"Not since the Great Depression." "Not since the 1930s." You hear those phrases a lot these days, and with some reason. As Congress prepares to pass the Democratic stimulus package, it may be worthwhile to look back at Franklin Roosevelt's New Deal and consider how well it worked as policy -- and politically.
There's a fairly broad consensus on policy that some of Roosevelt's actions made a positive difference but that they didn't get us out of the Depression. Amity Shlaes in her path-breaking "The Forgotten Man" makes a strong case that some of Roosevelt's moves blocked recovery, and even his admirers admit that his policies led to a sharp recession in 1937-38. After eight years of the New Deal, unemployment remained at 15 percent in 1940 -- double the figure for today. What really got us out of the Depression was World War II. The total number of employed persons and military personnel increased from 44 million in 1938 to 65 million in 1944.
So it would be unwise to copy the New Deal as a recipe for economic recovery. And the policies that produced the wartime boom are not replicable today. We are not going to have rationing, wage and price controls, government spending nearly half the gross domestic product, 91 percent tax rates and a 12-million-man military (the equivalent today would be 27 million).
There has been general agreement, however, that Roosevelt's policies were politically successful. Most of us in the political commentary business make frequent use of the phrase "New Deal Democratic majority" and tend to believe that Roosevelt's policies worked for his party for a long generation extending into the 1960s.
I think the picture is more complicated than that. Democrats did win big in the 1934 and 1936 elections. They made big gains in large cities and factory towns, many of which were staunchly Republican in the 1920s. But these gains were not sustained, as the effects of some New Deal policies -- high taxes on high earners, the unionization-promoting Wagner Act and jobs programs like the WPA -- became apparent.
In early 1937, unions engaged in sit-in strikes in auto and steel factories; they were plainly illegal, but Democratic governors in Michigan and Ohio refused to enforce court orders against them. Later that year, the "capital strike" Shlaes describes led to a sharp recession.
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