is vice president for research at the Cato Institute. He is theauthor of The Age of Abundance: How Prosperity Transformed America'sPolitics and Culture, which will be published in the spring.

The conservative movement--and, with it, the GOP--is in disarray.Specifically, the movement's "fusionist" alliance betweentraditionalists and libertarians appears, at long last, to befalling apart. To understand what's happening, look at theDemocratic gains made in previously Republican strongholds onElection Day. In "Live Free or Die" New Hampshire, both Houseseats--as well as control of both houses of the statelegislature--flipped from the GOP to the Democratic column. Out inthe interior West, Jon Tester squeaked past Conrad Burns in theMontana Senate race, while other Democrats picked up a House seatin Colorado (along with the governorship) and two more in Arizona.These parts of the country are all known for their individualism andsuspicion of officialdom--in short, for their libertariansympathies.

Libertarian disaffection should come as no surprise. Despite theGOP's rhetorical commitment to limited government, the actualrecord of unified Republican rule in Washington has been anunmitigated disaster from a libertarian perspective: runawayfederal spending at a clip unmatched since Lyndon Johnson; thecreation of a massive new prescription-drug entitlement with hardlyany thought as to how to pay for it; expansion of federal controlover education through the No Child Left Behind Act; a big run-up infarm subsidies; extremist assertions of executive power under coverof fighting terrorism; and, to top it all off, an atrociouslybungled war in Iraq.

This woeful record cannot simply be blamed on politicians failing tolive up to their conservative principles. Conservatism itself haschanged markedly in recent years, forsaking the old fusionistsynthesis in favor of a new and altogether unattractive species ofpopulism. The old formulation defined conservatism as the desire toprotect traditional values from the intrusion of big government;the new one seeks to promote traditional values through theintrusion of big government. Just look at the causes that have beengenerating the real energy in the conservative movement of late:building walls to keep out immigrants, amending the Constitution tokeep gays from marrying, and imposing sectarian beliefs on medicalresearchers and families struggling with end-of-life decisions.

As a string of recent books attests, the conservative embrace of aright- wing Leviathan has left libertarian-minded intellectualsfeeling left out in the cold. Bruce Bartlett, a Treasury Departmentofficial in the Reagan and Bush I administrations, blasted Bush IIin Impostor: How George W. Bush Bankrupted America and Betrayed theReagan Legacy (and got fired from his conservative think tank forhis efforts). Cato Institute scholar Stephen Slivinski followed upwith Buck Wild, an expose of GOP fiscal incontinence. In TheElephant in the Room, New York Post columnist Ryan Sager bemoanedthe rise of big-government conservatism and warned that excessivepandering to evangelicals would rupture the movement. And, mostrecently, The New Republic's own Andrew Sullivan denounced theright's fundamentalist turn in The Conservative Soul: How We LostIt, How to Get It Back.

Libertarian-leaning voters started drifting away from the GOP evenbefore Katrina, civil war in Iraq, and Mark Foley launched thegeneral stampede. In their recent Cato-published study "TheLibertarian Vote," David Boaz and David Kirby analyzed polling datafrom Gallup, the American National Election Studies, and the PewResearch Center and concluded that 13 percent of the population, or28 million voting-age Americans, can be fairly classified aslibertarian- leaning. Back in 2000, this group voted overwhelminglyfor Bush, supporting him over Al Gore by a 72-20 margin. By 2004,however, John Kerry--whose only discernible libertarian credentialwas that he wasn't George W. Bush--got 38 percent of thelibertarian vote, while Bush's support fell to 59 percent.Congressional races showed a similar trend. In 2002, libertariansfavored Republican House candidates by a 70-23 spread andRepublican Senate candidates by a 74-15 margin. Things tightened upconsiderably in 2004, though, as the GOP edge fell to 53-44 inHouse races and 54-43 in Senate contests.

To date, Democrats have made inroads with libertarian votersprimarily by default. Yes, it's true that Markos Moulitsas of DailyKos fame caused something of a stir by proposing the term"Libertarian Democrat" to describe his favored breed ofprogressive. And the most prominent examples of his would- bemovement--first-term Governor Brian Schweitzer of Montana, fellowMontanan Tester, and Virginia Senator-elect Jim Webb--have soundedsome libertarian themes by being simultaneously pro-choice andpro-gun rights. At the same time, however, their anti-nafta,Wal-Mart-bashing economic populism is anathema to free-marketsupporters.

In short, if Democrats hope to continue appealing tolibertarian-leaning voters, they are going to have to up theirgame. They need to ask themselves: Are we content with being abrief rebound fling for jilted libertarians, or do we want to forma lasting relationship? Let me make a case for the second option.

