CAN BIG GOVERNMENT BE ROLLED BACK?

BY MICHAEL BARONE

AMERICAN ENTERPRISE INSTITUTE CAN BIG GOVERNMENT BE ROLLED BACK?

BY MICHAEL BARONE

December 2012

AMERICAN ENTERPRISE INSTITUTE Contents

Acknowledgments ...... iv Introduction ...... 1 1. The 1920s Republicans ...... 3 2. 1938 to 1946: The Conservative Coalition ...... 9 3. Reacting to Roosevelt: The 80th Congress and Beyond ...... 17 4. 1966 and 1968: Policy Changes at the Margins ...... 23 5. Achievements and Compromise in the Reagan Era ...... 29 6. Major Conservative Policy Advances ...... 35 Conclusion ...... 43 Notes ...... 45 About the Author ...... 49

iii Acknowledgments

I wish to thank Samuel Sprunk, who provided sterling research on this project; Karlyn Bowman, who provided sage counsel and advice; Claude Aubert, who designed the cover and layout; and Christy Sadler, who led the editing process.

iv Introduction

t is a rare proposition on which liberals and conser- and price controls; rationing of materials and food; Ivatives agree: American history over the last hun- and, in World War I, subsidies for farmers to ensure dred years has been a story of the growth of the size food supplies for famine-threatened allies. Such poli- and powers of government. This growth has not been cies produced demands for continued government steady. Conservatives, with some bitterness, have controls and subsidies in the postwar years, not least embraced a theory of ratchets: in every generation, lib- from military veterans who were drafted into service. erals succeed in ratcheting up the size of government But war is not the only friend of the state. Defense and conservatives fail to significantly reduce it. spending even during the Iraq and Afghanistan con- Liberal historian Arthur Schlesinger Jr. argued for flicts of the 2000s was a significantly smaller per- a similar theory of cycles: we have periods when lib- centage of GDP than in the peacetime of the late erals succeed in expanding government and then 1950s, early 1960s, and 1980s. A greater contributor periods when conservatives resist further expansion to the size of government in recent decades has been but do not roll back previous growth.1 In Schlesinger’s the growth of transfer payments in so-called entitle- view, each cycle of government growth begins with a ment programs, not subject to the congressional major electoral victory for the Democratic Party: appropriations process—Social Security, Medicare, Woodrow Wilson’s election in the three-way contest and Medicaid. Their share of the total economy now in 1912, the five consecutive victories of Franklin substantially exceeds that of military spending. Roosevelt and Harry Truman from 1932 to 1948, the In addition, government regulation imposes landslide for Lyndon Johnson in 1964, the victories of costs on the private-sector economy and has often Bill Clinton in 1992 and Barack Obama in 2008. tended to stifle competition and innovation. But reg- Superficially, the case for Schlesinger’s theory ulation has not inexorably risen in the United States; seems solid. Federal government spending as a on the contrary, it has grown and decreased over the percentage of gross domestic product (GDP) has years. And laws and regulations governing labor increased from 1.8 percent of gross national product unions and management have increased the power (GNP)2 in 1912 to 24 percent of GDP in 2012. And of government, or at least of politicians who favor the regulatory reach of the federal government has adversarial unionism; that movement, too, has increased exponentially over the last century as well, waxed and waned. in areas ranging from finance to pharmaceuticals. But The elections Schlesinger cited can be taken as a closer look shows that the growth of federal spend- endorsements by voters of government expansion, ing has not been smooth. “War is the health of the though not unambiguously; note that Franklin Roo- state,” as the New Republic’s Randolph Bourne wrote sevelt in 1932 called for reducing federal budget during World War I, and federal government spend- deficits, and Bill Clinton in 1992 called for ending ing as a share of GNP spiked during the two world “welfare as we know it.” But other elections can be wars, to 17 and 22 percent in the fiscal years ending taken as repudiations of big-government policies. in 1918 and 1919 and to 41 percent in 1943 and 45 They include Warren G. Harding’s record-breaking percent in 1944 and 1945. These wars also resulted winning percentage in 1920, the triumph of in vast increases in government power, with wage anti–New Deal Democrats and Republicans in 1938,

1 CAN BIG GOVERNMENT BE ROLLED BACK?

the Republican congressional majorities elected in World War I, the western world moved toward 1946, the significant Republican victories in 1966 political and economic freedom. The Great War, as and 1968, Ronald Reagan’s election in 1980, and the it was called, put the West and the United States on Republican congressional victories in 1994. a different trajectory. What follows here is an examination of the con- So neither the growth nor the shrinkage of gov- sequences of those elections. How successful or ernment is inevitable. Those who insist that progress unsuccessful were the efforts to reduce the size and consists of an ever-larger and more active govern- scope of government? What implications do these ment never specify at what point that process should episodes have for those who seek to reverse the stop. Those who argue for a minimal government recent growth in government spending as a percent- are grappling with the general trend toward conti- age of the economy, which rose from the 20–21 per- nuity of institutions in a mostly successful society. cent level in the years from the 1960s to 2007 to Despite the growth of government over the past cen- 24–25 percent today? It starts with the observation tury, over many years, polls indicate that most that neither the cycle theory nor the ratchet theory Americans have favored a smaller government that is consistent with the long run of history. To the con- does less over a larger government that does more. trary, history records many shrinkages of the power The question to examine is how effective public offi- and size of government and expansions of freedom. cials and policymakers who share that view have These things ebb and flow. In the century before been in translating it into public policy.

2 1

The 1920s Republicans

he 1920 presidential election was the harshest Public Information to “arouse ardor and enthusi- Trejection of a governing party in American asm” in April 1917. It passed an onerous Espionage political history. Four years before, Democratic Pres- Act in May 1917 and Alien and Sedition Acts in ident Woodrow Wilson was reelected by a popular 1918 authorizing deportation of allegedly disloyal vote margin of 49 to 46 percent. In 1920, with Wil- aliens and jailing of citizens for “disloyal, profane, son retiring after two terms, Republican Warren G. scurrilous or abusive” speech.2 It passed a ban on Harding was elected by a popular vote margin of 60 alcohol production in the summer of 1917, and the to 34 percent. At no time since the Civil War has the 18th Amendment imposing prohibition of alcohol candidate of a governing party received such a low was ratified in January 1919.3 percentage of the popular vote. This was a clear In these tumultuous times, with fighting still raging mandate for changes in public policy. in many parts of the world and the American econ- Wilson had come into office at a time when fed- omy in turmoil, Wilson spent the first half of 1919 in eral spending as a percentage of the economy was Europe, negotiating the peace treaties, including his level at about 2 percent, lower than in the economi- pet project, a League of Nations. In October 1919, cally troubled 1890s, and Wilson and the Democra- after a nationwide trip campaigning for the treaties’ tic Congress did not raise that level of spending until ratification, he suffered a disabling stroke and was the declaration of war in April 1917. At that point, bedridden for months, with access controlled by his budget expenditures rose from $700 million in the wife and physician. A bipartisan group of senators peacetime fiscal year ending in mid-1916 to $2 bil- refused to ratify the treaties without reservations indi- lion in 1916–17, $12.7 billion in 1917–18, and cating that the League could not force the United $13.5 billion in 1918–19, a rise from 1.5 percent of States to go to war without a congressional declara- gross national product to 3.2, 16.6, and 22 percent, tion; from his sickbed, Wilson opposed any reserva- respectively.1 The Army, Navy, and Marine Corps tions, and the treaties were rejected in November were expanded from a prewar force of 179,000 men 1919 and once again in March 1920. to 2.9 million by the time of the Armistice in Novem- During this time, events seemed to be spinning ber 1918, and total military spending for the war has out of control. In November 1918, communists been estimated at $26 billion. The railroads were seized power in Russia, which was plunged into nationalized in December 1917, and huge shipyards civil war, with US troops sent in to oppose the new were built by the government. Individual and cor- regime. Marxist revolutionaries staged uprisings in porate income taxes were sharply increased, but Berlin and Budapest, as well, and the threat of vio- two-thirds of funds to pay war costs were borrowed; lent revolution also appeared in the United States. the national debt increased from $1 billion to $19 In February 1919, there was a five-day general billion between 1915 and 1920. strike in Seattle, and in September 1919, there was In addition, the war also saw the creation of sev- a police strike in Boston, in which Massachusetts eral government agencies and acts that were Governor Calvin Coolidge became a national figure encroaching on citizens’ rights more than ever when he refused to reinstate strikers. November and before. The government created the Committee on December 1919 saw national coal and steel strikes.

