In 1948 that Congress was engaged in an attempt to roll back FDR’s New Deal. The de facto leader of the Republicans in Congress was Sen. Robert Taft, and Taft, sometimes referred to as “Mr. Republican,” was deeply opposed to the New Deal, which he regarded as “socialistic.” This was more than ideological posturing: After Republicans gained control of Congress in 1946, Taft pushed through the Taft-Hartley Act, significantly rolling back the National Labor Relations Act of 1935, which was a key ingredient in the surge in union membership and power under the New Deal. Thus in 1948 voters had good reason to believe that a Republican victory, which would give them control of both Congress and the White House, would lead to a significant U-turn in the policies that produced the Great Compression.
By 1952, when the Republicans finally did regain the White House, much less was at stake. By that time Republican leaders had, as a matter of political necessity, accepted the institutions created by the New Deal as permanent features of the American scene. “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs,” wrote Dwight Eisenhower in a 1954 letter to his brother Edgar, “you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”[1]
How did ideas and programs that were considered dangerously radical in the 1930s become the essence of respectability in the 1950s, with only a “tiny splinter group” calling for their repeal? To answer that question we need to look both at how changes in American society altered the political environment and at how the political parties responded to the new environment.
In the 1930s the New Deal was considered very radical indeed—and the New Dealers themselves were willing to use the language of class warfare. To read, or, better yet, listen to Franklin Delano Roosevelt’s Madison Square Garden speech (the recording is available on the Web), delivered on the eve of the 1936 election, is to be reminded how cautious, how timid and well-mannered latter-day liberalism has become. Today those who want to increase the minimum wage or raise taxes on the rich take pains to reassure the public that they have nothing against wealth, that they’re not proposing class warfare. But FDR let the malefactors of great wealth have it with both barrels:
We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.
FDR wasn’t exaggerating when he said that the plutocrats hated him—and they had very good reasons for their hatred. As I documented in chapter 3, the New Deal imposed a heavy tax burden on corporations and the wealthy, fostered the growth of unions, and oversaw a narrowing in income inequality that included a substantial fall in after-tax incomes at the top.
But a funny thing happened over the twenty years that followed the Madison Square Garden speech. Thanks in large part to Truman’s 1948 victory, New Deal policies remained in place: unions remained powerful for several more decades, and taxes on corporations and the rich were even higher during the Eisenhower years than they had been under FDR. Yet by the mid-fifties support for the continuing existence of the policies that inspired such hatred from “organized money”—in the Madison Square Garden speech FDR singled out Social Security and unemployment insurance in particular as programs smeared by the plutocrats—had become the very definition of political moderation.
This transformation partly reflected shifts in demography and other factors that favored the continuation of the welfare state. I’ll get to those shifts in a moment. But first let me talk briefly about an enduring aspect of political economy that made the New Deal extremely hard to achieve but relatively easy to defend: the innate and generally rational conservatism of voters—not conservatism in the sense of right-wing views, but in the sense of reluctance to support big changes in government policies unless the existing policies are obviously failing. In modern times we’ve seen that type of status-quo conservatism bring projects of both Democrats and Republicans to grief: Clinton’s attempt to reform health care and Bush’s attempt to privatize Social Security both failed in large part because voters feared the unknown.
In the 1920s status-quo conservatism helped block liberal reforms. Any proposal for higher taxes on the rich and increased benefits for workers and the poor, any suggestion of changing labor law in a way that would make unionization easier, was attacked on the grounds that the would-be reformers were irresponsible people who just didn’t understand how the world worked—that their proposals, if adopted, would destroy the economy. Even FDR was to some extent a prisoner of the conventional wisdom, writing, “Too good to be true—you can’t get something for nothing” in the margin of a book that, anticipating Keynes, called for deficit spending to support the economy during recessions.[2]
Once in power—and less inclined to dismiss radical ideas—FDR was faced with the task of persuading the public to reject conventional wisdom and accept radically new policies. He was able to overcome voters’ natural conservatism thanks largely to accidents of history. First, the economic catastrophe of 1929–33 shattered the credibility of the old elite and its ideology, and the recovery that began in 1933, incomplete though it was, lent credibility to New Deal reforms. “We have always known that heedless self-interest was bad morals; now we know that it is bad economics,” declared FDR in his second inaugural address. Second, World War II created conditions under which large-scale government intervention in the economy was clearly necessary, sweeping aside skepticism about radical measures. So by the time Eisenhower wrote that letter to his brother, the New Deal institutions were no longer considered radical innovations; they were part of the normal fabric of American life.
Of course it wouldn’t have played out that way if the pre–New Deal conventional wisdom had been right—if taxing the rich, providing Social Security and unemployment benefits, and enhancing worker bargaining power had been disastrous for the economy. But the Great Compression was, in fact, followed by the greatest sustained economic boom in U.S. history. Moreover the Roosevelt administration demonstrated that one of the standard arguments against large-scale intervention in the economy—that it would inevitably lead to equally large-scale corruption—wasn’t true. In retrospect it’s startling just how clean the New Deal’s record was. FDR presided over a huge expansion of federal spending, including highly discretionary spending by the Works Progress Administration. Yet the popular image of public relief, widely regarded as corrupt before the New Deal, actually improved markedly.
1.
Dwight D. Eisenhower to Edgar N. Eisenhower, Nov. 8, 1954, http://eisenhowermemorial.org/presidential-papers/first-term/documents/1147.sfn.