Since the late '60s, and especially the mid-'80s, torrents of wordshave been spilled urging Democrats to move toward the center of thepolitical spectrum. Most such efforts, however, have advanced onecompromise or another between progressivism-as-usual andconservatism-as-usual--a few more items from Menu A here, a fewmore from Menu B there.

But the real problem with our politics today is that the prevailingideological categories are intellectually exhausted. Conservatismhas risen to power only to become squalid and corrupt, a Nixonianmelange of pandering to populist prejudices and distributingpatronage to well-off cronies and Red Team constituencies.Liberalism, meanwhile, has never recovered from its fall from gracein the mid-'60s. Ever since, it has lacked the vitality to do morethan check conservative excesses--and obstruct legitimate,conservative-led progress. As a governing philosophy, liberalismhas been moribund: When Jimmy Carter and Bill Clinton managed towin the White House, they did so only by successfully avoiding theliberal stigma.

Today's ideological turmoil, however, has created an opening forideological renewal--specifically, liberalism's renewal as a vitalgoverning philosophy. A refashioned liberalism that incorporatedkey libertarian concerns and insights could make possible a trulyprogressive politics once again--not progressive in the sense ofhewing to a particular set of preexisting left-wing commitments,but rather in the sense of attuning itself to the objective dynamicsof U.S. social development. In other words, a politics that joinstogether under one banner the causes of both cultural and economicprogress.

Conservative fusionism, the defining ideology of the American rightfor a half-century, was premised on the idea that libertarianpolicies and traditional values are complementary goods. That ideastill retains at least an intermittent plausibility--for example,in the case for school choice as providing a refuge for sociallyconservative families. But an honest survey of the pasthalf-century shows a much better match between libertarian meansand progressive ends. Most obviously, many of the great libertarianbreakthroughs of the era--the fall of Jim Crow, the end ofcensorship, the legalization of abortion, the liberalization ofdivorce laws, the increased protection of the rights of theaccused, the reopening of immigration--were championed by thepolitical left.

Furthermore, it has become increasingly clear that capitalism'srelentless dynamism and wealth-creation--the institutionalsafeguarding of which lies at the heart of libertarianconcerns--have been pushing U.S. society in a decidedly progressivedirection. The civil rights movement was made possible by themechanization of agriculture, which pushed blacks off the farm andout of the South with immense consequences. Likewise, feminism wasencouraged by the mechanization of housework. Greater sexualopenness, as well as heightened interest in the naturalenvironment, are among the luxury goods that mass affluence haspurchased. So, too, are secularization and the general decline inreverence for authority, as rising education levels (prompted by theeconomy's growing demand for knowledge workers) have promotedincreasing independence of mind.

Yet progressives remain stubbornly resistant to embracingcapitalism, their great natural ally. In particular, they areunable to make their peace with the more competitive, moreentrepreneurial, more globalized U.S. economy that emerged out ofthe stagflationary mess of the 1970s. Knee-jerk antipathy tomarkets and the creative destruction they bring continues to bewidespread, and bitter denunciations of the unfairness of thesystem, mixed with nostalgia for the good old days of the BigGovernment/Big Labor/Big Business triumvirate, too often substitutefor clear thinking about realistic policy options.

Hence today's reactionary politics. Here, in the first decade of thetwenty- first century, the rival ideologies of left and right areboth pining for the '50s. The only difference is that liberals wantto work there, while conservatives want to go home there.

Can a new, progressive fusionism break out of the current rut?Liberals and libertarians already share considerable common ground,if they could just see past their differences to recognize it. Bothgenerally support a more open immigration policy. Both reject thereligious right's homophobia and blastocystophilia. Both are opento rethinking the country's draconian drug policies. Both seek toprotect the United States from terrorism without gratuitousencroachments on civil liberties or extensions of executive power.And underlying all these policy positions is a shared philosophicalcommitment to individual autonomy as a core political value.

The central challenge in cementing a new fusionist alliance--and,make no mistake, it is a daunting one--is to elaborate a vision ofeconomic policy, and policy reform, that both liberals andlibertarians can support. Here, again, both sides seek to promoteindividual autonomy; but their conceptions differ as to the chiefthreats to that autonomy. Libertarians worry primarily aboutconstraints imposed by government, while liberals worry most aboutconstraints imposed by birth and the play of economic forces.

The basic outlines of a viable compromise are clear enough. On theone hand, restrictions on competition and burdens on privateinitiative would be lifted to encourage vigorous economic growthand development. At the same time, some of the resultingwealth-creation would be used to improve safety-net policies thathelp those at the bottom and ameliorate the hardships inflicted byeconomic change. Translating such abstractions into workable policydoubtlessly would be contentious. But the most difficult thing hereis not working out details--it is agreeing to try. And, as part ofthat, agreeing on how to make the attempt: namely, by treatingeconomic policy issues as technical, empirical questions about whatdoes and doesn't work, rather than as tests of ideologicalcommitment.