3 CAN BIG GOVERNMENT BE ROLLED BACK?

In June 1919, a bomb exploded outside the DC town- This tactic appealed to voters yearning to return to a house of Attorney General A. Mitchell Palmer (Assis- time when government was more modest in its goals tant Secretary of the Navy Franklin Roosevelt lived and less intrusive in its actions. down the street), and in September 1920, a bomb The New Deal historians depicted Harding as a killed 38 people on Wall Street. Inflation, rampant relic from the horse-and-buggy age, and he has been during the war, continued to rise sharply until the often labeled as one of America’s worst presidents summer of 1920; then prices collapsed, sharply reduc- because of the scandals involving some members of ing farm income and increasing unemployment. his administration. But he was an able politician, Republicans won majorities in the Senate and and his call for a return to normalcy resonated with House in November 1918. Their opposition scuttled voters. And he appointed some first-rate Cabinet efforts by some Wilson Cabinet members to con- members, including Secretary of State Charles Evans tinue wartime planning programs and “forced coop- Hughes and Secretary of the Treasury Andrew Mel- eration between strong competitors”—the reference lon. Hughes’s stature as a former governor of New was to the relaxation of antitrust laws and govern- York, Supreme Court justice, and nearly successful ment direction of business—and they passed a bill Republican presidential nominee in 1916 and Mel- that restored the railroads to private ownership in lon’s stature as a creator of industrial corporations March 1920. But the Republican Congress, respond- were reassuring not only to voters but also to policy ing to sharp drops in farm prices, passed bills to elites in the United States and abroad. subsidize agricultural exports and impose tariffs on In his first two years, Harding’s Republicans had agricultural imports.4 large majorities in both houses of Congress. But the “America’s present need,” said Senator Warren G. Republican Party was not a laissez faire, free-market Harding, the Republican presidential nominee in party. Since the Civil War, it had been the party more 1920, “is not heroics but healing, not nostrums but likely to support government intervention in the normalcy, not revolution but restoration.”5 Harding economy. It tended to back high tariffs, while was a journalist, proprietor of the Marion (Ohio) Star, Democrats wanted to move toward freer trade. with something of a reputation for oratory and Republican presidents signed the Hepburn Act regu- phrase making; he was chosen to give the nominat- lating railroad rates and the Sherman Antitrust Act, ing speech for President William Howard Taft at the and Republican presidents Theodore Roosevelt and 1912 Republican National Convention and to deliver William Howard Taft prosecuted more antitrust cases the keynote speech at the 1916 convention. His ora- under that law than their Democratic successor tory was ridiculed in his own day and has been ever Woodrow Wilson. Republican presidents supported since, but that one sentence encapsulates a strong building federal dams and establishing federal water case against the Wilson administration. “Heroics” reclamation projects. And self-styled progressives was clearly a reference to Wilson’s high-flown oratory like Robert LaFollette of Wisconsin and George Nor- and dreams of a League of Nations bringing peace to ris of Nebraska did not think it anomalous that they the world; “nostrums” evoked the impractical pro- spent most of their political careers as Republicans. posals of the dreamier progressives, and “revolution” Under Harding and his successor Calvin reminded voters of the threat of violent revolution in Coolidge, Republicans did substantially reduce fed- the world and at home. “Healing,” “normalcy” (not a eral spending, but not to prewar levels. Federal out- word coined by Harding, by the way), and “restora- lays were $5.1 billion in the fiscal year ending in tion” evoked the seemingly more placid and less June 1921, three months after Harding took office; strife-ridden world before World War I, and so did they fell to $3.3 billion the next year and hovered Harding’s tactic of campaigning on his front porch, as between that figure and $2.9 billion up through the his fellow Ohioan William McKinley did in 1896. fiscal year ending in 1930, Herbert Hoover’s first full

4 THE 1920S REPUBLICANS year in office. A little more than half those reduc- office is created.”7 When the office was created and tions came from military spending for the Depart- placed in the office of the president rather than in ments of the Army and the Navy. In addition, the Treasury Department, Dawes accepted the job— budget surpluses enabled Republicans to whittle for one year only. He exerted his authority over down interest on the national debt from about departments aggressively, brandishing a letter from $1 billion to $659 million. Harding with a threat to fire agency heads who One means of disciplining federal spending was refused to comply with the requests of the bureau. the creation of the Bureau of the Budget in legislation When he left the office in June 1922, he boasted of signed in June 1921. Previously, federal departments savings of more than $1 billion. each made their own requests for funds, and each house of Congress had eight separate appropriations The 1922 elections came shortly after a committees. This obviously represented an institu- tional bias toward greater spending, since depart- severe recession and cutbacks in Republican ment heads tend to believe in the worthiness of their agencies’ missions and members of Congress tend to majorities, and farm bloc Republicans, eager seek membership on committees where they can for subsidies, were dubious about tax cuts. spend money on what they consider, for principled or political reasons, worthy programs. After the state of Illinois established a centralized budget process in Dawes’s handpicked successor, General Herbert 1917, Republican Illinois Congressman Medill Lord, shared his military but not his political back- McCormick (a scion of the McCormick reaper family ground. He stayed on throughout the Harding and and brother of longtime Chicago Tribune proprietor Coolidge administrations. “It was his custom, in the Colonel Robert McCormick) introduced a bill pro- search for economy,” reports political scientist viding for a federal budget bureau. It had widespread Richard Neustadt, “to inspect his subordinates’ desk bipartisan support and was taken up by a House drawers after office hours, confiscating extra pencils, select committee chaired by James Good (R-IA). A paper clips and pads of paper.” His harvest must bill passed both houses (McCormick had been have been minimal, since the bureau had fewer than elected to the Senate in 1918 and sponsored it there), 30 employees, but it appears that the institutional but Woodrow Wilson vetoed it in June 1920 because culture he and Dawes developed made the bureau a he questioned the constitutionality of the office of force for reducing spending. As Neustadt writes, comptroller general. Nonetheless, the House consol- “The theme of budget policy was reduction: reduc- idated the appropriations function into one commit- tion of expenditures, of taxes and of the public debt, tee that year. When the new Congress assembled in with presidential budgeting mainly a means of cut- 1921, it quickly passed a budget bureau bill, and ting back on current outlays and avoiding new com- Harding readily signed it into law.6 mitments.”8 This quest for economy was an example As head of the new Bureau of the Budget, Hard- of presidents seizing on a proposed procedural ing appointed Charles G. Dawes, a Chicago banker reform to effectively advance a policy for which they with political experience going back to the 1896 believed they had an electoral mandate. McKinley campaign and military experience as a Another policy for which they had reason to general in charge of procurement in Europe in believe they had a mandate was cutting tax rates and World War I. Dawes had turned down Harding’s paying down the national debt. As with the budget, offer of an appointment as secretary of the Treasury, Harding appointed a man determined to do the saying, “Nothing could tempt me into public life job, the multimillionaire banker and industrialist now, except possibly Director of the Budget, if that Andrew Mellon. During the war, the Democratic

5 CAN BIG GOVERNMENT BE ROLLED BACK?

Congress had raised the top rate of personal income nificant support from Democrats as well as Republi- tax to 65 percent. Mellon wanted to cut it to 32 per- cans. The gift tax was repealed and the estate tax rate cent in 1921 and 25 percent in later years. He knew cut in half; the top income tax rate was reduced to that high rates had prompted many high earners to 25 percent; and the income tax was abolished for invest in tax-free municipal bonds and believed that everyone earning $4,000 or less, which included a if income tax rates were much lower, they would majority of citizens. invest not in these but in businesses, which would As Mellon envisioned, the new and much lower produce jobs. He also wanted to repeal the excess tax rates stimulated economic growth, which pro- profits tax and, to provide compensating revenue, vided a revenue stream that enabled the federal gov- raise the corporate income tax from 10 to 12.5 per- ernment to run large surpluses and to use them to cent. But Republican members of the farm bloc, whittle down the national debt accumulated almost which I will examine in greater detail later, objected entirely during World War I from $24.3 billion to much of this, and the bill passed in November when Mellon took office to $16.9 billion in his last 1921 postponed repeal of the excess profits tax full year as secretary, 1931.9 This policy, of course, while increasing the corporate income tax and lim- did not endure through the economic collapse of the iting the cut in the top personal income tax rate to 1930s. But it was an example of a public policy pur- 50 percent. sued with careful planning and perseverance and The 1922 elections came shortly after a severe which proved successful over an extended period. recession and cutbacks in Republican majorities, The end of the war of course resulted in a vast and farm bloc Republicans, eager for subsidies, were reduction in military spending, but Harding and his dubious about tax cuts. Mellon’s plans for further commerce secretary, Herbert Hoover, aimed to tax cuts seemed imperiled. But he was stoutly reduce it further by promoting a naval disarmament backed by Calvin Coolidge, who became president treaty. The huge naval arms race between Britain and on Harding’s death in August 1923. This time, Mel- Germany before 1914 was seen as one of the causes lon wanted an immediate cut in the top income tax of World War I, and in Britain it led to adoption of rate to 25 percent, with lower rates on low earners the high-tax Lloyd George budget of 1910. Many as well. He also proposed to reduce the deduction also hoped that reductions in British and European for capital losses from 100 to 12.5 percent, the same naval spending would revive those countries’ rate as the capital gains tax. This was called the Mel- economies and make them more able to pay off their lon Plan and was presented in a book ghostwritten war debts to the United States and buy farm and for Mellon, entitled Taxation: The People’s Business other American exports. The Washington Naval and published in April 1924. Taxes, Mellon said, Conference opened in November 1921 and resulted should present “the least burden to the people” in an agreement limiting the navies of Great Britain, while yielding “the most revenue to the govern- the United States, Japan, France, and Italy to a ratio ment.” But Congress that year rejected his proposals, of 5 to 5 to 3 to 1.75 to 1.75, and the US govern- raised the estate tax, and established a gift tax to ment was able for a time to scuttle old ships rather limit estate tax avoidance. than build new ones.10 In 1924, Coolidge was resoundingly reelected The Harding and Coolidge administrations were over divided opposition (the Democrats ran the con- less successful, however, in holding down spending servative John W. Davis and the Progressives ran in two areas, farm programs and veterans’ bonuses, Robert LaFollette), and Republicans regained solid which were in different ways legacies of World War majorities in Congress that they would retain in I. Since the beginnings of the nation, a majority of 1926 and 1928. Mellon persevered, and in 1926 the Americans had been farmers, and even with the Mellon Plan was enacted almost in toto and with sig- rapid industrialization of the late 19th and early 20th

