Online at: http://politicalaffairs.net/article/articleview/6918/

It's Time for a New Deal

By Norman Markowitz
Archives - Dates and Topics 2008 – online May – June 2008 May 26 – May 31 click here for related stories: democracy matters

5-29-08, 9:25 am


(illustration by John Kim)
Prominent New Dealer, Rexford Guy Tugwell, author of The Battle for Democracy, was a "brain truster" or policy advisor to Franklin D. Roosevelt and served under Department of Agriculture Secretary Henry A. Wallace. Tugwell was typical of the “new people” who had come to Washington in 1933 with Roosevelt’s election. They were independent progressives, and many were academics or activists who had been outside mainstream politics. Some were even mocked as “tired radicals” from the 1920s, but after Roosevelt’s election came to be seen as dangerous radicals, even socialists and communists, by the retreating, yet powerful right-wing political forces in the country.

In his book, Tugwell saw the “battle for democracy” in depression America as a struggle for long-term economic planning in the public interest. He urged the creation of a political economy that would restrain the predatory forces on Wall Street and in corporate boardrooms whose unregulated accumulation of wealth, speculation and profiteering had produced the Great Depression. Tugwell tied the battle for the future of democracy itself to the ability to develop new forms of planning for the economy and social welfare for the people.

The New Deal government moved forward in 1935 to advance a democratic people’s program in response to enormous pressure from the working class. The most ambitious public employment program for the unemployed was the Works Progress Administration (WPA). The Roosevelt administration created it in response to demands from unemployed councils, social worker groups, and community-based groups who called for “work relief.”

Additionally, the New Deal government enacted national anti-poverty legislation to provide public assistance for working families, called Aid to Families with Dependent Children (AFDC). With the growing New Deal coalition behind him, Roosevelt also established the Rural Electrification Administration (REA) for the mostly rural, poor one-third of the nation who lacked access to electricity
because private power companies saw little profitability in providing electricity to those areas.

The National Labor Relations Act, establishing the National Labor Relations Board (NLRB), created a mechanism to provide a democratic process enabling workers to establish unions. The NLRB was also given authority to prevent employers from using criminal or threatening tactics against workers to block union organizing and to compel bosses to bargain collectively with workers. Social Security and unemployment insurance legislation, the latter particularly championed by a nationwide network of Unemployed Councils, often organized by Communists were enacted.

Another major achievement of the New Deal coalition on the labor front was the formation of a new way of organizing workers. In 1935, the Committee (later Congress) of Industrial Unions (CIO) was formed by industrial unionists to organize
the mass production industries and millions of unorganized semiskilled and unskilled workers. Communist Party USA activists, who for years had been engaged in campaigns to build inclusive industrial unions, played a leading role in this development.

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New Deal forces won a huge political victory in the reelection of Roosevelt in 1936. That electoral victory accelerated the drive by CIO organizers to successfully lead a sit down strike against General Motors and then won union recognition from US Steel by threatening a sit-down strike. These victories against what were at the time the two largest industrial corporations in the world were quantitatively and qualitatively the greatest victories won by the labor movement in its history, before or since.

While there were also major defeats particularly in the South and New Deal progress was uneven (the capitalist class used vigilante violence and sympathetic local and state police forces and everything else they could to defeat the working class offensive), the gains were not reversed. In 1938, the Fair Labor Standards Act established minimum wages, the 40-hour work week, timeand-a-half for overtime work and outlawed child labor. Pilot programs for federally supported public housing and a program to provide aid to small farmers and agricultural laborers were also enacted. A food stamp program providing poor people with subsidies to purchase food through coupons that store keepers could redeem passed into law in 1939.

Although this list isn’t complete, it is most of what Americans came to see as the New Deal. It was the accomplishment of the center-left coalition that advanced labor’s rights at home, strengthened the working-class and people’s movements generally, and also advanced at the grassroots an anti-fascist policy that would play a major role in the victory over fascism in the World War II.

