When Franklin Roosevelt was inaugurated, he had adopted the popular writer Stuart Chase’s phrase “a New Deal,” even though the contents of that New Deal were yet to be determined. In the absence of consensus on a similar term for the Age of Obama, we might draw on America’s tradition of contractarian language — the New Deal, the Fair Deal, the Square Deal, the New Covenant, the Contract With America — and call this new period the era of the New Contract. That serves as well as any other name as a title for a synthesis of the three new strategies that the U.S. needs in the next generation: the Next American System, a new economic growth agenda; the Citizen-Based Social Contract, the completion of America’s incomplete system of social insurance; and a New American Internationalism, based on a strategy of concert among the great powers. I don’t expect the New Contract to be adopted as proposed. My purpose is to start a debate, not offer a prophecy.

In this, the first of three essays, I will explore the Next American System. The Next American System is the 21st century equivalent of Henry Clay‘s and Abraham Lincoln’s American System, a program for modernizing the U.S. by promoting canals and railroads, steam-powered factories and national banking. It is also a version for our time of the program of the mid-20th century New Deal era for promoting economic recovery, exports, rural electrification, and highway construction.

Beginning in the 1970s, conservatives and centrist liberals shared the delusion that government was the problem and the self-regulating market the solution; neoliberal Democrats simply wanted more after-tax redistribution to compensate the market economy’s losers. The economic crisis, which is resulting in the partial nationalization of the banking sector and industries like automobile production, should forever discredit this kind of Reagan-to-Rubin market utopianism. The alternative is not socialism or a mere revival of Keynesianism. It is a return to old-fashioned American-style developmental capitalism, which existed in both Lincoln Republican and Roosevelt Democrat forms. In developmental capitalism the government is viewed not as a neutral umpire between American producers and foreign producers, but as the coach of a mostly private team — America Inc. Success in the game will make future debt-financed bailouts less likely and less necessary.

Beyond the stimulus, the priority of U.S. economic policy in the Obama years must be to avert future bubbles like the tech bubble and the housing bubble by addressing one of the root causes. That is the interaction between the chronic trade deficits of the U.S. and the chronic trade surpluses of China, Japan, Germany and the oil-exporting countries. The surplus U.S. dollars that those trade surplus nations have accumulated, invested in U.S. Treasury bills and other financial assets, made possible low U.S. interest rates, which in turn lowered the cost of borrowing to reckless speculators in tech stocks, mortgages and gold. Even a successful stimulus will merely return us to the world of chronic trade imbalances and the resulting bubbles and busts unless it is accompanied by a rebalancing of the world economy, in which the U.S. makes and exports more manufactured goods and the trade surplus nations export less and consume more. As Paul Krugman among others has argued, a “plausible route to sustained recovery would be a drastic reduction in the U.S. trade deficit, which soared at the same time the housing bubble was inflating. By selling more to other countries and spending more of our own income on U.S.-produced goods, we could get to full employment without a boom in either consumption or investment spending.”

While pressuring the surplus nations to end unfair mercantilism and increase consumption, the U.S. must shift capital and labor from low-value-added industries like restaurants and retail to high-value-added manufacturing, high-value services, and research and development. Export-oriented, import-competing industries like automobiles and aerospace tend to have much higher productivity growth and R&D spending than other industries. Manufacturing-led growth for both the U.S. and global markets can melt away the debt legacy of today’s economic emergency more rapidly.

In the new era of American developmental capitalism, the tax code will have two purposes — raising adequate revenue and promoting “onshoring” or the growth of high-value-added production inside U.S. borders, by domestic and foreign companies alike. To encourage onshoring, the U.S. should lower or abolish its high corporate income tax, one of the few sound ideas of the American right. This would stimulate foreign direct investment in U.S. production. It would also reduce the incentive for U.S. companies to engage in tax avoidance schemes.

If the corporate income tax remains, then, as the economist Ralph Gomory has suggested, it should be made variable and lowered for high-value-added production inside the U.S. Alternately, the U.S. could replace the corporate income tax with a value-added tax (VAT). This would level the playing field for American companies. They are punished by de facto tariffs in the form of VATs in Europe and Asia, even as European and Asian exporters get government subsidies in the form of VAT rebates from their governments. In addition, a “Gomory VAT” could be reduced for high-value-added U.S. production, regardless of the nationality of the company or investors.

Adding a VAT to the mix of federal taxes would shift the U.S. toward the European mix of national consumption, payroll and income taxes. In the next half-century, even after runaway healthcare costs are controlled, the U.S. government share of GDP, while remaining relatively low by international standards, needs to expand by several percentage points to pay for universal healthcare, adequate retirement and a permanently higher level of infrastructure investment. Invisible taxes like payroll and consumption taxes are a better way to finance modern big government than highly visible taxes like income taxes and property taxes. Because they do not cause “sticker shock” to check writers around April 15 or when mortgage payments are due, they are harder for politicians to inveigh against on the campaign trail. Consumption and payroll taxes tend to be regressive in their effect on middle- and low-income people. But the exemption of necessities from consumption taxes, payroll tax rebates or (better yet) allowing biweekly credits against payroll tax withholding, an idea I have suggested elsewhere, can make these taxes more progressive.