6 THE 1920S REPUBLICANS centuries, a near majority still were on the farm. But in the summer of 1920, in the last chaotic days of the 1920 Census for the first time reported that a the Wilson administration. Republicans, who had majority of Americans lived in urban areas, defined won control of the Congress in November 1918, (perhaps quaintly, to 21st century eyes) as govern- accommodated their business supporters by passing ment units with more than 2,500 people. This clearly a bill restoring the railroads to private ownership in upset many people, including rural-based members March 1920, and rallied their farm supporters by of Congress, who had long proclaimed the particular passing bills to subsidize agricultural exports and virtue of farm life and, like Thomas Jefferson, impose tariffs on agricultural imports, which Wilson lamented the baleful mores of the city. So unhappy vetoed. And after Warren Harding called Congress were members of Congress that, for the first and only into session in Spring 1921, one of the first acts of time in history, it ignored the Constitution’s com- the new heavily Republican Congress was to pass in mand to reapportion the members of the House of May even higher agricultural tariffs. With this farm Representatives among the states; not until June bloc’s support, the Fordney-McCumber Act raising 1929 did Congress pass and the president sign a bill tariffs passed in 1922. The farm bloc also quickly (that is still in effect) establishing a formula for reap- pushed through bills restricting speculation on portionment to be mechanically applied after the wheat in futures markets and strengthening USDA results of each census were certified.11 meat inspection powers.13 Farmers were on their way to becoming a minor- ity group and, like many minority groups, sought Farmers were on their way to becoming advantage through the political process. Throughout the 1920s, they could significantly influence a Con- a minority group and, like many minority gress in which farmers were disproportionately rep- resented. And that was true of both parties. Most groups, sought advantage through congressional Democrats in this period were from the political process. the largely rural South, where memories of the Civil War were still fresh, while in the North many cities sent Democrats to Congress, which meant that most In 1922, it pushed successfully for an antitrust Republicans represented states or districts which exemption for farm cooperatives, increased spending could be regarded or depicted as agricultural. Hence on farm loans, and a bill regulating the futures mar- the power of the farm bloc, a term that was used to kets to replace the 1921 law that the Supreme Court describe the about 20 Republican senators and 50 voided as unconstitutional. The subsidized farm loan Republican House members who made up a signifi- program was followed by the McNary-Haugen Farm cant part of the party’s congressional majorities.12 Relief Bill, first introduced in 1924, under which the The US Department of Agriculture had long government would buy eight commodities at subsi- sponsored agricultural research and provided advice dized prices and sell them on the world market at to farmers, and during World War I it provided out- lower prices. It was voted down in the House that right aid. The government wanted to maximize food year, but another version passed both houses in 1927 and fiber production to supply not only the United and 1928, only to be vetoed each time by Calvin States but also its allies, particularly Britain, which Coolidge. Herbert Hoover also opposed it. Despite did not produce enough food to feed its population. this opposition, these proposals laid the foundation This followed a period of high farm prices in the for the New Deal farm programs passed in the 1930s, early 1910s, the last years that saw big population and government support of commodities prices has gains in parts of the Great Plains. Farmers, accus- continued into the 21st century though farmers con- tomed to high crop prices, saw them fall precipitously stitute only 2 percent of the population.

7 CAN BIG GOVERNMENT BE ROLLED BACK?

The other issue that was a legacy of the war effort 1932, Hoover sent in the police and then the Army was the proposal that the government pay a veter- to clear the 2,000 who remained.14 Four years later, ans’ bonus. Harding and Mellon opposed any bonus Congress passed a law providing that veterans could unless Congress raised taxes to pay for it because the exchange their certificates for government bonds that proposal was estimated to cost $4 billion over the could be redeemed at any time. years and would wreak havoc with Mellon’s plan to Nearly everyone agreed that government owed reduce tax rates and pay down the national debt. something to those who had served in the military, The proposal was to deliver service certificates to the large majority of whom had been drafted. But the veterans proportionate to their length of service that Republicans failed to come up with creative legisla- would triple in value over 20 years, when they could tion that provided incentives for veterans to move up be converted to cash. Despite Harding’s opposition, like the GI Bill of Rights passed during World War II, the House passed a bonus bill by an overwhelming which provided money for college fees. margin in March 1922, the Senate passed a similar Overall, the Republican presidents and Congresses bill in August, and a reconciled version was passed elected in 1920 and in the four congressional and two in September. Harding vetoed the bill, and although presidential elections that followed were able to roll the House voted to override the veto, the Senate back government to an impressive extent in line with vote was 44–28, just short of the two-thirds needed what they took as their electoral mandate. They set to make the bill law. out on a deliberate path to reduce government spend- ing, lower taxes, and reduce the national debt, all of Republicans set out on a deliberate path to which were successful over a lengthy period. One can argue that spending must have been reduced because reduce government spending, lower taxes, the war had ended. But the fiscal discipline of the 1920s-era Republicans was impressive, and the and reduce the national debt, all of which macroeconomic response to their policies was robust. were successful over a lengthy period. Lower tax rates did produce more revenue, as Andrew Mellon insisted they would, despite demands for more spending by the farm bloc and by congres- This issue continued to split Republicans. sional Republicans sympathetic to veterans. Coolidge made it clear that he had enough votes in The Republican Party of this era was by no means the Senate to sustain a veto of a bill with immediate a uniformly free-market party, however. Republicans cash payments, but bonus advocates pressed suc- raised tariffs, allowed the precursors of farm subsidy cessfully for “adjusted compensation certificates” that programs to germinate, and failed to produce a vet- entitled veterans to certain cash payments. Coolidge erans’ benefits program that could do more than vetoed the measure in May 1924, but it got the two- whet the appetite of a large bloc of voters for imme- thirds needed in both houses to override his veto. In diate cash payments. Historians sympathetic to the 1931, Congress passed, over a Hoover veto, a bill New Deal treat these policies as leading to the providing for loans up to 50 percent of the value of Depression of the 1930s, but economic historians the certificates. In Spring 1932, Congressman Wright attribute the collapse fundamentally to bad mone- Patman (D-TX) called for issuance of $2.4 billion in tary policy, not reduced government. The 1920s fiat money to pay additional claims. The bill passed Republicans had public policy successes that the House but was defeated in the Senate that June, endured for a decade and were rewarded in succes- as a “bonus army” of some 10,000 veterans camped sive elections with the highest percentages of the out on Washington’s Anacostia Flats. Congress pro- vote the party has ever attained since it began field- vided funds for them to return home, but in July ing candidates in 1854.