This historical perspective of the New Deal helps us understand the present, as the anti-New Deal forces who came to power with Reagan’s victory in 1980 and who have been hegemonic since, face a possible devastating defeat in 2008 as a result of their disastrous and discredited policies. Since the 1930s, there has been an ongoing struggle between the New Deal and the anti-New Deal, broadly put, a struggle which has been an essential part of the class struggle and the struggle for democracy. World War II and the developing Cold War contained but stopped short of dismantling the pro-working-class policies called for and enacted by the New Deal coalition. The Taft-Hartley law of 1947, for example, amended the NLRA to establish anti-union shop and so-called “right to work” laws in Southern and agricultural western states, to weaken the right to strike, and, until recently, to deny
Communist Party USA members the right to hold any union office.

Harry Truman’s attempt to enact a New Deal program that he called the “Fair Deal” in 1948, including a national health program, federal aid for education, and a repeal of Taft-Hartley, helped bring an unexpected election victory for himself and congressional Democrats that year. But the program was a casualty to both his own Cold War policies and the general Cold War mindset that linked such policies with socialism. Also the domestic effects of the Cold War led to massive purges and blacklisting of left activists whose work would have been necessary to make those programs work even if they had been signed into law.

Less than two decades later, Lyndon Johnson succeeded in passing New Deal-inspired programs he repackaged as the “Great Society.” These programs included Medicare and Medicaid, substantial federal aid for education programs, a Department of Housing and Urban Development, consumer and environmental protection legislation, and, of course, the most significant civil rights legislation since the Civil War.

While these programs passed in Congress, Johnson’s Cold War inspired involvement in and escalation of the Vietnam War lost him the support of many people who had formed the original center-left New Deal coalition: civil rights, women’s rights, environmental, and especially anti-war activists who united around the goal of “participatory democracy.” This fragmenting of the New Deal coalition combined with the organized racist right-wing backlash against civil rights and antipoverty legislation greatly undermined the implementation of the Great Society and set the stage for the future successes of the anti-New Deal.

Richard Nixon, for example, was able to gain the presidency by campaigning for law and order against those whom he accused the retreating New Deal coalition of harboring and unleashing, that is, cultural and social radicals attacking the American “silent majority.” Although Truman’s and Johnson’s attempts to advance the New Deal clearly failed by the 1970s, it still appeared that the postwar synthesis of New Deal and corporate Cold War institutional arrangements remained in place.

Though the labor movement stagnated, no major piece of New Deal legislation had been repealed, nor were Great Society programs like Medicare and Medicaid eliminated. Civil rights legislation and policy was more complicated. While the Civil Rights Acts of 1964, 1965 (voting rights), and 1968 (affirmative action) were not repealed, right-wing forces blocked new civil rights legislation to expand and develop their scope. Subsequent Republican administrations filled federal judicial appointments with activist right-wing judges, undermining judicial support for labor’s rights, civil rights and civil liberties won as a part of the New Deal and its subsequent extensions.

At the beginning of the 1980s, the forces long centered in the Republican Party who had fought to dismantle the New Deal institutionally and destroy the influence of the New Deal coalition gained political power in Washington. Most establishment scholars and analysts had concluded by the 1970s that the Eisenhower and Nixon administrations, along with leading sections of business, had accepted the New Deal as an accomplished fact, satisfied to prevent as far as was possible new progressive social legislation, but either uninterested in or afraid to try to dismantle existing programs.

But the ultra right signaled its intention to destroy the New Deal with the presidential candidacy of Barry Goldwater in 1964. Though soundly defeated that year, Goldwater advocated privatizing Social Security and publicly-owned development projects and electrification programs and greatly expanding anti-labor “right to work” laws.

Ronald Reagan emerged as Barry Goldwater’s successor in right-wing politics, and he used the inflation crisis of the late 1970s to gain the presidency on an irrational program of tax cuts, social spending cuts, increases in military spending, while promising to balance the budget. Reagan won crossover voters pretending to be what he called a “Truman Democrat,” but the whole aim of his presidency was to starve New Deal programs of funding and squeeze them out of existence and appeal to the racist backlash against the civil rights movement that had gained momentum a decade earlier.

Reagan and his successor George H.W. Bush blocked minimum wage increases for 12 years. Reagan attacked the trade union movement in 1981 when he broke the air traffic controllers strike by firing them and blacklisting them from any federal employment. With the active support of the NLRB, employers began the most extensive union busting campaigns since the 1920s. As a result, the trade union movement, which had long stagnated under conservative leadership, began to decline sharply both in terms of union density and the nature of the contracts that unions were signing. Reagan also reduced over 80 percent of all HUD aid for public and low-income housing, carried out the most extensive cuts in domestic social spending in history, punished local authorities that sought to sustain rent controls, pushed for the deregulation of energy and banking that undermined New Deal controls, and enacted the most extensive tax cuts for corporations and the wealthy ever.

