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Does America Need Another New Deal?

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Does America Need Another New Deal?

The coronavirus pandemic is bringing serious financial repercussions. Is drastic action needed to preserve the future?

Learn the why behind the headlines.

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The New Deal was really a series of new deals, spread out over more than six years during the Great Depression. It was a menu of nationally scaled projects that were one part make-work and many parts lasting impact. They delivered a broad-shouldered expression of presidential authority whose overall benefits were both economic and psychological.

Not all of them worked. Some failed badly. But it was a try-anything moment by President Franklin Roosevelt at a time of national despair. And it remade the role of the federal government in American life.

Men were hired to plant trees in Oklahoma after the Dust Bowl and to build roads, bridges and schools. Writers and artists were dispatched to chronicle the hardship, employing authors like Saul Bellow and Ralph Ellison. In many states, you can still see murals, read local histories or walk into enduring projects like LaGuardia Airport and Dealey Plaza in Dallas.

These programs were designed to provide get-by wages in exchange for work. But others were crafted to remake society. Social Security was instituted to save the elderly from poverty, federal insurance on banks to renew trust in the financial system, and minimum wage and labor rights to redistribute the balance of power between employer and employee.

Now, nearly 90 years later, the United States is fighting a disease that presents the country with wrenching life-and-death challenges. Yet at the same time it has offered something else as well: a rare opportunity to galvanize Americans for change.

“The current, acute crisis in unemployment is likely to become a chronic condition that, even if it waxes and wanes, will not remedy itself. Like the Great Depression, it demands intervention not only to resume trade and employment, but also to preserve the institutions we cherish,” Eric Rauchway, professor of history at the University of California, Davis, wrote in The Guardian.

As the U.S. confronts its most profound financial crisis since the Depression, there are early soundings of a larger question: What would a “new” New Deal look like? Going further, how could it succeed?

Difficult Questions

The New Deal’s legacy still provides support today: Unemployment insurance. Retirement and disability income. Transparency in the stock markets. Infrastructure that ensures a steady flow of electricity and supply of water.

Yet the coronavirus outbreak has also revealed how ill-equipped the government was to address the rapidly escalating fallout of 26 million job losses, overwhelmed hospitals and millions of shuttered businesses only weeks away from failure.

In an editorial for The Detroit News, labor leader James Hoffa wrote, “During the last 10 weeks, more than 40 million Americans have filed for unemployment, forced out of jobs by a pandemic that has shuttered businesses, many never to reopen again.”

“Getting people back on the job is not just going to magically happen—it is going to require a detailed federal plan that not only puts people to work, but improves the nation…”

The country has an appetite for change. According to USA Today, “Americans by double-digit margins say the federal government is doing too little—not too much—to deal with the health and economic repercussions of the deadly pandemic.” A USA Today/Suffolk Poll found that “50% say the government should do more; 40% say it is trying to do too much. That is the strongest endorsement for the government doing more since Gallup began to ask the question in 1992.”

But difficult questions must be addressed:

How can Americans have greater access to savings for retirement and financial emergencies? There are fewer workers than a generation ago, and many face higher costs for housing and school.

How can the government ensure greater resources for medical care in a crisis? This would mean that mission-critical workers, from nurses to grocery store clerks, have stockpiles of equipment to stay safe. It would mean people could get tested and treated without crippling hospital bills. And it would mean researchers have incentives to develop vaccines and bring them to market faster.

President Donald Trump has talked up infrastructure programs and affordable healthcare, but details have been scarce. Democratic lawmakers must work with a president their base of voters largely distrusts. The likely consequence: Any mandate for change will come from the ballot boxes this November.

Recently, Senator Kirsten Gillibrand (Democrat, New York) and Senator Michael Bennet (Democrat, Colorado) leaned hard on programs of the New Deal to offer legislation to create a federal “health force” to employ workers “for future public health care needs, and build skills for new workers to enter the public health and health care workforce.” It is unlikely the Republican-controlled Senate would consider such legislation, but it shows what Democrats might have in mind as voters contemplate upcoming elections.

Former Vice President Joe Biden, the Democratic presidential nominee, has talked more about combating the pandemic than he has about reimagining what kind of country might emerge from it.

Both parties have an uneasy relationship with how states and the federal government should share their power, and any reprise of the New Deal would likely enhance Washington’s authority.

Mr. Trump has yet to offer a systemic solution to the crisis, though he has approved record levels of direct assistance to businesses and individuals. The Coronavirus Aid, Relief, and Economic Security Act, signed into law at the end of March, amounted to over $2 trillion in aid. That breaks out to about $6,000 per American and accounts for 45 percent of federal government expenditures in 2019.

Most economists see that unprecedented sum as relief—one of the “three Rs” of the New Deal—but not recovery or reform.

Any recovery will rely on government programs to catalyze the economy so that hiring and commerce can flow again. The public will also expect reforms that make the nation more resilient against future emergencies, so people feel comfortable enough to take the risks that lead to innovation and prosperity.

On paper, investing in infrastructure holds bipartisan appeal. Mr. Trump has repeatedly called for upgrades to roads, bridges and pipelines. Democrats would like to ensure that internet connectivity, including next-generation 5G, exists in rural and poorer communities.

But other options have existed mainly in the white papers of think tanks, academics and advocacy groups. There is a newfound appetite for them, which could overpower even the highly polarized politics of this moment.