8 2

1938 to 1946: The Conservative Coalition

he 1938 elections, including Democratic primar- parades rallying people to support the administra- Ties as well as the general election in November, tion reminded some of the much more sinister con- were a stinging repudiation of Franklin Roosevelt’s temporary mobilizations in Italy and Germany. As a New Deal, coming just two years after Roosevelt had permanent policy, the NRA was unworkable, and it been reelected by a 61 to 37 percent margin. He and was unclear whether Congress would have reautho- many of his advisers, and later most New Deal histo- rized it when a unanimous Supreme Court declared rians, misinterpreted the results. They noted, accu- it unconstitutional in May 1935—a decision that rately, that Roosevelt won larger percentages in prompted Roosevelt to seek his Second New Deal industrial and immigrant areas than in 1932 and legislation. But what the NRA did, or at least seemed lower percentages in rural and small-town areas and to do, was stop the deflationary downward spiral in ascribed those changes to the big-government poli- the economy and produce at least some economic cies of the so-called “Second New Deal” enacted in growth and reduction in unemployment. 1935, such as the Wagner Act requiring employers to Why did the NRA attract people in industrial and negotiate with unions, high income tax rates on high immigrant areas to Democrats but do the opposite in earners, and Social Security. rural areas and small towns? As I wrote in Our Country, But they failed to consider that the demographic and geographic trends they observed in 1938 were It supplied a sense of control for those whose already apparent in the 1934 congressional elec- fortunes seemed to be falling helplessly down tions, in which Democrats gained House seats com- a bottomless hole. Voters in the great cities of pared to 1932—before the Second New Deal America in the years up to 1930 were not so policies had been enacted or explicitly proposed.1 much the starving masses as they were people New Deal historians have argued that Roosevelt’s who had been gathered in from the country- 1932 and 1936 victories profoundly altered the sides of Europe and North America and were political balance. But the off-year elections of 1938 advancing economically more rapidly than and those that followed also changed the political they had ever thought possible. They were not balance, in the other direction. so much people mired in poverty as people In my 1990 book Our Country: The Shaping of suddenly and cruelly checked in upward America, I ascribed these electoral trends primarily mobility. Having grown up in a world where to the major New Deal program visible in 1934, the the milk cow, chicken and vegetable patch National Recovery Administration (NRA). The NRA guaranteed sustenance in even the toughest aimed not at economic redistribution but economic times, they found themselves in a world where stability: it established more than 700 industry they depended on paper—paper money and councils made up of businessmen and union leaders checks, deeds and mortgages—for their food, to set minimum wages and minimum prices for clothing and shelter; then all of a sudden they each industry. There was a certain element of coer- found their paper was worth nothing. For cion in this: the NRA’s blue eagle symbol was weirdly them NRA, with its price and wage regulations, similar to Mussolini’s fascist iconography, and its controls on production and distribution,

9 CAN BIG GOVERNMENT BE ROLLED BACK?

provided a sense of that things were back was not apparent in 1936 as growth continued and under control. Its pageantry and hoopla, the unemployment fell. As for Social Security, the first conformity it urged citizens to impose on one check to an elderly recipient would not go out until another, were assurances that the community 1940, and in the meantime, the tax on wages would not let them starve. . . . In the country- imposed a dead-weight loss on the economy. side, the fear was not so great, and the fall from Franklin Roosevelt failed to anticipate these devel- prosperity to depression had not been so far. opments and interpreted his reelection margin and There the interference of NRA and other New the huge Democratic majorities in Congress as an Deal programs in the fabric of local life seemed endorsement of economic redistribution and a man- unneeded and was quickly resented. William date for increased power for the executive branch. In E. Leuchtenberg, a historian sympathetic to the opening weeks of 1937, even as the first sit-down the New Deal, reports that NRA “sought to strikes were raging, he advanced proposals to pack drive newsboys off the streets and took a Blue the Supreme Court and streamline and increase the Eagle away from a company in Huck Finn’s old power of federal administrators. Roosevelt was frus- town of Hannibal, Missouri, because a fifteen- trated that the court had ruled unconstitutional year-old was found driving a truck for his much of his New Deal legislation, not only the NRA father’s business.” Accordingly, in the country- but also the Agricultural Adjustment Act farm bill side the Democrats began receding slightly and the Guffey Coal Act.4 His bill gave the president from the levels of popularity they had achieved authority to appoint a new Supreme Court justice six as the alternative to the discredited Republi- months after any incumbent turned 70 and would cans in the disastrous year of 1932.2 have enabled him to name six new justices immedi- ately. (Roosevelt’s first term was one of only four 20th century presidential terms—including Calvin The Roosevelt administration’s push for Coolidge’s full term, Jimmy Carter’s one term, and greater powers had split the very large Bill Clinton’s second term—in which the president had no Supreme Court vacancies to fill.) Democratic majorities and revealed that The bill was immediately opposed by New Deal Democrats like Senators Burton Wheeler (MT) and support for New Deal programs was Edward Burke (NE); the heavily outnumbered Repub- far from universal. licans, united in opposition, let Democrats make the case against it, since it could not be stopped with only Republican votes.5 Gallup’s public opinion polls In addition, the programs of the Second New showed that small majorities of the same voters who Deal had not come into anything like full operation strongly supported Roosevelt opposed the measure. by November 1936. The sit-down strikes that The impetus for it was weakened when one elderly resulted in unionization of auto, rubber, and steel justice retired and when the court, contrary to expec- workers after Democratic governors refused to tations, upheld the constitutionality of a Washington enforce injunctions against them were not launched State minimum wage law and of the Wagner Act, and until the last days of December 1936 and proved to the court-packing bill was abandoned after its chief be unpopular not only nationally but also in the Senate sponsor died in July 1937.6 Roosevelt suc- local communities affected. The effect of high tax ceeded in influencing and then, through a series of rates on high earners would in time provoke what appointments, transforming the Supreme Court. But New Deal lawyer Robert Jackson called a “capital his court-packing plan created a divide in the Democ- strike,”3 or a refusal to invest in job creation. That ratic Party that would persist for many years to come.

10 1938 TO 1946: THE CONSERVATIVE COALITION

Roosevelt’s executive reorganization plan met a now have blamed it on spending cuts ordered by similar fate as the court-packing proposal. An Roosevelt, who never entirely gave up on the goal of appointed committee of three municipal reformers a balanced budget, and money tightening by the and chaired by political scientist Louis Brownlow Federal Reserve, which refused to monetize gold recommended an expansion of the White House stocks flowing in from troubled Europe and sharply staff, limits on the autonomy of regulatory agencies, increased the reserve requirements for banks. and creation of a planning commission in the exec- Conservatives then and now identified other utive branch. Roosevelt gingerly forwarded the rec- causes. The undistributed profits tax enacted in ommendations to Congress, though they fell far 1936 required corporations to pay out most of their short of his desire for “a planning board charged profits in dividends and wages, leaving less to invest with the responsibility for directing the actions of a in job creation. The high tax rates enacted in 1935 regional system of planning boards.”7 Public reac- also limited capital formation, and Social Security tion was negative. This was seen, together with the payroll taxes were taking money out of the economy. court-packing bill, as an attempt to centralize power Wages had risen sharply in the wake of the sit-down in the executive branch at a time when dictators strikes and in reaction to the Wagner Act, but that were tightening control over European nations. did not result in the increased consumer demand Opponents of the reorganization plan held large ral- some economists predicted. Industrial production lies in New York City and Washington, DC, and in August 1937 fell by the largest percentage in his- Roosevelt appointees in regulatory agencies offered tory; by the end of December, it was down 40 per- covert opposition. cent, corporate profits were down 78 percent, and In April 1938, the plan came to a vote in the gross national product was down 13 percent. In first House, where Democrats outnumbered Republicans four calendar years of the Roosevelt administration, 331 to 89, and was defeated 212 to 204, with 108 unemployment fell steadily: the percentages, Democrats voting against it.8 There were only two rounded off, were 25, 22, 20, and 17 percent, significant legislative successes for the New Deal. respectively. This trend was absent in the years from One was enactment of a minimum wage law. It was 1937 to 1940, with unemployment fluctuating at originally defeated in the House in December 1937 high levels: 14, 19, 17, and 15 percent, respectively. by a 216 to 198 vote, including almost all Republi- At the beginning of 1938, Amity Shlaes writes in her cans and 135 mostly rural Democrats but was revisionist history of the 1930s, The Forgotten Man, revived and passed in the House after the May 1938 “there was a new sense of permanence in the depres- primary victory of New Deal Florida Democratic sion.”11 Similarly, historian Alan Brinkley notes that Senator Claude Pepper. But to gain Southern sup- “many liberals had reached the pessimistic conclu- port, the measure exempted farm workers.9 The sion that stagnation had become the normal condi- other was the so-called pump priming bill for $6.5 tion of modern industrial economies; that America, billion in federal spending to combat the recession, having reached ‘economic maturity,’ would need to which was passed in June 1938.10 Large majorities be managed since it could no longer be expected to are hard to hold together; the Roosevelt administra- grow.”12 Some inside the Roosevelt administration tion’s push for greater powers had split the very large called for sharp increases in government spending. Democratic majorities and revealed that support for Others wanted NRA-style collusion between busi- New Deal programs was far from universal among nesses and government or some form of government elected Democrats—especially those from Southern planning. Treasury Secretary Henry Morgenthau and rural districts—or among their constituents. pleaded for a balanced budget.13 Much to almost everyone’s surprise, a recession No clear policy emerged. Instead, Roosevelt began suddenly in August 1937. Liberals then and embarked on a course suggested by rhetoric in his

