes. They will find that we have stepped up out of the darkness, and into the light. They will find that the Republic of Fear that Bush and Rove crowned, has fallen to ruin, and been replaced by a Union of Purpose.

But they will only get that chance if those of us who have fought so long, and sacrificed so much, refuse to surrender to our own baser impulses, and turn our eyes forward and upward. And prove that there is exactly one dime's worth of difference between the progressive present, and the reactionary past. They will only understand if we show them that in order to win back their hopes lost to terror, to restore their opportunities drowned in debt, and to secure the blessings of liberty to themselves and their posterity, they must reestablish an American which is financial sound, economically fair, and fearlessly faces towards the work of the future, and not the quarrels of the past.

However, for Democrats, progressives and liberals to expect this of all Americans, we must show that we can run our mouths, the way we say we would run the country.