To promote high-tech domestic manufacturing as the engine that will drive U.S. economic growth, America’s energy policy must reduce greenhouse gas emissions in an industry-friendly way. This can be done by means of a federal oil and gas trigger-price system that provides stable energy prices for industry even as it supports alternate energy development. If the price of gas falls below a floor, gas taxes will increase, so that long-term investments in alternative energy sources will not be wiped out. If the price of gas rises above a ceiling, then a new U.S. civilian strategic petroleum reserve will flood the market to lower them.

Transportation is responsible for two-thirds of U.S. petroleum consumption. The answer is not to throw money at crash programs for this or that single technology — ethanol, solar, wind. It is to build an intercontinental electric freight and passenger rail system to reduce reliance on trucks, cars and airplanes — and a smart, green, national electric grid, open to a variety of clean energy sources, that can power the electric trains and, perhaps, in time, a hybrid or purely electric automobile fleet.

“Internal improvements” in the form of federally financed canals and railroads were part of the Clay-Lincoln American System. Long-overdue infrastructure investment must be part of the Next American System — not only “shovel-ready projects” as part of the short-term stimulus, but a permanent commitment to green and high-tech energy, transportation and telecommunications grids. These are classic capital improvements that should be paid for by borrowing rather than upfront spending. President Obama supports a National Infrastructure Reinvestment Bank. Allowing such an infrastructure bank and similar federal economic development agencies to issue bonds, as state and local governments and agencies routinely do, would permit the federal government to channel private international capital and even money from foreign sovereign wealth funds into productivity-enhancing public investments, without selling or leasing U.S. infrastructure assets to foreign corporations or governments. (Except in emergencies like the present, ordinary government expenditures like defense and social insurance should be paid for out of current taxation, not financed by debt.)

Only a minority of Americans are likely to be employed directly in manufacturing. Even so, a new American developmental capitalism requires an active federal labor market policy that aims to shift labor out of low-productivity industries like retail and restaurants and into the goods-producing export sector and its supporting industries. If labor is to be diverted from wasteful low-productivity jobs into the traded-goods export sector, service sector wages need to be much higher. Congress should pass pro-union legislation, but at best it would take decades to rebuild the labor movement in the private sector. We don’t have the time. The federal government should intervene directly, gradually raising the minimum wage until it is an inflation-adjusted living wage of $10 or more an hour.

Wouldn’t a high minimum-wage policy destroy some jobs in the service sector? Let’s hope so. Minimizing the number of menial jobs — gradually, not all at once–is the whole point. There would, however, be no wave of outsourcing as a result of higher service sector wages, because most nontraded service sector jobs like nursing can be performed only in the U.S. One beneficial side effect of this policy would be an incentive to automate backward, labor-intensive sectors like hospitals and home construction. Another would be increased demand for U.S.-made goods by well-paid American workers. Higher wages need not lead to inflation as long as productivity growth increases — in part as a result of the substitution of capital for more expensive labor

To further discourage employment in less-productive sectors, Congress should impose a federal servant tax on the employers of nannies, maids, gardeners, chauffeurs, restaurant and hotel workers and other menial servants in luxury industries. That labor could be more productively employed to the benefit of the nation in the export sector or non-luxury services like healthcare, elder care and education. We need more machinists and fewer maids. In a democratic republic, even affluent citizens should not be too good to take out the trash and mop the floor themselves. Middle-class and low-income Americans unable to afford necessary services like nursing could be given vouchers or tax credits, or those could be publicly provided.

The American growth agenda requires an immigration policy in the national interest. A policy of enhancing productivity growth by gradually raising wages in the service sector cannot succeed if unpatriotic employers can sabotage it. This means eliminating the ability of employers to pit illegal aliens or indentured servants like H-1B’s against American citizens and legal immigrants. Most of today’s illegal immigrants should be quickly made citizens with full rights — but only after illegal immigration has been reduced to a trickle, by a national ID card system, severe employer sanctions and a combination of border fencing and enhanced border patrols. Meanwhile, indentured servitude in the U.S. should be outlawed by abolishing programs like the H-1B visa, which makes foreign workers dependent on their employers, and replacing it with a skills quota like those of the U.K. and Canada. Unlike H-1B’s, qualified applicants would get green cards at once and compete on fair terms with American workers and legal permanent residents. Under no circumstances should the U.S. Chamber of Commerce be given its sinister “guest worker” program, which is really a colossal serf-worker program.

