Will the New Deal Survive?

new deal

Detractors tout an argument that the New Deal was more of a historical aberration prompted by the Great Depression than a triumph of the welfare state. As it exists, you cannot call our current state of affairs a Liberal utopia, let alone a triumph. But perhaps the New Deal was an aberration. Most analysts agree it produced a powerful political coalition that sustained the Democratic Party as a majority in national politics into the 1960s.

A companion question asks: Was the New Deal was hijacked by a global conflict in 1941? Are we suffering a massive entitlement hangover from the powerhouse binge of the World War II economy? In many ways, the horrors of global and regional conflict are eclipsed by the machines of the commerce they drive. Yet, it works. Money moves around the system and social programs get funded. Imagine unemployment at 1.3% (1944)! Re-live the rockin’ Fifties and an industrial base that purred like a V8. The wartime economy has been in place for over a century of our history. In one form or another, we generate foreign intervention and military adventure in support of commerce. Perhaps we need to replace “Semper Fi’” with “Business is business.”

The core of the New Deal can be summed up in its branding, the “3-R’s,” Relief, Recovery, and Reform: relief for the unemployed and poor, recovery of the economy to normal levels, and reform of the financial system to prevent a repeat depression. The New Deal also produced a political realignment, New Deal Liberalism, making the Democratic Party the majority, as well as the party that held the White House for seven out of nine Presidential terms from 1933 to 1969, losing only to Dwight D. Eisenhower, in 1952 and 1956. As the first Republican president elected after FDR, Ike built on the New Deal in a manner that embodied his thoughts on efficiency and cost-effectiveness (soldier that he was). He sanctioned a major expansion of Social Security by a self-financed program. He supported such New Deal programs as the minimum wage and public housing; he greatly expanded federal aid to education and built the Interstate Highway system primarily as defense programs (rather than jobs program). A Republican? Clever?

New Deal Liberalism laid the foundation of a new American consensus. Between 1940 and 1980 there was a tangible momentum about the prospects for the distribution of prosperity within an expanding capitalist economy. Harry S. Truman’s Fair Deal, and in the 1960s, Lyndon B. Johnson’s Great Society used the New Deal as inspiration for a dramatic expansion of liberal programs, notably Medicare. Notably Vietnam.

In 1964 Barry Goldwater was the Republican presidential candidate on a platform that attacked the New Deal. The Democrats under Lyndon B. Johnson won a massive landslide and Johnson’s Great Society programs extended it. However, the supporters of Goldwater formed the New Right which helped bring Ronald Reagan into the White House. Reagan, at the time an ardent New Dealer, had turned against the New Deal and moved the nation in new directions, with his emphasis on government as the problem, not the solution. It should be noted the Gipper then raided the Social Security Trust. He maneuvered the government transfer of $2.7 trillion from the Social Security Trust to the general fund over a 30-year period.

Consider some of these enduring and familiar New Deal programs:

Social Security Act (SSA), 1935, provided financial assistance to the elderly and handicapped, paid for by employee and employer payroll contributions.

Tennessee Valley Authority (TVA), 1933, was an effort to modernize very poor region (most of Tennessee), centered on dams that generated electricity on the Tennessee River.

Federal Deposit Insurance Corporation (FDIC) insures bank deposits and supervises state banks.

National Labor Relations Act (NLRA) / Wagner Act, 1935, set up the National Labor Relations Board to supervise labor-management relations. In the 1930s, it strongly favored labor unions. Modified by the Taft-Hartley Act (1947).

Surplus Commodities Program (1936), gives food to the poor. This still exists as Food Stamp Program.

Fair Labor Standards Act, 1938, established a maximum normal work week of 44 hours and a minimum wage of 40 cents/hour and outlawed most forms of child labor. Hours have been lowered to 40 hours over the years.

One make-work idea that should be resurrected is the Civilian Conservation Corps (CCC), 1933–1942. It employed young men to perform conservation and preservation work in rural areas, under United States Army supervision. The scope of this immensely successful program is an adventure and deserves a separate feature.

 Debates concerning the Glass–Steagall Act regulating investment banking, repealed 1999, will likely continue for the next 50 years.

Pundits across the globe compare our financial meltdown in 2008 to the Great Depression, and rightly so. There is no argument of how catastrophic it was, how fatal to capitalism it could have been, and how level heads nursed the global economy back to survival mode. It has been a time to remember the “3-R’s.”

Will nihilistic partisan conflict allow relief, recovery, and reform? Can this country restore a robust manufacturing base in addition to a thriving and astute service sector? Will there ever be unemployment at or below 2% (omg)! How does this miracle happen in a global economy? Without the fuel of revenue, will blessings of the New Deal Liberalism last?

Where is a good war when we need one?

We require an effective alternative to the war economy…a fundamental structural change. I don’t have the skill of an economist, so all I can hope for is the adage “First, you must realize there is a problem.” My moment of clarity.

Consider the modern parable of “Big Tobacco” and “Big Coal.” Both multi-billion dollar industries, both of questionable benefit to mankind in the long view. As public service legislation became law and diminished these industries, did we give the human factor an alternative way of life, a replacement industry? Not really. Generations of lives and fortunes across the Virginias, Pennsylvania, Ohio, and the Carolinas were left twisting in the wind. The recovery plans are never in synch with the moment of challenge. It’s a place to start improving.

Our government is living the same basic conflict. Social services, the element Franklin Roosevelt divined in a time of great need, are more beneficial than harmful. We will never return to 1933. The money engine must survive to support them and we must innovate to that end.

New Deal Liberalism will survive only if it can change. The jury is still out.


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