The Coming of the New Deal

the first two years of the Roosevelt Administration. . . what anni mirabilis [remarkable years] they were! Those who lived through them can still recall the electric excitement, the surging vitality, the mounting hope, the exhilaration that came over the American people after years of futility and frustration. It was, said Rexford Tugwell, "a time of rebirth, after a dark age.". . it ushered in the welfare state; it repudiated laissez-faire; it marked the rise of labor to a position of equality with industry and capital in our economy; it shifted the center of gravity from state to nation. . . from legislative to executive authority

--Henry Steele Commager, reviewing in January 1959 The Coming of the New Deal, 1933-1935 by Arthur M. Schlesinger Jr.

The stage is set for an American “new deal” in 2009. We seem ready for, in Tugwell’s phrase, "a time of rebirth, after a dark age." As in 1933, Democrats will have all the levers of power in their hands. And the country will look to Obama for action. The situation may not be, as French president Nicolas Sarkozy says, "Le laisser-faire, c'est fini” [is finished]. But people are shifting toward big government.

On the eve of the Democratic convention last August, Ronald Brownstein provided a sober look at the kind of changes we might expect from an Obama administration. In events where policy will pull between left and middle, expect the powerful, pent-up forces of the left—concentrated in the Democrats’ newly enlarged congressional majorities—to prevail. After all, as Brownstein notes, “Obama was shaped by an inner-city Chicago environment in which most political pressure came from the Left.”

The changes could be big. Brownstain quotes former (1984-88) presidential candidate Gary Hart saying, "We are now at the cusp ... of the end of the Nixon-Reagan-Bush era. Obama is poised. . . to be a transformational president and to redefine politics for the next 20 or 30 or 40 years."

Although Brownstein writes, “Obama hasn't attached a label to his agenda” like “New Deal,” preferring instead “change” that allows for maximum flexibility, Brownstein’s evaluation suggests an updated New Deal is on its way:

• Pump-priming. Obama portrays increased public spending on infrastructure, education, research, and other priorities as a key to prosperity, and he has emphatically sided with liberals who say that such investments take precedence over reducing the federal deficit. His programs just for alternative energy, infrastructure, and health care add up to $800 billion over 10 years, and the figures will certainly go higher. And, as Brownstein says, Obama won’t embrace any deficit-reduction target.

• Relief. Obama wants to increase income, payroll, capital-gains, and dividend taxes on upper-income families earning at least $250,000 annually to pay for federal tax credits or checks to 95% of families, with those near the median getting about $1,100 a year.

• Beyond Social Security. Obama’s health care plan will require insurance companies to compete in publicly structured exchanges not only with each other but also with a government-run insurance plan. Because of the add-ons Obama will require (no disqualification for pre-existing conditions, mandatory coverage of all workers), the government-run plan may end up covering most people.

• Alphabet soup. FDR created several government agencies to regulate the economy, and according to Brownstein, Obama will “subject businesses to an array of federal mandates.” Obama has sharply criticized legislation Clinton signed that deregulated the banking and telecommunications industries, saying, "Unfortunately, instead of establishing a 21st-century regulatory framework, we simply dismantled the old one -- aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight."

• Civil liberties. FDR appointed the first of the Warren Court justices who expanded civil liberties in the 1950s-70s. Obama will allow gays and lesbians to serve openly in the military, will repeal the Defense of Marriage Act signed by President Clinton, will reduce the use of mandatory minimum sentences, and he leans sufficiently toward individual rights that, in the words of Jeffrey Rosen, a George Washington University law professor, Obama will be "our first president who is a civil libertarian."

• Isolationism. FDR had to go along with the isolationism of the 1930s. Obama sides with the Left—today’s isolationists—in his recoil from free trade, his commitment to withdrawal from Iraq, and his willingness to meet with the leaders of rogue nations.

Brownstein left out another Obama-FDR parallel: support of unions. Republicans are alarmed about trade union insistence, supported by Democrats, on ending the secret ballot’s protection of workers from union bosses and thugs who will run union organization elections. The bosses want public elections that insure organizers know exactly how workers vote.