Most of these sensible immigration reforms were recommended in 1996 by President Clinton’s Commission on Immigration Reform, headed by Barbara Jordan. President Obama and Congress should abandon the misguided Kennedy-McCain comprehensive immigration reform approach, with its dangerous concessions to the cheap-labor lobby, and move quickly to enact the decade-old recommendations of the Jordan Commission instead.

I’ll conclude this discussion of a new growth agenda with the words of Barbara Jordan at the Democratic National Convention in 1992: “Why not change from a Party with a reputation of tax and spend to one with a reputation of investment and growth? … A growth economy is a must. We can grow the economy and sustain an improved environment at the same time. When the economy is growing and we are taking care of our air and soil and water, we all prosper. And we can do all of that.”

First, politics. The need to co-opt Republicans explains the Obama team’s inclusion of middle-class tax cuts as part of the proposed package. While it makes no sense to raise taxes during a recession, tax-cut Keynesianism has repeatedly failed and there is no need to repeat the experiment. The majority Democrats should find another way to buy off congressional conservatives and libertarians whose worldview is as bankrupt as the economy.

Then there are special interests. Infrastructure spending should be part of the package, and “shovel-ready” projects at the state and local level should get some funding. But modernizing American infrastructure requires two major reforms. First, decisions about infrastructure spending need to be moved from congressional pork-barrel politics to the independent, nonpartisan National Infrastructure and Reinvestment Bank that Barack Obama favors. Second, there needs to be federal, state and local collaboration on a generation-long project to modernize America’s transportation, energy and communications grids. These are long-term programs, and exaggerating what can be done by a crash infrastructure program will merely create an anti-infrastructure backlash in a few years, particularly if the money is seen to have been wasted on local pet projects.

Finally, there is ideology — in this case, liberal ideology. Many liberal opponents of sprawl are arguing that this short-term infrastructure program should somehow be used to turn America from a nation of suburban car-drivers to a nation of apartment dwellers using mass transit. Whatever one thinks of the war on sprawl, it’s absurd to think that a few hundred billion dollars as part of a stimulus package is going to significantly alter American driving and working patterns. It’s equally naive to think that a significant dent in global warming can be made by devoting a portion of stimulus money to projects like green building weatherization programs, laudable as they may be. Indeed, the green parts of the proposed stimulus package look suspiciously like “greenwash,” an attempt to co-opt environmentalists, just as the tax-cut elements look like an attempt to buy right-wing support.

The purpose of the stimulus — getting money into the economy, fast — is lost, if it turns into the world’s biggest ordinary appropriations bill, with something to placate every lobby and sect inside the Beltway. The money should be sent out the door as quickly as possible and spread around with the fewest possible restrictions on its use and a minimum of micromanagement by Congress. That doesn’t require a Troubled Assets Relief Program czar, or a White House, with arbitrary discretion. Rather, it means measures like unrestricted grants to states, cities and counties to refill depleted treasuries and to be spent on public services and infrastructure; extensions of unemployment insurance; temporary tax rebates, rather than permanent tax cuts, that people can spend as they please; and timely bailouts to finance and industry that are not conditioned on fulfilling a cobbled-together list of political demands, which may be reasonable but which can be pushed later. I, for one, would have doubts about a small green car that Washington hastily blackmailed Detroit into building as a condition of an emergency bailout.

A trillion-dollar stimulus, yes. A trillion-page stimulus bill, no.

Phil Angelides is chairman of the Apollo Alliance. He was the California state treasurer from 1999-2007 and the Democratic nominee for governor of California in 2006.

There is no doubt that our economy needs an immediate shot in the arm. And there’s also no doubt that the recovery plan must not only build economic prosperity, but climate stability and energy security as well. The financial sector collapse provides the opportunity for America to rethink how we do business — to move toward a more sustainable economy that creates broadly shared prosperity.

The Apollo Alliance has proposed an “Apollo Economic Recovery Act” to give a critical jolt to America’s economy and support American businesses and workers so that they can set their feet firmly on the path to the clean energy economy. Our plan would invest $50 billion immediately to create or retain over 650,000 direct jobs and an additional 1.3 million indirect jobs in communities around the country, and would retrain at least 300,000 more Americans to participate in the clean energy economy.

Our buildings, transportation network and power grid are the backbone of our economy. Immediate investment to rebuild our infrastructure to be greener and more efficient will create hundreds of thousands of jobs today, save billions of dollars in energy costs tomorrow, and reduce our carbon footprint over the long term.

Apollo has advocated the following specific, immediate investments that, among others, will result in a “green” payday for our environment and our economy: $6 billion in Energy Efficiency and Conservation Block Grants to be used by cities, counties and states for energy efficiency and renewable energy programs; $10 billion to upgrade the transmission grid to better connect consumers and renewable energy resources and improve reliability and efficiency; $6 billion in ready-to-go public transit projects across the country including intracity rail, regional rail and bicycle/pedestrian facilities; $8 billion to fix existing bridges and roads that are crumbling across America — encouraging infill development that reduces sprawl.