Allow me to hazard a few more specific suggestions about what aliberal- libertarian entente on economics might look like. Let'sstart with the comparatively easy stuff: farm subsidies and othercorporate welfare. Progressive organizations like Oxfam and theEnvironmental Working Group have already joined with free-marketgroups in pushing for ag-policy reform. And it's no wonder, sincethe current subsidy programs act as a regressive tax on low-incomefamilies here at home while depressing prices for exporters in poorcountries abroad--and, to top it off, the lion's share of the lootgoes to big agribusiness, not family farmers. Meanwhile, thepresident of Cato and the executive director of the Sierra Clubhave come out together in favor of a zero- subsidy energy policy. Anascent fusionism on these issues already exists; it merely needsencouragement and emphasis.

Tax reform also offers the possibility of win-win bargains. Thebasic idea is simple: Shift taxes away from things we want more ofand onto things we want less of. Specifically, cut taxes on savingsand investment, cut payroll taxes on labor, and make up theshortfall with increased taxation of consumption. Go ahead, tax therich, but don't do it when they're being productive. Tax theminstead when they're splurging--by capping the deductibility ofhome-mortgage interest and tax incentives for purchasing healthinsurance. And tax everybody's energy consumption. All taxes imposecosts on the economy, but at least energy taxes carry the silverlining of encouraging conservation--plus, because such taxes exertdownward pressure on world oil prices, foreign oil monopolies wouldwind up getting stuck with part of the bill. Here again, fusionismis already in the air. Gore has proposed a straight-up swap ofpayroll taxes for carbon taxes, while Harvard economist (and formerchairman of George W. Bush's Council of Economic Advisers) GregMankiw has been pushing for an increase in the gasoline tax.

Entitlement reform is probably the most difficult problem facingwould-be fusionists. Here, libertarians' core commitments topersonal responsibility and economy in government run headlong intoprogressives' core commitments to social insurance and an adequatesafety net. Yet a fusionist synthesis is possible nevertheless, forthe simple reason that some kind of compromise is ultimatelyunavoidable.

With millions already dependent on the current programs, and withbaby boomers beginning to retire in just a couple of years,libertarians' dreams of dramatically shrinking federal spending areflatly unrealizable for many years to come. But liberals must facesome hard facts as well. Spending on Medicare, Medicaid, and SocialSecurity is now projected to increase from about 9 percent of GDPtoday to approximately 15 percent by 2030. Already, spending on theelderly consumes more than a third of the federal budget, and thefun is just getting started. If a fiscal crisis is to be averted,if economic growth is to be sustained, and if there is to be anymoney left to fund domestic programs for people under 65, thefederal safety net is going to have to be recast.

One possible path toward constructive compromise lies in taking theconcept of social insurance seriously. Insurance, to be worthy ofthe name, involves the pooling of funds to protect against riskycontingencies; "social" insurance fulfills the same basic functionbut makes the government the insurer. Unemployment insurance is aspecies of legitimate social insurance; wage insurance, much talkedabout, would also qualify. But Social Security and Medicare ascurrently administered are not social insurance in any meaningfulsense, because reaching retirement age and having health careexpenses in old age are not risky, insurable events. On thecontrary, in our affluent society, they are near certainties.

We can have true social insurance while maintaining fiscal soundnessand economic vibrancy: We can fund the Earned Income Tax Credit andother programs for the poor; we can fund unemployment insurance andother programs for people dislocated by capitalism's creativedestruction; we can fund public pensions for the indigent elderly;we can fund public health care for the poor and those faced withcatastrophic expenses. What we cannot do is continue to funduniversal entitlement programs that slosh money from one section ofthe middle class (people of working age) to another (theelderly)--not when most Americans are fully capable of saving fortheir own retirement needs. Instead, we need to move from thecurrent pay-as-you-go approach to a system in which private savingswould provide primary funding for the costs of old age.

These are only suggestions, meant to start conversations anddebates. If a new kind of fusionism is to have any chance forsuccess, it must aim beyond the specifics of particular,present-day controversies. It must be based on a real intellectualmovement, with intellectual coherence. A movement that, at thephilosophical level, seeks some kind of reconciliation between Hayekand Rawls.

If such an exploration could be launched, liberal and libertarianthinkers would begin talking with one another and engaging oneanother regularly. Over time, they would come to see themselves asjoined in a common endeavor. And, in the shared identity that wouldemerge, there would be plenty of room for continuing disagreements,even sharp ones, just as there is in any robust politicalmovement.

Can liberals and libertarians really learn to work together? I don'tknow, but their alternative is most probably to languishseparately.

By brink lindsey