The internet is abuzz with controversy over Markos Moulitsas' (A.K.A. - DailyKos) argument for "libertarian Democrats," the claim that the Democratic Party, if given power, is likely to promote libertarian values, or at least do so to a much greater extent than Republicans have. Bruce Reed of the Democratic Leadership Council, and liberal economist Mark Thoma have tried to buttress Kos' case with additional arguments of their own.
I agree with the libertarian Democrats enough to believe that a limited Democratic victory in the 2006 elections will be good for libertarian values on balance. This is not because I have any confidence in the Democrats per se, however, but because I believe that divided government can limit the growth of the state (as it did in the 80s and 90s) and that a Democratic victory is necessary to punish Republicans for their many errors and sins.
I am skeptical, however, of Kos' broader claim that Democrats are truly the party of limited government, or are likely to be more of one than the Republicans. There are two big flaws in the case: The Democrats' position on government spending, and their heavy dependence on political support from public employees' unions.
Kos and his allies in this debate have rightly focused on the Republican's massively profligate spending over the last few years. And I too am more than willing to condemn Bush and the Republicans on this score. But it is significant that the Democratic Party, for the most part, not only failed to oppose Bush's spending increases, but actually argued for even more domestic spending than the Republicans were inflicting on us. For example, Democrats opposed Bush's massive $500 billion prescription drug benefit in large part because they thought it should be even bigger than it was, and the Democratic Party today continues to argue for replacing Bush's plan with one that is even bigger. The same is true of the Democratic position on most of Bush's other major spending initiatives, such as the No Child Left Behind Act. In the 2004 campaign, John Kerry likewise called for even more domestic spending than had been approved by Bush. Although I am not going to analyze the issue in detail here, what is true for spending is also true for regulation: on most issues, the Democrats support as much or more government regulation as Bush's Republicans do.
In addition to its position on specific size-of-government issues, the Democratic Party also has a major structural obstacle that will make it difficult for its politicians to move in a libertarian direction: the Party's dependence on public employees unions. Public employee unions such as AFSCME and the National Education Association are probably the biggest and most important sources of funds and political activists for the Party. Teachers union members alone accounted for about one quarter of the delegates at the 2004 Democratic national convention (see previous link).
It is difficult to think of an interest group more inimical to limited government than public employees unions. After all, efforts to shrink government necessarily mean fewer jobs and/or less income for the union members, and less union dues to pay the salaries and provide the perks of union leaders. The need to cater to these powerful interests significantly limits the extent to which the Democrats can move in a libertarian direction. Liberal bloggers such as Kos and Thoma can afford to ignore or downplay the needs of the unions, but Democratic politicians who want to get elected to office cannot.
The Republicans, of course, have their own pro-big government interest groups, such as large agribusinesses who benefit from farm subsidies, and corporations who benefit from corporate welfare. However, at least as far as I can tell, no such interest group provides anything like as large a proportion of Republican funds and political activists as the public employees unions do for the Democrats.
UPDATE: Jane Galt/Megan McArdle of Asymmetrical Information, presents some additional criticisms of the libertarian Democrat position here.