11 CAN BIG GOVERNMENT BE ROLLED BACK?

1936 Democratic National Convention acceptance said he accepted the challenge, and won the primary speech, delivered in a Philadelphia stadium to a with 44 percent of the popular vote. In South Car- crowd of 90,000 (larger than the crowds for the two olina, Roosevelt backed Governor Olin Johnston subsequent stadium acceptance speeches in 1960 over Senator “Cotton Ed” Smith, the incumbent and 2008). He assailed “privileged princes” of “eco- since 1908. Smith won 55 to 45 percent. In Mary- nomic dynasties” and “royalists of the economic land, he endorsed the opponent of Senator Millard order.” Later in the campaign, in New York’s Madi- Tydings, but Tydings won handily. son Square Garden, he said, “I should like to have it The lesson not lost on many Democratic politi- said of my first administration that in it the forces of cians, especially in the South, was that it was not fatal selfishness and of lust for power met their match. I to oppose the New Deal. A similar lesson was taught should like to have it said of my second administra- in the 1938 general election. In House elections, tion that in it these forces have met their master.”14 Republicans won 80 more seats than they had two In the wake of the recession, prominent New Dealers years before—a gain never matched again—and made the same appeal. In December 1937, Interior gained seven seats in the Senate as well. Republicans Secretary Harold Ickes gave a speech attacking “the captured governorships in Pennsylvania, Ohio, and sixty families” who, according to an article in the Michigan, where most of the sit-down strikes and New Masses, a left-wing magazine, controlled the union victories had been won, and 36-year-old Man- American economy. And that same month, Assistant hattan District Attorney Thomas Dewey nearly upset Attorney General (and, later, Supreme Court justice) Democratic Governor Herbert Lehman in New York. Robert Jackson accused business leaders of engaging All this represented a smashing defeat for the New in a “capital strike,” refusing to invest in selfish Deal, a repudiation of big-government policies as protest over high tax rates. their effects had finally become apparent and as pro- This was class warfare politics, and Roosevelt posals for further expanding the size and scope of waged it against Democrats as well as Republicans. government raised apprehensions and fears. Republican presidents elected in the 1920s had The political conflicts of 1937–38 and the con- been plagued by divisions in their large congres- gressional elections of 1938 birthed a new de facto sional majorities, but none set out to purge his party alliance of Southern and other conservative Democ- of his ideological opponents. Roosevelt, evidently rats with congressional Republicans. The enmities of taking his 61 percent as an endorsement of Second the Civil War era were fading more than 70 years New Deal economic redistribution, did. He decided after Appomattox, and Republican ardor to reverse to campaign actively in Democratic primaries, with Democrats’ reductions in tariffs faded in the face of a some success. Senator Alben Barkley of Kentucky sluggish economy. In 1937, an alliance of southern had loyally supported the New Deal, and after the Democrats and Republicans was “transforming the death of Senate Majority Leader Joseph Robinson previously docile House Rules Committee into a (D-AR) in July 1937, Roosevelt released a “Dear stubborn foe of administration proposals.”15 The Alben” letter endorsing him for Senate majority chief architects of this arrangement were Edward leader over Pat Harrison of Mississippi. Barkley won Cox (D-GA), who was Rules chairman or ranking 38 to 37 percent, and Roosevelt went to Latonia minority member from 1935 until his death in 1952, Race Track in northern Kentucky to endorse him in and Joseph Martin (R-MA), who was House minority his 1938 primary against Governor Happy Chan- leader from 1939 to 1959, except for 1947–49 and dler. Barkley won with 56 percent of the vote. Other 1953–55, when he was speaker of the House.16 interventions were less successful. Roosevelt went to The committee controlled the flow of legislation Barnesville, Georgia, to campaign against Senator to the floor and the number and contents of amend- Walter George in August. George shook his hand, ments that could be considered, and it remained a

12 1938 TO 1946: THE CONSERVATIVE COALITION conservative bastion until January 1961, when the also rejected the administration’s $3 billion Work House voted by only 217 to 212 to add three addi- Finances bill, which would have provided loans and tional members at the behest of incoming President funding for public works projects, and slashed fund- John Kennedy. The most explicit sign of cooperation ing for unemployment relief activities.19 In the came when Senators Josiah Bailey (D-NC) and House, 46 Democrats joined 146 Republicans in Arthur Vandenberg (R-MI) drew up a “Conservative voting not to consider the bill.20 The coalition passed Manifesto” in 1937, calling for lower taxes, less a bill empowering courts to review any rule of an spending, revision of the Wagner Act, and mainte- administrative agency, an attempt to rein in federal nance of “states rights.”17 Vandenberg became the regulators; this was vetoed by Roosevelt in 1940. It effective leader of Senate Republicans, since Minor- also passed a much watered-down Executive Reor- ity Leader Charles McNary (R-OR), a cosponsor of ganization Act, which authorized Congress to veto the 1920s McNary-Haugen Bill, had supported most any presidential reorganization of government.21 New Deal measures. Left unmentioned in the mani- festo were New Deal agricultural subsidies, which The political conflicts of 1937–38 and the the remnants of the 1920s Republican farm bloc and most Southern Democrats tended to support. They congressional elections of 1938 birthed a continued to receive bipartisan support for decades. But the setting out of an explicit conservative plat- new de facto alliance of Southern and form was something new, and the spirit behind it other conservative Democrats with would prove to be enduring. This conservative coalition had only limited suc- congressional Republicans. cess in the Congress that took office in 1939. It did push through the Hatch Act, sponsored by conser- vative Democratic Senator Carl Hatch of New Mex- The new coalition had less success on economic ico, officially titled “An Act to Prevent Pernicious legislation because of the war clouds rising over Political Activities.” This was a response to active Europe. It did repeal the bitterly criticized undistributed campaigning by personnel of Harry Hopkins’s profits tax, but it did not lower income tax rates and Works Projects Administration in the 1936 general for the most part did not slash spending. The House election and in the 1938 primaries and general elec- did make many spending cuts in appropriations in tions in Kentucky, Tennessee, Pennsylvania, and 1939, but most were rejected by the Senate, and the Maryland—public financing of pro–New Deal House acquiesced.22 And any spending cuts were out- politicians’ campaigns independent of state and weighed by increased defense and military spending, local parties. The Hatch Act prohibited campaign as concerns rose over the war being fought in Asia and activities by federal employees and by diplomats looming in Europe.23 Many House Republicans— and foreign policy and defense appointees; it also especially from the Upper Midwest and Great Plains prohibited federal employees from membership in states, where German- and Scandinavian American “any political organization which advocates the voters leaned toward isolationism—opposed any mil- overthrow of our constitutional form of govern- itary spending increases, but Democrat “hawks” from ment.”18 It was reluctantly signed by Roosevelt, who the South, the most martial part of the country, almost considered a veto, and, with an extension in 1940 to unanimously supported them. state and local employees paid with federal funds, The conservative coalition, though its exact remained in effect until 1993, when a Democratic strength was never clear, tended to dominate the Congress modified it to allow some political activity House and, to a lesser extent, the Senate, for most of by federal employees. The conservative coalition the 20 years after the 1938 elections. The tension

13 CAN BIG GOVERNMENT BE ROLLED BACK?

between Republican isolationists and Southern a staunch New Deal supporter, resigned as Senate Democrat hawks vanished after Pearl Harbor and majority leader in protest of Roosevelt’s veto of a tax when Arthur Vandenberg changed his views and bill. The conservative coalition had only limited pol- became a dedicated internationalist, supporting icy success in the eight years after the 1938 election. American membership in first the United Nations and Its achievements were mostly negative, blocking new then NATO. The potential tension between the two New Deal measures and limiting government and blocs on civil rights did not become a front-rank issue labor unions in wartime. It could muster congres- until the late 1950s. In the meantime, as Roosevelt, in sional majorities and even two-thirds veto overrides his own words, switched from being “Dr. New Deal” before it could develop policy alternatives to Roo- to “Dr. Win the War,” Congress took the opportunity sevelt’s agenda. But the development of a working to permanently abolish New Deal programs, includ- relationship between almost all Republicans and ing the Civilian Conservation Corps (with a military about half of congressional Democrats, rooted in a draft, jobs for unemployed young men were not distrust of centralized government, in time led to the needed), Hopkins’s hated Works Progress Administra- development of conservative public policies. After the tion, the National Youth Administration, the National 1946 election, when Republicans gained majorities in Resources Planning Board, and the Home Owners’ both houses, the conservative coalition had not only Loan Corporation (which was always intended to be effective supermajorities on many issues, but also an temporary). Congress showed its hostility to wartime articulate agenda ready to enact. wage and price controls by reducing funding for the Liberals have long interpreted Roosevelt’s reelec- Office of Price Administration. And it showed its fears tion in 1940 and 1944 as endorsements of liberal of a propaganda enterprise like the Wilson adminis- policies and rejections of the views of the conserva- tration’s Committee on Public Information by reduc- tive coalition. But Roosevelt actually ran far behind ing funding for the Office of War Information. It his job approval ratings, which were as high as 70 rejected Roosevelt’s efforts to limit wartime salaries to percent during the war. Even so, he won in 1944 by $25,000 and refused to pass a tax measure as progres- 53 to 46 percent over the 42-year-old Thomas sive as he wanted in 1944.24 The Congress passed the Dewey, his lowest majority in four elections. Smith-Connally Act in 1943, banning strikes in war The conservative coalition was winning majori- industries and authorizing the government to seize ties in congressional elections at the same time. The struck firms, over Roosevelt’s veto. conservative coalition’s strength, at least in the House, owed something to redistricting—or the fail- Roosevelt owed his victories in 1940 and ure of many legislatures to draw equally populated districts and the Supreme Court’s unwillingness, 1944 to foreign, more than domestic, issues. until 1964, to order them to do so. Northern Repub- licans tended to represent rural and small-town dis- tricts with little population growth in comparison to These rebuffs of the administration “were a result the very rapid growth in major metropolitan areas in of Republican unity and Democratic disunity,” writes the 1920s and again in the 1940s and 1950s. And political scientist Charles O. Jones. “In the last years the few medium-sized metropolitan areas in the of the war, a frequent vote split found 50% of Democ- South, which might have elected more liberal mem- rats joining all Republicans against the president. . . bers than those from the countryside, were under- The defection of many in the president’s own party represented as well. provided the Republicans with the legitimacy they In addition, blacks were effectively barred from needed to oppose the president.”25 The division among voting in most Southern states and that many poor Democrats went deep: in March 1944, Alben Barkley, whites did not vote because of poll taxes. This

