Conservatism Staring Into an Abyss

Obama can, for a while, blame the financial crisis on the policies of the past. But a stagflation scenario -- combining slow growth with higher prices -- would be an achievement all his own, putting him more in the political category of Jimmy Carter than Clinton. Already the prospect of immense debt is spooking Democratic centrists. It has also begun reuniting the coalition of libertarians and social conservatives that Obama nearly sundered during the last election. As a compassionate conservative, I support focused, effective spending to help the poor at home and abroad. But as a conservative, I cannot support an explosion of debt and the reorganization of large sectors of the economy by federal planners.

There is a third possible future that conservatives do not want to consider. We could be seeing a much more fundamental ideological trauma -- something that enters the realm of psychology, not economics. Franklin Roosevelt used the shocks of the 1930s to discredit the capitalism of the 1920s -- even though the real causes for the Great Depression had more to do with tariffs, monetary policy and bank failures. Conservative economics fell into disrepute, even as many New Deal policies proved ineffective. Republican elected leaders became less-ambitious reflections of the Roosevelt consensus. Intellectual dissent was captured by extremists, from Ayn Rand to the John Birch Society. It took 40 years for the development of an intellectually serious and politically respectable conservative movement.

Are conservatives, once again, heading into the ideological wilderness? I strongly doubt it. The historical analogy to the Great Depression (so far) is strained. In that crisis, unemployment rose to 25 percent, a third of banks failed, GDP contracted by more than 30 percent and the social safety net did not exist. America is a much wealthier nation than it was in 1929, bank deposits are safe, and Fed Chairman Ben Bernanke, an expert on the 1930s, is expanding the money supply, not contracting it.

Obama is not likely to be a Roosevelt. But conservatives remain in a difficult position. Since they favor economic success, they must root for Obama to be a Clinton -- even as they suspect and predict he will be a Carter.