Four years ago Barack Obama prepared to take the oath of office as a Democratic president, at a moment when free market ideology and Republican incumbency were disgraced by events. But a year that should have marked the end of the laissez-faire fantasy and the resurgence of effective government instead began an era of muddle through.
I have often quoted the British historian A. J. P. Taylor. Speaking of the revolutionary year in Europe, 1848, when democratic revolutions broke out only to be crushed, Taylor observed, "It was a turning point of history, but history didn't turn." In many respects, that also describes 2008.
The Republicans were voted out, but the big banks that caused the collapse were propped up rather than broken up. Their basic business model was allowed to continue, with taxpayers guaranteeing billion dollar paydays for corporate moguls. The economic rules of the game continued to tilt against regular working families, who are more precarious than ever. Obama took most of his economic advice from the very people whose belief in complete license for finance caused the collapse.
The administration played softball with a Republican opposition determined to wreck the recovery rather than allow Obama any victories. Democrats were almost as thoroughly in bed with Wall Street as Republicans. The mantle of populist frustration, absurdly, passed to the tea parties. Democrats, in the 2010 mid-term, suffered the worst defeat since 1938, a year when President Roosevelt listened to the Wall Street deficit hawks of that era.
But two years later, even muddle-through managed to beat muddled thinking. Mitt Romney divided his own party, committed one mistake after another; and despite one decent debate performance, he couldn't beat the incumbent even in a weak economy.
Now the political gods have granted President Obama a do-over. It remains to seen whether he will use it to maximum advantage.
If anything, circumstances at the start of Obama's second term are even more auspicious for the president and the Democrats than they were at the beginning of his first term, after Wall Street crashed the economy.
How far are Republicans out of touch with public sentiment? Let us count the ways.
The president, sensibly, has jettisoned the bad idea of a grand budget bargain that would result in serious cuts to Social Security and Medicare. He is trying to enlist Republicans to support a small bargain that will avert a contrived fiscal contraction -- no tax hikes on 98 percent of Americans, and the continuation of benefits for upwards of two million long-term unemployed.
The White House and Congress, having avoided the worst of the fiscal cliff, could then continue to debate other budget issues, like how to avoid the "sequester" of devastating automatic cuts and how to arrest the inflation in medical costs without cutting into medical care.
Most Americans oppose a tax increase on the middle class and support one for the rich. Obama was very effective on Meet the Press, reducing the budget debate to that simple essential issue.
But the Republicans in Congress are so dysfunctional that they may not be able to avert bearing responsibility for a tax hike that nobody wants. Even after President Obama tentatively offered to raise the income cut-off for a tax increase from $250,000 a year to $400,000 a year - limiting tax hikes to the top one percent, neither House Speaker John Boehner not Senate Republican Leader Mitch McConnell could bring himself to support it. Both prisoners of legislative caucuses even more extreme than they are.
Earlier in the negotiations, Obama had opened the door to adjusting the cost of living adjustment formula -- the so-called chained CPI -- as a backdoor way of cutting Social Security, in the context of a bigger budget deal. This was both a tactical and a policy mistake, and it gave Senate Republican Leader McConnell a basis for demanding more concessions from Democrats in return for agreeing to higher taxes on the rich. But Senate Democratic Leader Harry Reid, sensibly, wants nothing to do with any kind of cuts in Social Security, back door or front door.
The Democrats have the strongest hand when they keep the basic issues clear and simple. Eventually, the budget deal being offered by President Obama or something very much like it will be made. The only question is how much damage the Republicans do to themselves and the economy in the meantime. If no deal is struck before January 1 and taxes briefly go up on everybody while financial markets swoon, the pressure on Republicans only increases.
And that isn't all. In the new Congress, the Republicans will find themselves on the wrong side of other high-profile issues, ranging from gun control to immigration reform to same-sex marriage, as well as protecting Social Security and Medicare from cuts that are less about "saving" these programs than about saving tax breaks for the rich.
On all these issues, there is no question that President Obama will be on the right side of public opinion. The only question is whether he will lead public opinion.
Over the pre-New Years weekend, President Obama was sounding like a partisan, albeit a reluctant one. He should not be so reluctant. A radical, obstructionist, and dysfunctional Republican opposition in the House and Senate stands between the country and the policies that the economy needs and that the majority of Americans want.
The president was right to call the Republicans on taxes. As the New Year wears on, he should do the same on gun control, immigration reform, and gay and lesbian rights.
Obama wanted to be the president who would change the tone in Washington, meaning a more collaborative relationship with the Republicans. That was not to be. The Republicans would not allow it. Now, history invites Obama to change the tone in Washington by dispatching an extremist Republican Party to the far fringes of public discourse where it belongs.
Robert Kuttner is co-editor of The American Prospect and a Senior Fellow at Demos.