14 1938 TO 1946: THE CONSERVATIVE COALITION meant most Southern Democrats did not have to opposition. New Deal historians have taken his four worry about voters who, political scientists like V. O. presidential election victories and Harry Truman’s in Key Jr. hoped, would unite to form a liberal con- 1948 as an indication that Americans wholeheart- stituency. In the postwar period, this would arguably edly accepted and supported economically redistri- undermine the conservative coalition by giving its butionist New Deal programs. But Roosevelt owed members incentives to cater to constituencies of his victories in 1940 and 1944 to foreign, more than declining demographic importance and would domestic, issues; Gallup showed about 70 percent reduce the coalition’s appeal in statewide and presi- of Americans opposed a third Roosevelt term in dential elections. But between 1938 and 1946, the 1938 and early 1939, but only 57 percent did after electoral success of the conservative coalition rea- war broke out in September 1939. sonably represented public opinion. Both parties in There is a strong argument as well (see chapter 3) the conservative coalition voted mostly in line with that Truman’s victory in 1948 also owed much to opinion in their states and districts. They would not foreign policy; in that area, he received bipartisan have been elected and reelected if they had not. support from Republican congressional leaders even The irony is that if any one person was most as they were opposing him fiercely on domestic responsible for driving a wedge in the Democratic issues. The continual confrontations between liberal party and sparking the emergence of the conserva- presidents and conservative Congresses occurred tive coalition, it was President Franklin Roosevelt. because voters were electing presidents on foreign He overestimated the popularity of economic redis- issues and voting for congressmen and senators on tributionist and central planning policies, prompt- domestic issues. But when the war was finally over, ing the coalescence of principled conservative domestic issues came to the fore.

15 3

Reacting to Roosevelt: The 80th Congress and Beyond

n January 1944, Franklin Roosevelt delivered a individual freedom cannot exist without economic IState of the Union address that looked forward to security and independence,” he declared. the end of the war and set out a postwar program This speech was an attempt to give constitutional resembling, in some respects, the Beveridge Report dimension to not only the New Deal but also a that guided Britain’s Labour government, which much more systematically developed welfare state. came to power in the election of July 1945. “In our Roosevelt, in command of the largest American mil- day these economic truths have become self- itary forces ever assembled and aware that he was evident,” the president said in his address, echoing leading them through great vicissitudes toward the the vocabulary of the founders. He continued, total victory he had promised in his Pearl Harbor speech, presumably had little doubt that he would We have accepted, so to speak, a second Bill of win a fourth term in 1944. He hoped that he could Rights under which a new basis of security leverage his wartime prestige (as indicated by his 70 and prosperity can be established for all percent job approval rating) into support for an regardless of station, race or creed. Among ambitious postwar program. But such ideas had had these are: the right to a useful and remunera- very limited support in Congress, since Republicans tive job in the industries or shops or farm or had outpolled Democrats in elections for the House, mines of the Nation; the right to earn enough leaving Democrats only a nominal 218 to 208 to provide adequate food and clothing and majority there (since Democrats won almost all seats recreation; the right of every farmer to raise in the South, where general election turnout was and sell his products at a return which will light) and a much reduced 58 to 37 majority in the give him and his family a decent living; the Senate (down from 76 to 16 when these seats were right of every businessman, large and small, to last open). trade in an atmosphere of freedom from unfair Roosevelt’s plans for a postwar world organiza- competition and domination by monopolies tion gained support, most notably from Senator at home and abroad; the right of every family Arthur Vandenberg. Congress passed, by nearly to a decent home; the right to obtain adequate unanimous votes, imaginative and generous veter- medical care and the opportunity to achieve ans’ legislation, the GI Bill of Rights. Americans rec- and enjoy good health; the right to adequate ognized that they had unique obligations to those protection from the economic fears of old age, who had served, and the bill, fashioned largely by sickness, accident and unemployment; the the American Legion, provided not automatic cash right to a good education.1 or credit bonuses, but generous subsidies for those making the effort to go to college or to buy a home. He decried “the whining demands of selfish pres- But on economic issues the conservative coalition sure groups” and called for steeply graduated tax had clear majorities in both houses. Efforts to con- rates, government controls on crop and food prices, vert the wartime National Resources Planning Board continued controls on wages, and a national service (NRPB) into a postwar planning agency foundered law to prevent strikes while the war lasted. “True amid widespread congressional opposition, and the

17 CAN BIG GOVERNMENT BE ROLLED BACK?

board was allowed to expire before the war ended. Vice President Henry Wallace, Roosevelt reportedly A 1943 NRPB report called for a Federal Works said, “Clear it with Sidney.”5 At the end of the war, Agency to provide jobs for “all who are able and some one-quarter of the civilian labor force were willing to work.”2 The proposal received support union members, a huge increase from a decade from the American Federation of Labor; from the before, and with inflation raging and wartime price Congress of Industrial Organization, whose union controls in danger of collapse, unions sought big leaders were busy forming a political action com- wage increases. mittee to support liberal Democratic candidates; and In fall 1945, the United Auto Workers and United from the National Farmers Union. Republicans had Steelworkers threatened to go out on strike; Truman limited success in the 1944 election, held five first called for the Railway Labor Act’s 30-day cooling months after the landings in Normandy and a off period to be applied, then demanded to see the month after General Douglas MacArthur fulfilled his companies’ books. The unions struck in early 1946, vow to return to the Philippines. Roosevelt was the government recommended settlements, the com- reelected by a 53 to 46 percent margin—his lowest panies demanded the ability to charge higher prices, in four elections—over New York Governor Thomas and the Steelworkers and Auto Workers settled in E. Dewey, and Democrats made only minimal gains February and March 1946. John L. Lewis’s United in the House of Representatives while losing one Mine Workers struck the coal mines in March, at a seat overall in the Senate. time when industry and homes depended on coal for In that setting, a Full Employment Act intro- fuel; two railroad unions struck in May, and the coal duced in January 1945, requiring the president to miners went out again. Truman sought a law drafting use loans and direct spending to create enough jobs strikers but vetoed the Case Bill, which restricted the to bring the economy to full employment, was a powers of unions. Overall, 1946 was the number- nonstarter. Harry Truman, president since Roo- one strike year in American history, with 4.6 million sevelt’s death in April 1945, supported the bill and workers, more than 10 percent of those employed, the outlines of Roosevelt’s 1944 State of the Union striking. Work stoppages totaled 1.4 percent of all speech. The conservative coalition amended the bill working time, more than double the next highest so that when it was finally enacted in 1946 it simply year. Truman also wavered on price controls. He declared it was government policy to encourage full lifted controls on building materials in October 1945 employment and created the president’s Council of and reimposed them in December. He urged Congress Economic Advisers “to formulate and recommend to extend the Office of Price Administration beyond its national economic policy to promote employment, expiration date of June 1946, vetoing one bill and production and purchasing power under free com- signing another that imposed price controls on meat petitive enterprise.”3 Even less successful were Tru- on August 20. Providers withheld their meat to avoid man’s calls for continued government price controls, the lower prices, leading to a shortage, so Truman a higher minimum wage, a public housing bill, a ordered controls on meat lifted in October. The first permanent Fair Employment Practices Commission, postwar year was a time of clamor and uncertainty.6 and tax cuts limited to $5 billion.4 As the conservative coalition was winning victo- Labor unions, the fruit of the 1935 Wagner Act, ries in the Democratic Congress, one member in were a new political and economic force in postwar particular, Republican Senator Robert Taft of Ohio, America. The CIO-PAC, organized by the Amalga- concentrated on crafting serious legislation. The son mated Clothing Workers’ Sidney Hillman, did such of President and Chief Justice William Howard Taft, yeoman’s work for the Democratic ticket that when he had practiced law in Cincinnati and served in the Democratic National Committee Chairman Bob Ohio legislature for eight years until he was elected Hannegan asked Roosevelt about a replacement for to the Senate in 1938 by a 54 to 46 percent margin

