While it’s still unclear exactly what the Democratic Party’s reconciliation package will look like in its final form, the bill originally pitched as a monster $6 trillion banquet of public investment now looks set to come in at less than a third of that number. Amid what is obviously a climbdown from the more far-reaching agenda the White House pitched earlier this earlier, however, some Democratic partisans have adopted a kind of glass-half-full rhetorical strategy: essentially arguing that the bill, whatever its faults and limitations, still represents the best of activist government on a large scale, akin in many ways to Franklin D. Roosevelt’s New Deal or Lyndon B. Johnson’s Great Society.
The most clearly articulated version of the argument, and quite probably the original source of what’s become a common talking point, came from White House chief of staff Ron Klain, who recently offered the following reply to a reporter tweeting about the lacerating cuts that continue to be made to the bill:
It’s twice as big, in real dollars, as the New Deal was. This can be the Congress that goes from 12 years of universal education to 14 years; that makes the largest investment in fighting climate change ever; that cuts what families pay for child care in half.
Klain is, of course, doing his job, which in this case involves spinning a drastically pared-down piece of legislation as historic and transformative. Nonetheless, given how its central claim has been taken up by some liberal partisans, it’s worth examining this spin a bit more closely. With this in mind, I put the question to historian Harvey Kaye, who has written extensively on both the presidency of FDR and the New Deal.
The first and most obvious issue with drawing dollar comparisons to the New Deal era in 2021 is that the country has changed pretty radically since the 1930s. “The United States population through the course of the Roosevelt administration,” he points out, “was at its peak about 130 million. The population of the United States today is about 330 million. So you can talk all you about the real dollars, but we should be talking about it in terms of something like per capita expenditures.”
Also, simply adjusting for inflation ignores the massive growth of real incomes since the 1930s. To be as effective as the original Works Progress Administration (WPA), which in the 1930s hired unemployed workers to deliver services, a modern-day version could not simply take the original WPA wage and adjust it for 1935–2021 inflation; that would give today’s beneficiaries a monthly wage of, on average, about $840, in exchange for full-time work — well below today’s federal minimum.
In addition, while the New Deal wasn’t a single bill or piece of legislation but rather a suite of new programs and social expenditures that together forged a new economic and political consensus, we might — taking Klain’s claim at face value — consider how the current package measures up to the programs and spending of the New Deal era when you factor in the growth of US GDP.
Last month, CNBC’s Greg Iacurci offered up some useful numbers vis-à-vis social spending during both the 1930s and the 1960s:
By 1939, the share of federal social-welfare spending hit a New Deal-era peak of 3.6% of GDP, according to an analysis by Price Fishback, a professor at the University of Arizona who studies New Deal political economy. That’s a 2.7-percentage-point increase relative to 1933. In 1963, social spending was 4.1% of GDP; by 1973, it had jumped to 7.4%, an increase of 3.3 points, Fishback said.
By comparison, the $3.5-trillion-over-ten-years version of Joe Biden’s plan would have represented a rise in spending roughly equivalent to 1.5 percent of the country’s current GDP of $22.7 trillion — smaller than the analogous increases during the Roosevelt and Johnson eras. With the proposed figure for the current reconciliation package now coming in at less than $2 trillion, we’re potentially talking about an even smaller increase.
The biggest problem with trying to draw comparisons between the present moment and the 1930s, however, is that the scope of something like the New Deal can’t actually be captured in purely quantitative terms. As Kaye explains:
When Ron Klain makes that kind of remark, it’s another example of liberals just utterly misunderstanding the significance of the New Deal. They grab hold of it as if the New Deal was just a matter of legislating some programs and spending a lot of money, when in fact it was a vast mobilization of labor and a vast empowerment of working people. FDR actually said, “New laws unto themselves do not bring the millennium.” In other words, “You’re going to have to fight now.” So when they say things like “we’re spending more than the New Deal spent,” which is nonsense to begin with, they’re just completely leaving out that it was a vast mobilization and class struggle was at the heart of it.
Whatever its limitations may have been, then, the New Deal was premised on and enabled by a kind of political militancy that is nowhere to be found during the Biden era. It’s true that FDR commanded much bigger congressional majorities than Biden (though he also openly sought confrontation with powerful interests and had to overcome considerable opposition). In any case, whatever its merits remain once the Democrats’ reconciliation package finally goes to a vote on the floors of the House and Senate, there’s virtually no chance it will represent anything as transformative or lasting as the New Deal — nor anything “twice as big.”