“The question people always ask is, what would it take to break through that extreme partisanship?” Historian Doris Kearns Goodwin said. “It takes a crisis.”

Willingness to Work Together?

After 9/11, much of the criticism of the federal government focused on a collective “failure of imagination.”

Nineteen years later, that phrase has a new context as Washington tries to fashion a response to the coronavirus. It is a challenge at a scale the nation has not seen since 1932, when Roosevelt, a Democrat, defeated Republican President Herbert Hoover with a promise of better days ahead—a “new deal” for the “forgotten man.”

When New Deal programs were unveiled, no one definitively knew what had caused the U.S. economy to collapse, unlike now, when the culprit and the vulnerabilities are clearer.

The political climate was fundamentally different then. Roosevelt, celebrated for his optimism and empathy, had muscular Democratic majorities in Congress. But he also sought to unite the country. His first radio “fireside chat” in 1933 was devoted to asking Americans to trust the banking system again. “He promised them that they could get their money back,” Ms. Goodwin said.

But the New Deal programs stemmed from bold visions that could be implemented by political leaders, Allan Winkler, a professor emeritus at Miami University of Ohio, noted. “In our fragmented body politic, it would take an extraordinary politician to do what is necessary.”

The Ideological Split

The ideological differences between Democrats and Republicans are a major roadblock for any attempt at a “new” New Deal.

Take just one simple question that frames this divide: Is it better to establish a government firewall that can protect the economy during future downturns? Or should the tax code and regulations be re-engineered so that private companies and individuals can more easily adapt to pandemics?

Heather Boushey, president of the Washington Center for Equitable Growth, says allowing government aid to automatically increase as the economy began to fall would have been one of “our best defenses so that the coronavirus recession does not turn into a full-scale economic depression.”

“Responding to the crisis without also making our economy more resilient against future shocks would be a mistake,” she said. Automatic triggers for expanded jobless benefits, increased medical aid and new construction spending would ease the pain of a downturn and speed recovery.

Conservative economists believe adjustments to the tax code and regulations will improve growth and resilience.

“This is not one of those things where if you send checks you can jump-start the economy,” said former Congressional Budget Office director Douglas Holtz-Eakin.

Price Fishback, an economist at the University of Arizona known for his work studying the Depression era, proposed another, more abstract notion as a key to fashioning a New Deal for the 21st century: humility.

Even New Deal programs that improved lives did not insulate the American people. There was stagflation in the 1970s. Untamed financial markets fueled a housing bubble during the 2000s. And at the end of 2019, no major economist forecasting this year envisioned that a pandemic would throw the world into turmoil.

Yes, the U.S. would be stronger with improved internet connectivity, more housing, government programs that can cushion a downturn and a health care system that can handle crises and emergencies. But the nation would be far from impervious. So stay humble, Mr. Fishback urges.

The Missing Key

The humility of realizing no solution will be perfect is important. Just as the original New Deal was not a cure-all, neither would be a “new” New Deal. Yet, answering the question of whether such legislation is even possible requires us to examine the concept of humility on a fundamental level.

Dr. Michael Laitman wrote in an opinion piece on online publishing platform Medium: “The [coronavirus] situation is showing the whole world how weak and vulnerable humans are in the face of nature. It is a lesson in humility…We have been given an awakening to change paths and connect with each other…”

Columnist Victor Davis Hanson also recommended in City Journal that “humility, not certainty—much less accusation and panic—should be the order of the day.”

However, as with many things in life, being humble is easier said than done. One person’s idea of humility varies from another’s. The difficulty lies in consistently applying specific behaviors that reflect this attribute.

America was built on Judeo-Christian values. And the Bible has much to say about the kinds of actions that promote humility. Consider two examples: The apostle Paul wrote, “Let nothing be done through strife or vainglory; but in lowliness of mind let each esteem other better than themselves” (Phil. 2:3); the apostle Peter taught, “All of you be subject one to another, and be clothed with humility” (I Pet. 5:5).

How often do you see leaders esteeming those of the opposing political parties as “better than themselves”? When do politicians or even citizens act “subject one to another”?

Be honest—in most instances this does not happen. Recall that a “willingness to work together” is essential for another New Deal.

Even though many talk about bipartisanship as a concept, they still hold rigidly to existing beliefs. Very few wish to even consider opposing views, let alone work toward real compromise, even in the face of a pandemic.

The result? Gridlock.

An editorial in The Columbus Dispatch stated that “a healthy dose of civility would be as welcome as the preventive coronavirus vaccine most are desperate to receive. It’s not necessary for us all to embrace different viewpoints, but we can at least concede that others have the right to see the world differently and that we might even learn from other perspectives.”

Pull back from the coronavirus for a moment. Think about the litany of other issues being debated in the country. These include police reform, racism, gun ownership, healthcare, climate change, equal pay, immigration reform, and much more. Each item on this list has a multitude of proponents pushing for a particular course of action—each convinced their way is best.

Endless words have been written analyzing the cause of America’s division. While there are a near-infinite number of ways to characterize what is wrong with the country, at its fundament, an abundance of pride and dearth of humility is what keeps America from moving past its differences.

Former United States Secretary of Housing and Urban Development Robert Weaver famously said, “you cannot have physical renewal without human renewal.”

Without a nationwide renewal of humility, leading to a widespread willingness to work together, positive transformational change is simply impossible. Our booklet Why Man Cannot Solve His Problems explains more why this is the case.

This article contains information from The Associated Press.

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