18 REACTING TO ROOSEVELT: THE 80TH CONGRESS AND BEYOND and reelected in 1944 over strong labor union oppo- Most Americans had had enough strikes, wage and sition, by only 50.3 to 49.7 percent. In the days price controls, inflation, and high taxes after the before large congressional staffs, Taft was a prodigious long, hard years of war. For all these problems, worker, studying statistics and government reports, Republicans had crisp, clear solutions, and on com- developing his own positions on major issues and plex issues like labor law, they had already, often in persuading others, despite his lack of charm in pub- concert with conservative Democrats, started on the lic. (His advice to consumers when food prices were difficult business of drafting legislation. The voters rising was “eat less.”7) rewarded them at the polls. Labor union election In the absence of a strong Senate Republican efforts were desultory after the death of Sidney Hill- leader, the hard-working Taft replaced the garrulous man earlier in the year, and turnout was down in Vandenberg as effective party leader on domestic heavily Democratic areas in the North. Republicans issues, leaving the newly internationalist Vanden- won 55 percent of the popular vote in Senate elec- berg to speak for the party only on foreign policy. tions and won the popular vote for the House by a Taft was content to be chairman of the Republican 53 to 44 percent margin—the highest percentage Policy Committee and the Labor Committee. His margin since 1928 and higher than any Republican particular goal was to revise the Wagner Act to victory margin since. Almost all the Republican reduce the power of unions, and when Democrats in House gains were in industrial and large metropoli- March 1946 passed disabling amendments in com- tan areas, from Connecticut west through Missouri mittee to the bill sponsored by South Dakota Repub- and in California (where Richard Nixon defeated a lican Francis Case, Taft stepped in and drafted floor New Dealer) and Washington State. A majority of amendments. The Case Bill banned secondary boy- the surviving House Democrats were from the cotts and violent picketing, permitted injunctions South, outnumbering those remaining from big-city against strikes, and provided for a 30-day cooling- districts. Republicans had a 51 to 45 majority in the off period before a strike could begin. Taft’s amend- Senate and a 245 to 188 majority in the House. ments were tougher: a 60-day cooling-off period, an They had reason to believe that they had a mandate independent federal mediation board, and joint from the voters to reduce the size and scope of gov- employer-union administration of pension funds. ernment and to limit the power of labor unions. Unions would be liable for contract violations, and foremen were defined as part of management. In Labor unions, the fruit of the 1935 Wagner May, the Senate adopted his amendments and passed the bill; Truman vetoed it, and the 255 to Act, were a new political and economic 135 majority to override in the House fell short of force in postwar America. the necessary two-thirds. But in the same month, when Truman demanded the power to draft railroad strikers, Taft intervened to preserve the right to Taft immediately plunged into labor law. Lacking strike.8 Taft also took the lead in the drive to oppose a committee majority because of northeastern price and wage controls. His characteristic manner Republicans’ pro-union views, he fashioned the leg- was to go off by himself to master the facts; devise a islation on the floor, banning secondary boycotts legislative solution; and, despite his lack of bon- and jurisdictional strikes (a problem when the AFL homie, persuade most of his colleagues to agree. and CIO unions picketed an employer, both seeking Taft nevertheless took part in the Republican bargaining rights), providing an 80-day cooling-off campaign to recapture majorities in Congress in Fall period, banning use of union dues for politics, and 1946. “Had enough?” was their slogan. It was a full- banning communist union officials. Unions could throated campaign against overly large government. bargain for a union shop, in which all employees

19 CAN BIG GOVERNMENT BE ROLLED BACK?

would have to pay dues, but not in states with right- The 80th Congress refused to pass Truman- to-work laws banning such arrangements. He modi- backed increases in the minimum wage or Social fied the more stringent House version, sponsored by Security legislation. It dismantled most of what was Congressman Fred Hartley (R-NJ), to maximize its left of wartime wage and price controls. It did not support in the Senate. Unions nevertheless furiously seriously consider civil rights legislation, which Tru- opposed the bill as a “slave labor” act, but it passed man recommended in vague terms even as he took both houses. Truman, after some indecision, issued a the first steps as commander-in-chief toward deseg- stinging veto, which was overridden 331 to 83 in the regating the military. It did pass a one-year extension House and 68 to 25 in the Senate—a vivid demon- of reciprocal trade legislation, something of a retreat stration of the strength of the bipartisan conservative from Republicans’ historic cause of higher tariffs. coalition that had been forged nearly a decade before.9 Taft let Republican George Aiken of Vermont pass an The Taft-Hartley Act, modified somewhat by the extension of farm price supports at 90 percent of Landrum-Griffin Act (another conservative coalition parity (a figure calculated on the basis of the very achievement) in 1959, has remained in effect ever high farm prices of 1909–14); this was handed since, an enduring public policy success. down from the unsuccessful McNary-Haugen Bill of This was not the only achievement of what Tru- the 1920s and the New Deal farm legislation of the man in 1948 called the “do-nothing 80th Congress,” 1930s, and Republicans representing rural districts which in fact was unusually productive for a Con- or states were eager to see it continued.12 gress dominated by the party in opposition to the Taft did not, however, reject every aspect of Roo- president.10 Another Republican goal was to reduce sevelt’s 1944 State of the Union program. He worked tax rates, which had risen to 91 percent on high with Democratic Senator Robert Wagner of New earners during the war. And they had to address a York, another workhorse who developed legislation particular problem: states with Spanish and French from independent study on housing legislation. heritage had community property laws, which rec- Wagner, an immigrant from Germany who traveled ognized married couples’ incomes as equally owned regularly to Europe, was impressed with the public by both spouses, and federal courts had allowed housing programs of 1920s and 1930s in Britain and spouses to file separate returns, enabling them to Austria and believed that private homebuilders could pay much lower rates than if all the income had not provide the supply of housing needed after 15 been assessed against the (usually) sole earner. Tax- years of low construction during the depression and payers in other states demanded equal treatment, war. Taft had greater but not complete faith in the and legislatures in those states were urged to enact private market, which he felt could not build low- community property laws. To provide equal treat- cost housing. In Fall 1945 he, Wagner, and Allen ment, the tax writing committees created the mari- Ellender (D-LA) cosponsored a housing bill that pro- tal deduction, which allowed married couples in vided funding or loan guarantees for both private every state to be taxed at a lower rate than before. and public housing. It passed the Senate by voice In addition, Republicans provided for lower tax vote in August 1946, and a similar bill passed the rates and passed one of the largest tax cuts in Amer- Senate by a wide margin in April 1947. But housing ican history in 1947. Truman argued it would be legislation went nowhere in the House. Taft’s support inflationary, and the Senate fell short of overriding for some form of federal aid to education, again a his veto. But Congress cut Truman’s budget by $2.8 contrast to his reputation as an unflinching conser- billion, and in 1948, with the economy seemingly vative, was similarly unsuccessful.13 weakening, similar tax cut legislation was brought The Republican 80th Congress is usually treated forward. This time, the conservative coalition rallied as an aberration in the long story of the growth of two-thirds in both houses to override.11 government and the expansion of the American

