I think Bret brings up some good points in the post below and he's opened my eyes to how unclear I've been in my formulation of what liberalism is. In order to help myself think more clearly (and help give others firmer grounds upon which to attack any mistakes I might be making) let me try to restate my definition of Liberalism.
"Liberalism argues that government should give people more and better options if a mechanism can be found to reliably do so."
There are a lot of things that are left unsaid here so let me break it down into bite-sized pieces.
"...government should give people more and better options..."
The idea here is that it would be nice if we had more options, and if the options we had were better. Obviously these two desires can conflict. It would be nice if I had the option of getting good health care. In fact, I'd like it so much I'd be willing to trade my current condition (many bad options) for one in which having good health care was my only option.
Furthermore the "people" in the above phrase is important too. It would be unfair for government to expand one person's opportunities at the expense of everyone else. Taken to the extreme this would be confiscatory as Bret rightly points out. However, we should recognize that the services provided by government are a package deal. As long as the overall affect is to expand the opportunities for the vast majority (i.e. "people") I think we can excuse the odd program which is basically confiscatory if taken alone. I would put Social Security and the Civil Rights act into this group. With such programs, government can reach out to improve the options of people who are left behind by other programs.
(As a corollary to the above, people who eat pudding do not, as a class, constitute a group that has been ill-served by government so a program to help them could not be justified.)
Now the question naturally arises: Who decides what's more and better and for whom? Bret asked precisely these questions and they are good ones. If you're just trying to decide what you personally support, then use your own metric. If we're trying to decide what the government should actually do, well... this is why we have a democracy. With the proper minority protections in place (which our constitutions provides in spades) I see no problem in resolving these questions at the ballot box.
"...if a mechanism can be found to reliably do so."
Lastly, government should only act if it can do so effectively, technically and politically. On a technical level, we should only support government programs if we expect them to produce the intended effect if carried out competently (i.e. No to price-caps and wage controls). On the political level, we should only support program if we think they're going to be politically sustainable in the long term. Thus we need to be wary of regulatory capture, rent seeking, and good old fashioned unintended consequences.
This last issue is - I suspect - what Bret is getting at when he calls me a "techno-liberal". I suspect he thinks I'm only looking at the technical aspects of government programs while ignoring the very real threats posed by government failures like regulatory capture. If that is the case then I'll assure everyone that I am aware of these issues and even made a point to include them in my formulation of Liberalism and indeed, in my personal political beliefs. This is why I support a carbon tax much more strongly than cap-n-trade.
So, to sum up: There are a lot of judgment calls that this formulation leaves open. Of course there is: it's a pragmatic philosophy that doesn't pretend to give you all the answers. Still, much better no answer than a wrong one.