But we also need to think beyond the physical infrastructure of transit and buildings and prioritize investments in America’s workers and technological innovators as well.

The opportunities for jobs and businesses in the clean energy economy are abundant, and American workers can’t wait to roll up their sleeves and get to work. But to tap the immense productivity of our people, we need to invest in high-quality green-collar job training programs that connect clean energy employers with unemployed and underemployed Americans who are hurting most from the current economic crisis.

The Apollo Economic Recovery Act calls for investing in the Green Jobs Act for grants to prepare workers for green-collar jobs, and to move low-income workers out of poverty and into family-supporting careers; creating a civilian service program of young adults and seniors to give homes in low-income communities an energy makeover; and providing Clean Energy Tomorrow scholarships in science, math and engineering to give America the homegrown talent it will need to be the world’s leader in clean energy technology.  

The most shocking thing about the alliance between the Southern states and America’s friendly but earnest economic rivals to destroy America’s most important industry is the fact that so few people find it shocking. Contrast the U.S. with the European Union. The nation-states of the European Union collaborate with each other in order to compete against foreign economic rivals, including the U.S., Japan, and China. By contrast, many states, particularly in the South, collaborate with foreign economic rivals of the U.S. in order to compete against other American states. Any British or French or German leader who proposed collaborating with Japan or the U.S. in order to wipe out industry and destroy jobs in neighboring EU member states would be jeered out of office. But it is perfectly acceptable for American states to connive with Asian and European countries in the destruction of industry elsewhere in the U.S.

Perhaps the lack of outrage over race-to-the-bottom rivalries among U.S. states and regions can be attributed to the longevity of this familiar Southern economic strategy. In the early 20th century, the Southern states were the first to adopt conscious statewide economic development policies, which then as now meant poaching industries from New England and the Midwest where wages and public spending and regulation were greater. That’s how the South took the textile industry from New England, before losing it to lower-wage Asia. Now with the help of Nissan, Toyota, and BMW, the South is trying to replace Detroit as the center of U.S. automobile production, using low wages, anti-union laws, and low taxes to benefit from the outsourcing of industry from societies more advanced than the South, like Japan and Germany. The economic Axis is collaborating with the neo-Confederates against their common opponent — the American Union. If they succeed, the losers will be not only non-Southern regions in the U.S., but the majority of Southerners of all races, whose interest in decent wages, good education, and adequate public services have almost always been sacrificed to the greed of the well-connected few by Southern statehouse gangs.

“A house divided against itself cannot stand.” At each of the defining crises in American history, a major expansion of federal authority was necessary to overcome a division between North and South that threatened the future of the U.S. as a democratic, middle-class nation. The division between slave and free states was overcome by the defeat of the Confederacy and the Reconstruction amendments that abolished slavery and established national citizenship for the first time. During the New Deal era, the enormous gap between the agrarian South and West and the industrial Northeast was overcome by federal programs like rural electrification and highway building, federal regulation, and federal social insurance.

Today the division is no longer between slave and free states, or agrarian and industrial states, but between two models of industrial society — the Northern model, based on adequate public service funding and taxation and unionization, and the Southern model, based on low-tax, low-service government and low-wage, non-unionized, easily exploited labor. If the industrial North and the industrial South compete for global capital investment, then the industrial South is likely to prevail, because Northern advantages in the form of a skilled workforce and superior public services are unlikely to overcome the South’s advantages of low wages and low taxes and state and local tax subsidies. The result, sooner or later, will be the Southernization of the North and Midwest, as states in the historic middle-class core of the U.S. are forced by economic pressure to emulate the arrangements of Alabama and Mississippi and Texas.

The alternative to the Southernization of the U.S. is the Americanization of the South — a process that was not completed by Reconstruction and the New Deal and the Civil Rights era, which can be thought of as the Second Reconstruction. The non-Southern states, through their representatives in Congress and the executive branch, and with the help of enlightened Southerners, need to use the power of the federal government to put a stop to the Southern conservative race-to-the-bottom strategy once and for all.

Call it the Third Reconstruction. The first step is to end the race to the bottom in wages and regulation, by national action. The national minimum wage should be gradually raised until it is a living wage, of $10 to $12 an hour, and it should be adjusted for inflation. At the same time, federal regulations should set a higher floor with respect to worker safety regulations, environmental regulations, and others, preventing America’s own internal rogue states from gaining any advantages by flouting national standards. Most Southern politicians and business leaders will howl that this will bankrupt the South. That’s what they said about the abolition of slavery, child labor, and the convict lease system, too. The South was a better place to live after those reforms, and it will be a better place to live when there is a living wage throughout the South.

Second, the race to the bottom in taxes and public services must be stopped by means of federal revenue-sharing. In most industrial democracies, the central government contributes much of the money for local services. In the 21st century U.S., too, a much greater percentage of state and local public service funding should come from the federal government, in the form of general revenue sharing (a popular and effective program abolished by Reagan) as well as special purpose grants and loans for some needs like infrastructure.