In contrast to the philosophy of the New Deal, Reagan contended that the more government did to increase the wealth of capital, the better off low-income people would be, reviving the long discredited “trickle down” theory of economic development. Social Security, unemployment insurance, and subsequent programs like Medicare, which New Dealers saw as rights, Reagan disparaged as “entitlements” that prevented the “trickle down” theory from being fully implemented. While the New Deal looked to the cities as centers of culture and job creation, the anti-New Deal either ignored or punished the cities with endless cutbacks and encouraging investment in racially segregated suburbs, compelling beleaguered city governments to make deals with developers to make up for lost revenues at the expense of working families.

Whereas the New Deal connected economic growth to expanding public sector funding and programs, the anti-New Deal connected economic growth to reducing those programs, replacing public employees with private consultants, outsourcing a wide variety of public sector services (even prisons and support services for the military, leading directly to the excesses of corporations like Blackwater USA).

Just as analysts contended that the Republican administrations of Eisenhower and Nixon had grudgingly accepted the New Deal, the Democratic administration of Bill Clinton accepted and sought to moderate the anti-New Deal. Clinton’s policies greatly strengthened the anti-New Deal, giving the right-wing dominated Republican Party control of Congress. Clinton also negotiated NAFTA, which had the general support of corporations and conservatives and the general opposition of labor and progressives, further dividing the Democrats and strengthening the Republicans. Clinton also joined with the forces of the anti-New Deal to implement what even Reagan had not done, the complete elimination of Aid to Families with Dependent Children (ADFC). Clinton’s collaboration with the anti-New Deal laid the groundwork for the George W. Bush administration, which pushed forward the worst policies of the anti-New Deal ideologues.

Today, it should be clear that the anti-New Deal has failed. Between the 1930s and the 1970s, income inequality narrowed because a relatively stronger labor movement, more progressive taxation, and significantly better social benefits connected economic growth to a substantial rise in real living standards. Income inequality between the 1980s and today, however, has risen sharply, producing homelessness at the bottom, the construction of multimillion dollar luxury developments at the top, and a huge debt crisis in the middle.

In addition to this, while the national debt rose from nearly $250 billion in 1945 to $1 trillion in 1980, the “supply side” economics and “trickle down” theory of the anti-New Deal has seen the national debt rise to over $10 trillion dollars in the 28 years since. Interest payments on the debt have become the second largest expense in the budget funded by general revenues after military spending.

The elections of 1932 and 1936 that swept New Deal forces into power represented one watershed in history. The election of 1980 another. And the election of 2008 will, however it ends, represent a third. In 1980, the long-term containment of the New Deal and the profoundly negative effects of the Cold War mindset led a major section of the electorate to be convinced that tax cuts for the wealthy were really tax cuts for them; that social spending was spending for minorities and the poor that took money out of their pockets, rather than social investments in services and infrastructure that benefited everyone; that domestic social problems could be solved by police and prisons; and that complex international problems could be solved only by war or the threat of military might.

Today, the anti-New Deal is in tatters. And the New Deal broadly defined as the movements for workers’ right, a progressive tax policy, a public sector that invests in housing, health care, education, transportation, environmental protection, and energy in order to provide affordable services for the whole people, is emerging.

For the 21st century version of the New Deal to be successful, the Republican Party must suffer the kind of smashing defeat that it suffered in 1932 at all levels. A Democratic president with a strengthened progressive caucus in Congress must come to power in a landslide. A united labor-led people’s movements for workers’ rights, peace, equality, universal health care reform, energy and environmental alternatives and so on must be involved in ensuring such a victory whenever and wherever possible. Only then will a period of large working-class and people’s victories, rather than defensive battles, become possible. Such victories would profoundly improve the quality of life for the overwhelming majority of Americans, producing greater economic and social equality, which as Rexford Guy Tugwell contended in 1935, is the foundation for modern democracy.

--Norman Markowitz is a contributing editor of Political Affairs.


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