The Wu New Deal

In his survey of the Great Depression and World War II, Freedom From Fear, historian David Kennedy makes the point that the New Deal—which manifestly failed to end the Depression—was only a failure if you assume that its purpose was, in fact, to end the Depression.

Likewise, the Democrats’ attempt at pushing their wish list of a Wuhan virus rescue bill.

If you assume, instead, that the purpose of the New Deal was to restructure the government’s relationship to the people and to society, then it was certainly a success. This is especially true of the so-called Second New Deal, passed mostly in 1935, which included Social Security, the Banking Act, the Wagner Act, other workplace protections, and unemployment insurance. Designed to provide a measure of security to periodically unemployed workers, it also made sure that people—for the first time—habitually looked to the government as the source of that security.

If you assume that its secondary purpose was to cement an emerging Democratic Party political coalition, then it was potentially an even greater success.

From the outset, Roosevelt had wanted to bring liberal Republicans into the Democratic fold, while marginalizing the more conservative southern Democrats who generally opposed his agenda. The prelude to World War II cut that short, as progressive Republicans from the west and Midwest—most prominently, Hiram Johnson, George Norris, and William Borah—stayed true to their isolationism. Nevertheless, blacks, urbanites, and union workers began voting for Democratic candidates in numbers that persist even to this day, though the current reshuffling of the parties threatens to undo some of that.

And there were people in the Roosevelt Administration who were sorry to see the economy recover because it closed the window on that restructuring.

Do you want to know where Rahm Emanuel got the idea for never letting a crisis go to waste? Look to the New Dealers.

Restructuring to “Fit Our Vision”

Which brings us to the Democratic version of the Wuhan coronavirus stimulus package. Now, the original idea—a payroll tax holiday, bridge loans to small and medium-sized businesses—wasn’t bad.

The eventual idea—trillions of dollars of helicopter money in an economy where there is less and less to spend it on, combined with some side-pork for votes—is less appealing. But at least it’s still geared toward doing something about the problem at hand. It seeks to tide over individuals and small businesses until the restrictions relax, and economic activity recovers.

The House Democrats had their own ideas, however. Via Senator Tom Cotton’s (R-Ark.) Twitter feed, we know that these included:

  1. Corporate pay statistics by race and race statistics for all corporate boards at companies receiving assistance;
  2. Bailing out all current debt of the postal service;
  3. Required early voting;
  4. Mandated same-day voter registration;
  5. A $10,000 bailout for each and every borrower with federal student loans;
  6. For companies accepting assistance, one-third of board members must be chosen by workers;
  7. Provisions on official time for union collective bargaining;
  8. A full offset of airline emissions by 2025;
  9. Greenhouse gas statistics for individual flights;
  10. Retirement plans for community newspaper employees;
  11. A $15 minimum wage at companies receiving assistance;
  12. Permanent paid family leave at companies receiving assistance.

None of this makes any sense if you assume that the purpose of the bill is to forestall or soften the economic effects of government action to combat the virus.

But if you assume that the House Democrats don’t really see the purpose of the bill as aiming at any of those things, but rather as Majority Whip James Clyburn (D-S.C.) said, “a tremendous opportunity to restructure things to fit our vision,” then it all makes a lot of sense.

I admit, I made the mistake myself. I assumed at first that, facing a collapse of in-person retail, a 33 percent drop in the stock market, a mother of all margin calls centered on international banking, and the prospect of the credit of the U.S. government being in play, Clyburn meant that he wanted the bill to fit their vision of economic aid.

No such luck.

Every item on that wish list is geared towards remaking society, directly grabbing political power, or solidifying what they see as their emerging coalition. And just because they didn’t make it into the bill that ultimately passed doesn’t mean those proposals are dead.

Democrats happily would insert the Justice Department into board elections, giving political hacks another tool to extract favors and money. They would replicate the damage caused by public unions, by putting private unions on both sides of the bargaining table. The inevitable green mandates would pay off the Tom Steyers of the world. Elections would become even more suspect. And they would include payoffs to universities (what, you thought unconditional student loan forgiveness was for the students?) as well as to increasingly liberal community newspapers.

In other words, restructuring things to fit their vision.

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About Joshua Sharf

Joshua Sharf has headed the Independence Institute’s PERA Project for three years. In that time he has authored a number of Backgrounders and Issue papers on Colorado’s Public Pensions, contributed to the Institute’s weekly newspaper column, and spoken to political and civic groups across the state on the subject. He routinely testifies before the state legislature on proposed pension reform bills. He is Vice Chairman of the Denver Republican Party and has also done original reporting on PERA for Watchdog.org and I2I’s Complete Colorado news site and is a regular guest on local talk radio, discussing this and other state and national political issues. He has an MBA and an MS in Finance from the University of Denver’s Daniels School of Business, and has also worked as a sell-side equities research analyst.

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