This means that more tax money, not less, will flow from blue states to red states. But it is the price the blue states must pay for the survival of their own way of life in their own regions. Ruthless Southern state governments have been willing to underfund public education and other public services, while lavishing hundreds of millions of dollars to bribe Nissan, Toyota, and other foreign corporations into opening up factories in their borders. The Southern states cannot be forced to raise state and local taxes. But federal revenue-sharing can raise the level of public services in Mississippi and Louisiana, thereby leveling the playing field by leveling up, not down. Nor is revenue-sharing unfair to the blue state rich, because the federal government taxes the rich everywhere, including the rich few in poor states. Moreover, the gradual equalization of public service spending nationwide might be compensated for by reductions in high blue-state tax levels.

Third, federal-state collaboration in national economic development must replace individual state economic development systems designed to promote one state at the expense of another. Most states today have complex and sophisticated economic development systems, including agencies like infrastructure banks and municipal bonds to pay for infrastructure and sometimes industry. The problem is not their existence, but rather the absence of an overarching federal system, modeled on existing state systems but on a larger scale, in which each of the state economic development systems can play a constructive rather than destructive role. A national infrastructure bank, for example, could channel foreign investment to state infrastructure banks, without subordinating America’s economic interest to that of foreign nations or allowing foreign companies like Toyota and Nissan to pit one American state against others.

These and similar measures adding up to a Third Reconstruction would not turn Mississippi into Vermont. But they would level the national playing field upward, making it more difficult for Southern elites to use misgovernment and underdevelopment as assets in luring investment. And while Southern business elites could be counted on initially to resist a higher national minimum wage, revenue sharing and the funding of state and local economic development systems by new national economic development agencies in time would create a new kind of Southern business elite with a stake in a flourishing national economy and an enlightened, activist federal government. Over time, reactionary conservatives might be marginalized even in Southern business and political circles. The greatest beneficiaries of the Third Reconstruction, as of the First and Second, would be Southerners themselves.

The Southern conservatives of the GOP are not irrational when they denounce the very idea of a national economic strategy as “socialism” or “industrial policy” while each of their states pursues its own “socialist industrial policy” within its state borders. They are being strategic. They understand their interests, as they define them. A U.S. economic development strategy would make it more difficult for individual state governments and their crony capitalist allies to engage in the beggar-thy-neighbor policies that the Southern elites have specialized in for nearly a century. And a national economic development system would thwart the ultimate goal of the extreme right in America — the leveling down of the entire U.S. to the South’s inhumane and primitive standards.

I can hear the objections already: “We agree that the South’s beggar-thy-neighbor and race-to-the-bottom strategies should be thwarted — but the methods that you suggest, a high national minimum wage, greater equalization of state and local public spending by increased federal revenue-sharing, and a national economic development framework built to align the existing state economic development systems are politically too difficult to achieve.” That may be true. But if it is true, then the neo-Confederates and their strategy of turning first the South and then the entire U.S. into a low-wage export platform for the outsourced industries of advanced industrial societies in Asia and Europe will prevail. If a non-Southern majority, controlling the White House and Congress, with the support of at least some moderate Republicans in other regions, along with the support of Southern populists and progressives, is too timid to take on a Southern oligarchy that is willing to wreck the national economy to promote their local economic empires, then the neo-Confederates have already prevailed.

The choice is simple — the reconstruction of the South, or the deconstruction of the U.S. economy.

Obama’s priorities make excellent sense. After emergency measures to stabilize the economy, public investment aimed at accelerating U.S. economic growth should be domestic reform priority No. 1. That’s because raising the rate of economic growth is the reform that makes all subsequent reforms easier. Accelerating the long-term growth of the productive economy will get us out of the recession faster, refill depleted federal, state and local government funding for public services sooner, and permit larger investments to be made with the same or lower tax rates in areas of needed reform like social insurance, energy and education. And the more rapidly the economy grows, the more quickly the colossal but necessary deficits the U.S. is now running up will melt away.

Note, however, that Obama’s stated priorities take the form of long-range public investments. True, the next stimulus package will and should contain massive aid to states and localities to spend on ready-to-go infrastructure projects like roads, mass transit and water systems, in addition to funds for the public services provided by state and local governments whose revenues have collapsed. We have learned our lesson as a nation from the bubble economy of the last generation. Public investment in necessary public goods, not bubble-inducing private consumer spending, should lead the way out of this recession.

Obama, however, is looking beyond a recovery that is still uncomfortably far off to the long-run health of the American economy. Public and private investment in energy efficiency, infrastructure, schools and the information highway are essential for sustainable economic growth and international competitiveness. Since the 1960s, however, these public goods have been underfunded, and absent structural reforms of the way Congress does the nation’s business these priorities probably will continue to be underfunded. Devoting short-term stimulus spending to infrastructure and other needs will not address the chronic problem of underfunding.

