The economic debate unfolding in Congress over President Joe Biden’s massive spending plans is much more far-reaching and consequential than most people realize, even most people in Washington engaged in the fight. It isn’t just about the numbers or the potential inflationary impact from the magnitude of spending that Biden wants or the extent of the sway that Rep. Alexandria Ocasio-Cortez (D-N.Y.) has over the Democratic Party. At its foundation, it represents an ongoing epic struggle over the nature of the American political system, a struggle that has been at the center of American politics ever since President Franklin Roosevelt unveiled the New Deal.
Its focus is the extent of the federal government’s scope, reach, and power to intervene in the daily lives of Americans and into their economic activities. We seem to be at an inflection point in that long struggle.
To understand it, we must understand its context, extending back to 1941 and the publication of James Burnham’s pivotal study, The Managerial Revolution: What Is Happening in the World. Much has been written about Burnham in conservative journals of recent years. But his treatise bears noting here as early recognition of a cultural phenomenon of vast significance—the emergence of a new elite structure in America and a new power clash attending that emergence.
Burnham argued that the great development of the twentieth century wasn’t the competition of Communism vs. Capitalism, as many at the time believed, but rather the rise of a new managerial class of business executives, technocrats, soldiers, government bureaucrats, and various kinds of experts in various kinds of organizations. He predicted that this managerial elite would face resistance from traditional elements of the country but would successfully embed itself into the folds of American society and use its growing power to protect itself from societal adversaries bent on curtailing its reach. Also, the power-enhancement impulse led inevitably to a growing faith in socialism among the new managerial elites who needed a justification for ever greater power accumulation in the name of helping people.
History has demonstrated that Burnham’s thesis was correct in many respects. To the extent that the American polity is today an oligarchy (as many believe), it is such because of that managerial revolution that elevated the oligarchs to their current dominance. But Burnham was wrong about one significant element of his vision--in the extent to which he believed the oligarchs of the federal government would entrench themselves in the bureaucracy sufficiently to fend off the political opposition and rule at will.
It never quite happened. Although Democratic presidents (and some Republican ones as well) have sought consistently to aggrandize federal power, and Lyndon Johnson did so with considerable abandon following his landslide 1964 election victory, the managerial bureaucrats always seemed to run up against political forces that curtailed their most extensive big-government plans.
Even Roosevelt had to downgrade his domestic ambitions following the fiasco of his “court packing” effort in 1937. While the American people thoroughly supported his New Deal transfer of power to the federal government through his first-term legislative blitz, his audacious political assault on the Supreme Court frightened enough voters and siphoned off enough support that further New Deal expansion became impossible. Besides, Roosevelt was turning his attention more and more to the international scene in any event.
Roosevelt’s successor, Harry Truman, while a thorough New Dealer, didn’t build on the Roosevelt legacy to any significant extent, and his effort to get through Congress major health-insurance legislation fell flat.
As for President Lyndon B. Johnson, no one can downplay the magnitude of his federal power enlargement through multifarious bills that essentially redefined federalism. Much of it was designed to address the nation’s unfinished business of guaranteeing civil rights to black Americans and protecting their voting rights. But, with total command over Congress, he went much further in fostering enactment of Medicare, Medicaid, the Equal Opportunity Act, and a host of direct-benefit programs in areas such as housing, education, and nutrition.
All in all, it certainly fit the Burnham thesis. But much of the Johnson domestic-policy legacy proved destabilizing. Coupled with the severe political fallout from the president’s Vietnam debacle, this led to feelings that much of the president’s leadership had failed. The civil rights initiatives couldn’t prevent rage-filled race riots in American cities that led to scores of deaths. Johnson’s ill-fated decision to protect his Great Society spending while also paying for the Vietnam War led to highly problematic inflationary pressures. Troublesome deficits led the president to push for an unpopular income tax surcharge, eventually passed by Congress as the Johnson presidency disintegrated in the spring of 1968.
That led to the election of Richard Nixon, a bit of a managerial type himself. But Nixon sought to separate himself from the Democratic power enhancers by crafting federal benefit programs, such as revenue sharing and the Family Assistance Plan, that didn’t significantly enlarge federal bureaucratic power. We’ll never know if that could have proved to be a successful approach because Nixon’s great Watergate transgressions destroyed his presidency.
The next Democratic president, Jimmy Carter, couldn’t muster enough popular support to get through Congress any major domestic-policy legislation, and so he left the size and scope of the federal government pretty much as they had been when he took power. But his failures in office, especially the deadly mix of simultaneous recession and inflation, proved to be so threatening that the American people turned against the federal government and against any initiatives designed to enhance its power.
That led to Ronald Reagan, the greatest skeptic of federal power to reach the White House since Roosevelt. While he insisted he didn’t want to undo the New Deal, he unabashedly sought to roll back as much of Johnson’s Great Society as he could. As New York’s Democratic Senator Daniel Patrick Moynihan repeatedly complained prior to his death, Reagan cut taxes to curtail federal spending. This was only partly true; he also sought to spur production as a way of sopping up those excess inflationary dollars and producing noninflationary economic growth. Reagan excoriated out-of-control government for causing the country’s ills and said that returning power to the people and the states would prove to be the solution.
Reagan backed up his rhetoric with presidential success in bringing down inflation (with much help from Federal Reserve Chairman Paul Volcker), spurring economic growth, and undoing much of the federal regulatory regimen. He changed the terms of domestic-policy debate, and that contributed to his success--and his popularity.
But he didn’t roll back much of the Great Society. As Burnham had foreseen, federal power had become too entrenched by that time. He had to content himself with merely curbing its further entrenchment and creating a political environment in which further federal power enhancement would be difficult.
He succeeded in that goal, as evidenced in the presidency of Bill Clinton, who entered the Oval Office saying he intended to repeal Reaganism and within two years altered that pronouncement to, “The era of big government is over.” In between came the 1994 midterm elections in which Clinton had his head handed to him following his failed attempt to get a major health insurance bill through Congress, for which he lacked a sufficient electoral mandate. Acknowledging Reagan’s legacy, Clinton served the following six years as a generally successful president governing from the center-left.
Finally, there was Barack Obama, who enacted his big Affordable Care Act despite widespread opposition but who failed in efforts to pass a major energy bill, took a “shellacking” at the next midterm election, lost his mandate for further major legislation, and coasted through the remainder of his presidency without any further major accomplishments. His first term, a mild success, assured his reelection; his second term, a mild failure, gave America Donald Trump.
What this shows that the one great impediment to excessive federal power accumulation throughout the last ninety years has been the American people and the politicians they sent to Washington. No president since Roosevelt has governed successfully from the far left. Johnson pulled off a series of major power-enhancement initiatives, but his success in doing so ultimately was undermined by his failures, some of them attributable directly to his power-grabbing ways.
Now comes Biden, along with Sen. Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.), with every intention of upending the decades-long balance of power between the forces of big-government socialism and the forces opposed to that kind of power enhancement. And the big-government players appear to have substantial prospects for reaching their goal. They may not have an electoral mandate, but they make up for it in brazen resolve.
The key is entitlement programs, those that spend automatically based on eligibility. These thoroughly entrenched programs—Social Security, Medicare, Medicaid, Food Stamps, etc.—are almost impossible to curtail or even reform, and they always seem to grow inexorably. Already the nation’s entitlement structure constitutes “the largest money-shuffling machine in human history,” as John Cogan and Daniel Heil of Stanford’s Hoover Institution wrote in the Wall Street Journal. Now, Democrats want to expand the nation’s entitlement reach to some twenty-one million additional Americans.