Conservatives tell a story about how we’ve backed ourselves into an economic and political corner through improvident public spending. On their telling, that’s just another instance of the moral maxim that you shouldn’t live beyond your means. Obama and congressional Democrats are in political trouble because the voting public is starting to remember what happens when liberals get their hands on the levers of government without a powerful political opposition to constrain them (the way that the Gingrich congress constrained Bill Clinton). For people old enough to remember the 1970s, Obama’s starting to look a little too much like Jimmy Carter.
The liberal counter-narrative turns on the idea that the sorry state of our political economy is the consequence of thirty years of public indifference to rising economic inequality. Now that the housing bubble has burst, on this telling, there’s no getting around the fact that the impoverished middle class no longer commands the purchasing power to sustain robust economic growth or the political power to induce either political party to attend diligently to its interests. Ten percent unemployment and slow economic growth is what we all get for being too self-absorbed to respond to the demands of social justice.
Robert Reich does an admirable job of telling the liberal story in a way that makes economic and moral sense. Here, however, is how the political state of play obliges him to end it (my emphasis):
The problem is that the slice of the voting public that’s “mad-as-hell” is a lot madder at Democrats committed to redressing economic inequality than at Republicans committed to cutting public spending. It’s never a good sign when an ideological narrative resorts to a theory of false consciousness. People usually find it easier to cast themselves as characters in an ideological drama that refreshes their memories than one that tells them that their moral common sense is leading them astray.“What we get from widening inequality is not only a more fragile economy but also an angrier politics. When virtually all the gains from growth go to a small minority at the top -- and the broad middle class can no longer pretend it's richer than it is by using homes as collateral for deepening indebtedness -- the result is deep-seated anxiety and frustration. This is an open invitation to demagogues who misconnect the dots and direct the anger toward immigrants, the poor, foreign nations, big government, 'socialists,' 'intellectual elites,' or even big business and Wall Street. The major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the 'establishment' and an increasingly mad-as-hell populace determined to ‘take back America' from it.’”