Excellent constructive criticism of mainstream liberalism: Thomas Edsall’s, Now What, Liberalism? column in yesterday’s NY Times.  An excerpt:

The argument of the political commentator Walter Russell Mead that the United States has reached an end-stage death match between liberal constituent groups has received widespread attention, especially in the conservative blogosphere.

Mead, who teaches at Bard College, contends that

The core institutions, ideas and expectations that shaped American life for the sixty years after the New Deal don’t work anymore. The gaps between the social system we inhabit and the one we now need are becoming so wide that we can no longer paper over them.

In many respects, liberalism is a fat target. Dozens of city and state public employee pension plans are on the verge of bankruptcy – or are actually bankrupt – from Rhode Island to California; in 2010, a survey of 126 state and local plans showed assets of $2.7 trillion and liabilities of $3.5 trillion, an $800 billion shortfall. The national debt exceeds $16 trillion.

Mead labels the “institutions, ideas and expectations” of contemporary liberalism the “blue model”:

In the old system, most blue-collar and white-collar workers held stable, lifetime jobs with defined benefit pensions, and a career civil service administered a growing state as living standards for all social classes steadily rose. Gaps between the classes remained fairly consistent in an industrial economy characterized by strong unions in stable, government-brokered arrangements with large corporations—what Galbraith and others referred to as the Iron Triangle. High school graduates were pretty much guaranteed lifetime employment in a job that provided a comfortable lower middle-class lifestyle; college graduates could expect a better paid and equally secure future. An increasing “social dividend”, meanwhile, accrued in various forms: longer vacations, more and cheaper state-supported education, earlier retirement, shorter work weeks, more social and literal mobility, and more diverse forms of affordable entertainment. Call all this, taken together, the blue model.

While American business abandoned the blue model long ago, especially the notion of providing secure employment and defined benefit pensions on retirement, American government, in Mead’s view, has not. Costs “are now exploding according to the immutable logic of demographic and actuarial facts, and it is clear that the government can’t pay them into the future.”

[See Edsall’s column for good but long question and answer between Edsall and Mead, economists Richard Freeman of Harvard and David Autor of M.I.T., and Joel Kotkin of Chapman University.]

By e-mail, I asked [Autor] “Is the disability program a prime example of the dysfunctionality of liberalism, or is it a unique problem not characteristic of the liberal agenda?”

His reply:

It’s neither. It’s an example of a program that was set up to do a lot of good and still does a lot of good, but one that has not changed with the times. Republicans are as complicit in this policy failure as Democrats. Neither has had the stomach to touch the program since the early 1980s, following Carter’s and then Reagan’s disastrous attempts at reforms. Every advanced country needs and has a disability program. But not all of them are on the same unsustainable trajectories as the U.S.’ program. Countries that are far more liberal than the U.S., like the Netherlands, have had the wisdom and courage to reform their disability systems to stem abuses while maintaining needed social insurance.

Autor argues that a reformed disability program should be a part of a structure of safety net programs that would provide a level of security…

Entitlement reform, a darling of gentry progressives who share Mead’s fear that “costs are now exploding according to the immutable logic of demographic and actuarial facts,” is perhaps the quintessential case study of the inclination of the progressive elite to disregard the distributive consequences of their reform initiatives. Take the case of those calling for gradual reduction in Social Security benefits – either by raising the retirement age or switching to a “chained” Consumer Price Index (a revised inflation index which cuts government spending by reducing annual cost of living adjustments).

Who would be most affected? Those in the bottom 20 percent of the elderly who depend on Social Security for 84 percent of their annual income, and those in the next quintile dependent on Social Security for 83 percent of their income. At the beginning of 2012, the average Social Security benefit was $1,230 a month, or $14,740 a year.  For 35 percent of elderly white beneficiaries, for 42 percent of Asian-Americans, for 49 percent of blacks, and for 55 percent of Hispanics, Social Security represents 90 percent or more of total income.

In the current debate over financing the cost of income support for older Americans, the chained C.P.I. proposal has more political support than the progressive alternative of raising the current $113,700 cap on the amount of income subject to the payroll tax. [Note:  For the life of me, I do not understand that.  Raising the cap would eliminate a large fraction of Social Security’s revenue problem as well as be a less regressive tax.  Why on Earth do people prefer the chained CPI?]  Low-income Social Security beneficiaries are not equipped to absorb cuts in benefits that a switch to a chained consumer price index would entail; on the other hand, according to the centrist Tax Policy Center, raising the cap on income subject to the payroll tax could completely cover Social Security costs into the foreseeable future without reducing benefits.

Obama’s victory and the growing evidence of an emerging majority Democratic coalition pose the danger that the left will take false comfort. The demographic forces currently powering the Democratic Party in no way guarantee a resilient coalition assured of a long-term competitive advantage.

In addition to the glaring class conflicts between the party’s upscale cultural liberals and the larger body of Democratic voters with pressing material needs, there are a host of potential fissures.

In cities from Los Angeles to Chicago to Houston, African-Americans are competing with Hispanics and others for government jobs, good schools, good neighborhoods, political power and basic resources.  Republicans are looking toward these tensions to see how their party can capitalize on them.

Insofar as austerity advocates force Obama and Democrats in the House and Senate to accept budget cuts, similar ethnic and regional conflicts will plague the party, undermining political unity.

The determination of the Obama administration and many of its Congressional allies to raise taxes on the affluent is not, in political terms, cost-free. The Democratic Party has made huge gains – although short of a majority – among upper-income voters, and inasmuch as Democratic tax policies threaten the standard of living of this cohort, upscale left partisans may get cold feet.

The much larger hurdle facing contemporary liberalism is the need to reconfigure the welfare state in ways that maintain popular support while addressing a host of conflicting forces:

• The aging of the population is steadily reducing the ratio of workers to retirees, expanding the “dependency ratio,” even as global competition drives governments worldwide to reduce corporate and individual taxes, cutting off the revenues to finance social welfare spending.
• Other demographic trends, particularly the erosion of supportive extended family networks and the rising numbers of single elderly, serve to increase the demands for benefits from the welfare state.
• Austerity policies enacted in response to high deficit and debt levels have resulted in increased voter suspicion of the “undeserving” poor and of “free riders” who are perceived as getting more out of government programs than they pay in, weakening support for the welfare state. Similarly, means testing old-age income security initiatives – particularly Social Security –would inevitably undermine universal support.

Liberalism now faces the job of paying for its own success in helping people live longer. The progressive ethos, currently embattled, has a proud history. What is uncertain is whether a durable social consensus can be mobilized in the face of the global economic pressure to reduce taxes and limit the scope of government. The Democratic left faces a daunting, but not necessarily insurmountable, obstacle.

To paraphrase Jared Bernstein, government needs to work.