Here the states can show the federal government the way. Most states, counties and cities, directly or through their agencies, issue municipal bonds to fund long-term, large-scale capital improvement projects like power plants, highways and school buildings. Usually these municipal bonds are tax-free. Most are either “general obligation” bonds, repayable from future general taxation, or “revenue bonds,” repayable from a specific stream of income, like highway tolls.

When paying for expensive projects with long-term payoffs, it makes sense for governments, like corporations and nonprofits and ordinary individuals, to borrow the money rather than to pay the entire cost upfront out of current revenues. Raising money by means of tax-exempt bonds that are paid back over years or decades permits a government to spread the costs of roads, schools and energy grids among the beneficiaries over many years, instead of forcing today’s taxpayers to pay the entire cost of a project that will mostly benefit future taxpayers.

States, counties and cities have been issuing debt to pay for capital projects for generations. It is time that our antiquated federal government be reformed, to give it the same capability. Doing so need not drive up deficit spending for noncapital projects. Indeed, most states combine bond-based debt financing for capital projects with balanced-budget rules for other spending. If deficit hawks complain, they should be asked whether they paid for their cars and houses upfront in cash.

Today the federal government, unlike state and local governments, lacks the capability to borrow money by issuing bonds for particular capital improvement projects like Obama’s priorities of infrastructure, school buildings, broadband and energy-efficient retrofitting. Highway maintenance and construction, for example, is paid for by the gasoline tax. The federal government issues bonds to pay for overall deficit spending, but it does not issue special bonds to pay for particular projects.

One result of the federal government’s archaic lack of special-purpose bonding capability has been underinvestment in public goods like infrastructure, which have large upfront costs but which spread their benefits slowly over time. For decades, Congress has sacrificed infrastructure spending to other short-term goals. That is no surprise. State governments would probably underinvest in infrastructure and economic development as well, if they lacked the capability to issue municipal bonds.

Obama knows this. That is why, during the campaign, he called for the creation of a national infrastructure bank: “For our economy, our safety, and our workers, we have to rebuild America. I’m proposing a National Infrastructure Reinvestment Bank that will invest $60 billion over ten years. This investment will multiply into almost half a trillion dollars of additional infrastructure spending and generate nearly two million new jobs — many of them in the construction industry that’s been hard hit by this housing crisis. The repairs will be determined not by politics, but by what will maximize our safety and homeland security; what will keep our environment clean and our economy strong. And we’ll fund this bank by ending this war in Iraq. It’s time to stop spending billions of dollars a week trying to put Iraq back together and start spending the money on putting America back together instead.”

As Obama recognized, a national infrastructure bank would accomplish two goals at once. It would rely on bonds to provide adequate funding for major infrastructure investments without requiring massive initial payments. And an independent, nonpartisan national infrastructure bank, by choosing projects on the basis of merit, could achieve Obama’s insistence that decisions should “be determined not by politics, but by what will maximize our safety and homeland security, what will keep our environment clean and our economy strong.” The president-elect repeated his determination to remove pork-barrel politics from public investment decisions in an interview on Dec. 7 on NBC’s “Meet the Press”: “What we need to do is examine: What are the projects where we’re going to get the most bang for the buck? How are we going to make sure taxpayers are protected? You know, the days of just pork coming out of Congress as a strategy, those days are over.”

In order to achieve the economic goals the president-elect has announced, the new administration and Congress should act rapidly to create a national infrastructure bank. Sens. Dodd and Hagel and Reps. DeLauro and Frank, among others, have introduced bills with that end in mind. Congressional Democrats and thoughtful Republicans quickly should settle on a single national infrastructure bank bill and send it to the new president’s desk for his signature. Once it is up and running, the national infrastructure bank can ensure that funding for long-term public investment in transportation, communications and sanitation will not collapse, once the present economic emergency is over. Creating an independent national infrastructure bank with the power to issue the equivalent of municipal bonds is the single most important strategic reform that President Obama and the Democratic Congress can undertake in the first hundred days.

I’ve always been uncomfortable with this rather soulless and manipulative exercise in rebranding, for a number of reasons.

Objection No. 1. Futility. It’s not the name of the center-left that the right objects to, but the policies and values. Suppose the defeated Republican minority decided that it needed to rebrand itself by replacing “conservatism” with “traditionalism.” Would anybody on the left or center be fooled, if traditionalism was defined by exactly the same synthesis of free-market radicalism, anti-Darwinism and support for a neoconservative foreign policy?

The center-left is going to be trashed by the right, whether the right adopts one term or another. If conservatives continue to call the new progressives “liberals,” then the right wins, by implying, correctly, that progressives are liberals who are ashamed to admit what they really are. If, on the other hand, “liberal” becomes as extinct as “Whig” and conservatives agree to use the term “progressive,” then what has the center-left gained? Nothing. The same conservatives who formerly denounced liberals as tax-and-spend appeasers would now denounce progressives as tax-and-spend appeasers. What then? Would wimpy progressives then abandon progressivism and hope to avoid the wrath of Limbaugh by disguising themselves with a new alias — reformists, or pragmatists? Your enemies will caricature you, no matter what you call yourself.

