President Franklin D. Roosevelt’s “New Deal” helped raise America’s economy out of the Great Depression in the 1930s and set the country on course to become a superpower. And now, for the first time in decades, we have someone in the White House who has a new New Deal within his grasp.
President Biden’s infrastructure investment bill echoes Roosevelt’s expansive public works projects; his vocal support for organized labor, his targeted debt relief efforts and his plans to strengthen domestic high-tech manufacturing evoke other Roosevelt priorities. The Inflation Reduction Act, too, includes money to bolster public infrastructure and address climate change, both goals Roosevelt most likely would have embraced, given his support for public works and conservation. Yet Mr. Biden’s efforts fall far short in two critical areas, and those shortcomings go to the heart of what his new New Deal could accomplish.
The most significant hole in the New Deal analogy: financial reform.
The financial landscape of the Jazz Age was ruthlessly unsafe. Wall Street lied to sell stocks and bonds to unsophisticated investors, and then it let rich insiders manipulate the prices of those securities for profit. Mutual funds were essentially unregulated piggy banks. This decade of plunder ended with the market crash of 1929 and the Great Depression, which put at least a quarter of the labor force out of work, nearly broke the banking system and made financial insecurity a fearful fact of life for all but the very richest Americans.
After the New Deal, depositors’ nest eggs were protected by the F.D.I.C., and the new Securities and Exchange Commission oversaw the accuracy of market prices and corporate financial statements. Mutual funds and money managers came under federal supervision, and the bankruptcy process became fairer to small creditors. Roosevelt understood that nurturing a less ruthless strain of capitalism was fundamental to making the American economy — and American democracy — work for everyone.
So far, Mr. Biden has largely been AWOL on the issue of financial regulation. There’s no excuse for that. While he clearly inherited a stronger economy than Roosevelt did, Mr. Biden also inherited an array of blindingly complex regulatory challenges that are as important to the nation’s future as any that confronted the New Deal.
Fraud in the unregulated market for cryptocurrencies has cost Americans billions. A growing share of our everyday life is now ruled by opaque and unregulated private-equity interests. Banks are still resisting regulation — and are still failing. The rise of near-monopolies threatens free competition in a host of industries. Finally, the advent of artificial intelligence in the increasingly automated financial industry holds the potential for a Pandora’s box of new risks that would probably have given Roosevelt nightmares.
But despite the obvious need for high-level attention, Mr. Biden has largely left critical battles to his regulators. Even where those regulators have been in Roosevelt’s mold — like the Federal Trade Commission chair Lina Khan, who is aggressively pursuing large corporations — their work has not been widely showcased by the president. If there is a top-down modernization of financial regulation on the drawing board for a second Biden administration, it is a well-kept secret. Too many people in both parties in Washington still give lip service to the tired deregulatory mantra left over from the Clinton administration.
From his first day in office, Roosevelt was deeply engaged in the passage of his landmark financial reforms. He was willing to listen when Wall Street had constructive ideas for regulating the market better, but he met every Wall Street demand for deregulation with the same firm response: No, we’re not going back to the bad old days.
Roosevelt also picked supremely competent people — the wily speculator Joseph P. Kennedy, the brainy James Landis, the fiery young William O. Douglas — to carry out his financial reforms. More important, he gave those people the superpower of presidential attention. My research shows that he kept tabs on what was happening in their agencies; he defended them when they came under attack, exercising his charm on news reporters and legislators and using his gift for communicating with average Americans to make his support as clear as possible.
President Biden’s supporters could argue, with some merit, that his administration needs time to design the reforms needed to modernize America’s regulatory machinery for the disruptive financial technology of a new century. But Roosevelt’s secret sauce, the magic of presidential attention that empowered and protected his regulators, is an ingredient that Mr. Biden could have applied from his first day in office — and that he could start applying tomorrow.
The second element missing from the New Deal analogy is eloquent and persistent Democratic advocacy that links Mr. Biden’s accomplishments to what has gone before.
If Roosevelt hadn’t spoken vigorously on behalf of his New Deal, it would never have passed. With his majestic cadences, Roosevelt used his campaign speeches to tell people what he intended to do; then, in office, he repeatedly told them what he had done and what more remained to be done. He sold his New Deal by emphasizing how much it was helping ordinary people.
Although some pundits have drawn arithmetic comparisons between Mr. Biden’s and Roosevelt’s budgets, when Mr. Biden mentions his achievements these days, he almost never frames them as a continuation of the nation’s New Deal legacy of making capitalism more fair.
Why Democrats on the campaign trail are so reticent about claiming their political heritage is a mystery to me. There is no better answer to the spurious claims that Mr. Biden’s policies are radical and extreme than to point to similar effective programs implemented roughly nine decades ago with broad public support — so broad that when Roosevelt ran for re-election in 1936 on the strength of his first-term accomplishments, he carried every state but two.
Yes, today’s media environment is more challenging. And in today’s hyper-combative Congress, it may have been strategically wise for Mr. Biden to dampen any echoes of the New Deal until he had secured bipartisan support for key legislation. But there is still a lot that Mr. Biden and his team could do. Many of today’s voters are simply unfamiliar with the way the New Deal helped level the economic playing field and raised living standards for ordinary Americans, and Mr. Biden could benefit greatly by educating them about America’s remarkable progressive heritage.
I’m not claiming that Mr. Biden, if he takes to heart these two lessons from Roosevelt, will sweep almost every state in 2024. But I firmly believe that opting for an eloquently vocal new New Deal, one visibly built around financial reforms that protect ordinary Americans every day, would put him in a much stronger situation than he’s in now.
As is the case today, America in the 1930s faced a rising global challenge from ruthless authoritarian regimes. Roosevelt, in a radio address several days before the 1938 midterm elections, had a message that the Biden administration would be wise to consider. “Democracy in order to live must become a positive force in the daily lives of its people,” he said, adding, “Democracy will save itself with the average man and woman by proving itself worth saving.”
As Roosevelt clearly understood — and said out loud — few things are more beneficial to the daily lives of the people than helping them safely save and invest their money in an economic system that treats them fairly and gives them hope. That was how Roosevelt helped to save democracy from authoritarianism in his era; it could help Mr. Biden do the same today.
Diana Henriques, formerly a senior financial writer for The New York Times, is the author of several books, including “Taming the Street: The Old Guard, the New Deal, and FDR’s Fight to Regulate American Capitalism.”
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