President Obama and the Democratic majority began his first term by launching a stimulus bill and creating a national health insurance system.[1] Both had failings, real and purely imaginary. Many voters responded to the ravings of the Tea Party and mainstream Republicans had little choice but to fall into line. The 2012 elections began to movement toward a Republican majority in Congress that culminated in the elections of 2014. Along the way, the Republican majority in the House not only blocked any further stimulus spending, but actually forced spending cuts through the sequester. Americans are still paying for that foolishness. By November 2014 President Obama and the Democrats were facing a two year-long march through the desert. Republican majorities can block any policy initiatives from the White House just as effectively as the White House and the Senate blocked the policies of the Republican House for the last four years. Aides are beginning to leave the White House to prepare for future campaigns on behalf of others or to cash in their chips by becoming consultants.

By early January 2015 the unemployment rate was down to 5.6 percent and falling, and the deficit had shrunk to 3 percent of GDP. This seemed to some observers to open a new “post-recession, post-panic era.” What will be the political themes of this new period? The mainstream of the Democratic Party is intellectually exhausted, while the left-wing (Elizabeth Warren, Bernie Sanders) is filled with enthusiasm.[2]

Betes noire of the Democratic Party (to judge by my cousins’ posts on FB) include big banks and inherited wealth and money earned from assets. The bêtes blanche are the middle class working Americans.[3]

In part, the President appears to have said “OK, I’ll do what I wanted to do from the start—govern the country like I’m the king.” He used his “prosecutorial discretion” to temporarily amnesty millions of illegal immigrants”; he dumped the policy of pretending Communist Cuba is just going to go away. In part, the President appears to have decided to lay down markers for the course his Democratic successors should follow.[4] In his state of the union address President Obama pitched a new tax plan. The plan proposed to raise the tax on capital gains, force people to pay when they inherited assets, and put a stop to 529 education savings plans because well-off people use them more than do lower-income people. The additional revenue would be used to fund a $500 tax credit to families where both parents work, and to cut taxes on families with children.

Right now this plan is going nowhere. It’s just more hot air from a guy who has always believed too much in the efficacy of speech. Republicans are philosophically opposed to high taxes on assets because the economy needs investment to grow. Still, going forward, it sets up a straight fight between Capital and Labor as the basic issue in the 2016 election. Whether that’s the best solution to the current American problems is open for debate. (See: Inequality 1.) Whether Democratic candidates will feel bound by Obama’s speeches also is open for debate.

[1] Neil Irwin, “Obama’s Tax Proposal May Help in Setting a Framework for 2016,” NYT, 18 January 2015.

[2] This same pattern led to disaster in the 1970s and 1980s. One can’t help but wonder if the Democratic Party is headed down the same road as the British Liberal Party in the early 20^th Century. See: George Dangerfield, The Strange Death of Liberal England (1935).

[3] This loose terminology sets academics to grinding their teeth for its lack of “rigor,” but the meaning is clear enough: pissed-off people who actually vote.

[4] Given the way Hillary Clinton and Leon Panetta have rushed into print with memoirs of their service under a still-serving president, you can understand his indifference to the effect on subsequent candidates. I’m leaving Robert Gates out of this because he’s in a different category of public “servant.”