Objection No. 2. Progressivism as neoliberalism. Some have sought to distinguish progressivism from liberalism in content. This was the project of the disproportionately Southern “neoliberals” like Bill Clinton and Al Gore and Dave McCurdy and the Democratic Leadership Council and Progressive Policy Institute in the 1980s and 1990s. Instead of using the obvious term, “moderate” or “centrist,” they sought to co-opt the term “progressive,” even though they weren’t very. In their analysis, liberalism was too identified in the public mind with organized labor and big-city machine bosses like the first Mayor Daley. They struggled and largely succeeded in creating a new Democratic Party based among upscale suburban whites and financed by the Industry Formerly Known as Wall Street rather than private-sector labor unions.

Fine by me. While the New Democrats were too conservative for my taste in some ways, a majority party has multiple factions or wings, and in the late 20th century the only way that the Democratic Party could grow was by appealing to centrists as well as liberals. If the DLC had been granted exclusive franchising rights for the term “progressive,” then it would have meant simply the pro-corporate right wing of the Democratic Party, whose left wing was pro-labor and populist. We would then be speaking of conflict and also collaboration within the Democratic coalition between liberals on the left and progressives on the right.

Unfortunately, Democrats on the left insisted on calling themselves progressive too. Instead of meaning a moderate Democrat, progressive came to refer to any Democrat. So by the 1990s anti-labor, pro-NAFTA progressives were battling pro-labor, anti-NAFTA progressives. Fiscal conservatives who wanted to invade Iraq were progressives — and so were democratic socialists. The left, center and right of the Democratic Party simultaneously gave up the name of the tradition of FDR, Truman, Kennedy, Johnson and Humphrey, all because Ronald Reagan and Rush Limbaugh denounced liberals.

Objection No. 3. Progressivism as the radical left. What made all of this even more confusing was the fact that the term “progressive,” which center-right Democrats like Will Marshall of the Progressive Policy Institute sought to capture, had been identified with Marxists and other groups on the extreme left during the previous half-century. If you were a progressive in the ’30s and ’40s, like many supporters of Henry Wallace‘s Progressive Party, you were likely to find redeeming qualities in the Soviet Union’s social experiment and to think that FDR was a pawn of the capitalists. If you were a progressive in the ’60s and ’70s, you were likely to think that Truman and Johnson were warmongering “corporate liberals” under the control of the “military-industrial complex” and that the Democrats and Republicans were indistinguishable. For the moderate and conservative Democrats of the DLC to call themselves the new progressives was the equivalent of moderate, secular Republicans calling themselves the new fundamentalists.

At least the far-left progressives were honest. They genuinely despised the mid-century American liberals, whom they viewed simply as another species of bourgeois imperialists. This is another one of the reasons I dislike the term “progressive.” Why should I call myself by the name preferred by deluded radicals who despised the New Deal and the Great Society liberals I admire? Why share a label with anyone who romanticized Ho Chi Minh or Fidel Castro?

Objection No. 4. The early 20th century progressives. Now that “progressive” is widely used as a euphemism for “liberal,” there is a natural tendency to link the progressives of the early 2000s with the Progressives of the early 1900s, like Woodrow Wilson and John Dewey. The problem is that while the modern center-left is the child of mid-century Roosevelt-Truman-Kennedy-Johnson liberalism, it is only the grandchild — or perhaps grand-nephew or grand-niece, twice removed — of the Progressives of the 1900s.

Hubert Humphrey, liberal, championed integration and federal enforcement of civil rights. Woodrow Wilson, Progressive, resegregated Washington, D.C. The Warren Court liberalized abortion and censorship laws. The early 20th century Progressives campaigned to outlaw alcohol and outlaw abortion and many of them favored eugenic sterilization of the “feeble-minded.” New Deal liberals celebrated Americans of immigrant stock. Progressives like Woodrow Wilson and Theodore Roosevelt were horrified by “hyphenated Americans.” Roosevelt and Truman inherited a disturbing progressive fondness for executive prerogative but by the 1960s and 1970s civil libertarianism and a renewed interest in checks on the imperial presidency became part of the liberal tradition.

Today’s center-left Americans can find a usable past in the liberals of the New Deal and Civil Rights eras. They will search in vain for philosophical ancestors among the snobbish, nativist, technocratic, authoritarian, segregationist Progressives of the early 20th century. Which leads me to:

Objection No. 5. It’s too German. The term “progressive” entered English from 19th century German politics. The first progressive party in the world was the Deutsche Fortschrittspartei, founded in Prussia in 1861 (“Fortschritt” means “progress”). The American Progressives like Woodrow Wilson who translated the term into English believed that Bismarck’s Imperial Germany was superior in many ways to the United States and Britain. They sought to graft German-style bureaucracy onto what they considered to be an antiquated political system crippled by 18th century Enlightenment notions of local government and civil rights. In other words, they saw statist, technocratic German progressivism as an advance beyond Anglo-American liberalism.

The older Anglo-American tradition of Abraham Lincoln and Frederick Douglass, of the Founders and John Locke, is called “liberal” with good reason. “Liberal” comes from the Latin word for “free.” The antithesis to liberalism is servility. A liberal society is one in which everyone is free and nobody is a serf or slave. In the late 19th and 20th centuries, the New Liberals in Britain and the New Deal liberals in the U.S. saw the need for social insurance and national regulation of business. But social welfare programs were added to civil liberties, which are what define liberalism. The radical left in the old days could excuse Fidel Castro’s tyranny because of his free hospitals, but no genuine American liberal believes in a tradeoff between civil liberties and social welfare. You can have universal healthcare and personal liberty, but if you have to choose, personal liberty is more important. On that point, liberals of the left, who don’t think you have to choose, agree with libertarians.

In his book “Freedom’s Power,” Paul Starr says that he prefers the term “liberal” to “progressive” because modern liberals are the heirs, not just of 20th century welfare state liberalism, but of centuries of Anglo-American liberalism, going back before the American Founding to Britain’s Glorious Revolution of 1689. He is right, I think, to insist that the history of evolving personal and political freedom should not be ceded to libertarians, who represent the extreme right wing of liberalism. American liberals, it might be said, are Lockean libertarians who recognize the need for social insurance and regulation; they have never had anything philosophically in common with Marxists or post-Marxist social democrats in Europe, support for universal healthcare and various public services notwithstanding.

Objection No. 6. “Progressive” implies progress. Like “conservative,” “progressive” is a term associated with a particular view of history. The conservative wants to stand still or go back; the progressive wants to move forward. Progressivism implies a view of history as perpetual progress; conservatism, a view of history as decline from a better world in the past. Needless to say, nobody who actually thinks this way could function. In the real world, self-described progressives aren’t mindlessly in favor of everything new, just as self-described conservatives aren’t indiscriminately in favor of everything that’s old.

Unlike progressivism and conservatism, liberalism is not a name that implies a view that things are either getting better or getting worse. Liberalism is a theory of a social order based on individual civil liberties, private property, popular sovereignty and democratic republican government. Liberals believe that liberal society is the best kind, but they are not committed to believing in universal progress toward liberalism, much less universal progress in general. Many liberals have been skeptical about the idea of unlimited progress and have believed that a liberal society is difficult to establish and easily changed into a nonliberal society.

Because liberalism refers to a particular kind of social order, and does not depend on any implied relationship of the present to the past or future, liberals can be either progressive or conservative, depending on whether they seek to move toward a more liberal system or to maintain a liberal system that already exists. For that matter, liberals can be revolutionary, if creating or establishing a liberal society requires a violent revolution. Liberals can even be counterrevolutionary, if they are defending a liberal society from revolutionary radicals, including anti-liberal revolutionaries of the radical right like Timothy McVeigh or Muslim jihadists.

Those, then, are six arguments in favor of using liberalism to describe the center-left. I’ve reserved the seventh for last. The word “liberal” is a badge of pride. What is more embarrassing in 2008, to be associated with self-described liberals like Roosevelt and Johnson, Martin Luther King Jr. and Barbara Jordan, or with conservatives like Reagan and George W. Bush and Tom DeLay? I much prefer the public philosophy of the mid-century liberals, for all their blunders and shortcomings, to that of the three movements in American history that have called themselves progressive: the moderate-to-conservative progressives of the Democratic Leadership Council in the 1980s and 1990s; the deluded pro-Soviet progressives of the mid-20th century; and the Anglo-Protestant elite progressives of the 1900s, who admired Bismarck’s Germany and wanted to keep out immigrants and sterilize the native poor.

But don’t listen to me. Listen to John F. Kennedy, accepting the endorsement of his presidential candidacy by New York’s Liberal Party on Sept. 14, 1960:

What do our opponents mean when they apply to us the label “Liberal?” If by “Liberal” they mean, as they want people to believe, someone who is soft in his policies abroad, who is against local government, and who is unconcerned with the taxpayer’s dollar, then the record of this party and its members demonstrate that we are not that kind of “Liberal.” But if by a “Liberal” they mean someone who looks ahead and not behind, someone who welcomes new ideas without rigid reactions, someone who cares about the welfare of the people — their health, their housing, their schools, their jobs, their civil rights, and their civil liberties — someone who believes we can break through the stalemate and suspicions that grip us in our policies abroad, if that is what they mean by a “Liberal,” then I’m proud to say I’m a “Liberal.”