20 REACTING TO ROOSEVELT: THE 80TH CONGRESS AND BEYOND makeshift welfare state. Not only was Harry Truman support but also from rural voters who wanted farm reelected, contrary to apparent trends in the polls subsidies and feared that the New York City–based (though the last Gallup poll, ending on October 25, Dewey and congressional Republicans would trim 1948, showed him only 5 percent behind Dewey), them. The electorate in 1948 had not yet expanded but Democrats regained majorities in both houses of to include the GI generation (total turnout was Congress. But once again, for the third time in 1940s lower than in 1940), and the farm vote was a larger presidential elections, foreign policy played a signifi- factor than it would ever be again. cant role, despite being downplayed in the accounts of New Deal historians. Truman boldly took the ini- The public policy achievements of the 80th tiative against the advance of communism in Europe in those years, setting forth in April 1947 the Truman Congress, with its conservative coalition Doctrine promising aid to Greece and Turkey against supermajority, proved to be enduring. communist incursion. In June 1947, he proposed the Marshall Plan of economic aid to rebuild Western Europe. (It was also offered to communist Eastern Truman’s 50 to 45 percent victory over Dewey Europe, but Stalin rejected it.) Congressional Repub- and the 9 percent increase in the Democratic per- licans, led by Vandenberg, heartily supported these centage of the popular vote for the House of Repre- efforts: 57 percent of House Republicans voted for sentatives (identical to the 9 percent increase in the the Truman Doctrine in 1947, and 74 percent voted Republican percentage in 1946) made it appear as if for the $5 billion Marshall Plan in 1948.14 In addi- the work of the Republican Congress had been repu- tion, the Republican Congress, which had rejected diated. But the new Democratic 81st Congress did Truman’s proposal for universal military training, not succeed in reversing the most important policies voted to reinstitute the military draft—something of its predecessor. The 80th Congress ratcheted back most Republicans had opposed in September 1940 government in some significant measure, and the and nearly defeated in August 1941.15 1948 election did not initiate a cycle of expanding Meanwhile, the communist threat continued. government in response. The conservative coalition, Czechoslovakia’s democratic government was weaker than in 1938–48, mostly still held, as many replaced by a communist coup in February 1948, Southern and other Democrats refused to embrace and in June 1948 the Soviets cut off land access to the post–New Deal liberalism Truman advocated. Berlin across the Soviet sector of Germany. Truman, The unions failed in their fight to repeal Taft- against military advice, ordered that Berlin be sup- Hartley. The tax cuts remained in effect until they plied by air, beginning the Berlin Airlift in July were raised marginally during the Korean War; this 1948—a great triumph of American strength, adapt- time also saw a return of some price controls that ability, and generosity. Truman and his foreign pol- were quickly phased out. The 81st Congress did icy advisers kept in close touch with Vandenberg pass a watered-down version of the Wagner-Taft- and other congressional Republicans; during the Ellender bill, but it gave more impetus to the private 1948 campaign year they admitted Dewey’s repre- housing market than to public housing projects; sentative, John Foster Dulles, into their counsels.16 only in Wagner’s New York City (which retained The vote totals show that Truman recovered support rent controls for generations, stifling the private that Roosevelt had lost in the 1940s among tradi- market) did public housing play the major role Roo- tionally anti-British Irish- and German-American sevelt and Wagner hoped and expected it would voters and did particularly well among Polish- play. Federal aid to education was again rejected, Americans and other Eastern European ethnics. On hinging on aid to Catholic schools: Catholics would domestic issues, he benefited from strong union not support it without the aid, and Southerners

21 CAN BIG GOVERNMENT BE ROLLED BACK?

would not support the plan with it. The public pol- The United States, thanks in large part to the 80th icy achievements of the 80th Congress, with its con- Congress, went in another direction. The apparatus of servative coalition supermajority, proved to be wartime controls was dismantled; industrial corpora- enduring—for a generation, in some cases (federal tions were left in private hands; the federal govern- aid to education was finally approved by the Great ment did not provide most new housing units or, for Society Congress in 1965) and indefinitely in others a generation, subsidize and direct elementary and sec- (the Taft-Hartley Act). ondary education; tax rates were lowered and even- The contrast with our Anglosphere cousins in tually would be lowered still more; labor unions did Britain is instructive. There the Labour Party, headed not grow powerful enough to stem the growth of the by wartime Deputy Prime Minister Clement Attlee, private-sector economy. Government programs that adopted the welfare state recommendations of the won the support of the conservative coalition, notably Beveridge Commission, similar in many respects to the GI Bill of Rights and home mortgage subsidies, the program Roosevelt laid out in 1944. The party succeeded because they stimulated, rewarded, and won a great victory over the Conservatives in the honored upwardly mobile personal behaviors. July 1945 election. The Labour government then The rejection of Roosevelt’s 1944 State of the Union proceeded to create a cradle-to-grave welfare state, program was an essential ingredient of the economic including the National Health Service; nationalize growth and unexpected prosperity of the post–World major industrial companies; and maintain wartime War II United States. The repudiation of big govern- rationing and price controls. In the years that fol- ment and big labor registered in the 1946 election, lowed, Britain’s economy grew sluggish. The pound and the fact that the conservative coalition was pre- lost more than half its value as compared to the dol- pared to adopt public policies in line with that repu- lar, labor unions developed overweening power, and diation shaped American government and American productivity and economic innovation languished. life for many years after the 80th Congress adjourned.

22 4

1966 and 1968: Policy Changes at the Margins

n your time,” President Lyndon Johnson said in thought. Kennedy, previously skittish on civil rights, “IMay 1964 to 100,000 people at the University responded by endorsing major civil rights legislation of Michigan’s stadium, “we have the opportunity to on television in June 1963. The legislation was well move not only toward the rich and powerful society, on its way to passage when he was shot, and Johnson but upward to the Great Society.” Johnson had been worked skillfully to push it through. Johnson president since the assassination of John F. Kennedy responded on poverty in March 1964 by unveiling an in November 1963, and characterizing his policies antipoverty program and pushing that through Con- as “the Great Society” was an attempt to suggest an gress in 1964. advance from Kennedy’s “New Frontier.” It was also Johnson was reelected by a 61 to 38 percent mar- more ambitious. “We have the power to shape the gin in 1964 over Barry Goldwater. He lost only five civilization that we want,” said Johnson in Ann Deep South states and Goldwater’s home state of Arbor. And he promised new policies “on the cities, Arizona. This victory was widely attributed to John- on natural beauty, on the quality of education and son’s penchant for “consensus” and for the conser- on other emerging challenges.” vative Goldwater’s suggestions to get rid of New Kennedy’s initial domestic policies, in contrast, Deal programs like Social Security and the Ten- had tended toward freer markets. The chief legislative nessee Valley Authority. Liberal Republicans like priority of his first two years was a bill lowering trade Goldwater’s primary opponent, New York Governor barriers; in the House, most Democrats voted for it Nelson Rockefeller, argued the results showed that a and most Republicans against. His next priority was a conservative could never win. But polling in fall tax cut, with a particularly large drop in the highest rate; 1963 put Kennedy ahead of either Republican by this was finally passed in February 1964. Kennedy similar margins and suggested he would have run as did seek increases in government spending, but pri- strong as Johnson outside Texas and the South, the marily in defense spending. But unanticipated devel- only part of the country where his job approval opments moved Kennedy and then Johnson to seek slumped after he endorsed the civil rights bill. Those an expansion of government. One was the success of results were so out of line with historic precedent the nonviolent civil rights movement in focusing that they were widely discredited. Johnson inherited attention on the violence and brutality of Southern these votes at a time when Americans, unsettled by officials like Birmingham police commissioner (and the assassination of a president, were in no mood to member of the Democratic National Committee) Bull oust incumbents and added more because of Gold- Connor. Video technology made it possible for televi- water’s penchant for provocative and impolitic state- sion networks to put same-day footage on the air ments. Although some well-known incumbent nationally, even as they prepared to expand their Republican governors and senators were reelected nightly newscasts from 15 to 30 minutes. The other thanks to ticket-splitting, Democrats won massive 2 was the sudden interest in 1963 in socialist Michael to 1 margins in Congress: 68 to 32 in the Senate and Harrington’s book The Other America, which argued 295 to 140 in the House. that poverty was more common and more persistent Johnson’s Great Society legislative program than most people in prosperous postwar America had included some unfinished Democratic business. He

23 CAN BIG GOVERNMENT BE ROLLED BACK?

pushed hard for administration legislation, insisting inevitable. The Republican Party continued to be led that not a comma be changed. Doris Kearns Good- mostly by men whose origins were in courthouse win notes, “For five years, from 1963 to 1968, Lyn- towns in rural and small-town areas, areas that had don Johnson dominated public life in Washington been overrepresented proportionate to population to such an extent that the cabinet was his cabinet, until the Supreme Court suddenly required one- the Great Society his program, the Congress his person, one-vote redistricting in June 1964. This instrument.”1 Federal aid to education, long held up made Republicans ill prepared to contest the rapidly by those who wanted aid to Catholic schools, was growing suburbs of major metropolitan areas, which pushed through without it. Medicare, providing gained increased representation by the court’s deci- supposedly free health care for the elderly, was sion and were an increasing percentage of the elec- pushed through. The Office of Economic Opportu- torates in all large and many small states. In nity was created to superintend local antipoverty addition, the number of committed conservatives programs and an Appalachian Redevelopment was reduced by the 1964 Democratic landslide and Commission was formed to tend to the needs of that those who remained were intimidated by the wide impoverished area. Johnson’s one failure was his margin of Goldwater’s defeat. Gerald Ford (R-MI), effort to amend the Taft-Hartley Act to outlaw state who ousted Charles Halleck (R-IN) as House minor- right-to-work laws; that was beaten when Democ- ity leader with the aid of young colleagues like rats from right-to-work states like George McGovern Charles Goodell (R-NY) and Donald Rumsfeld (R- of South Dakota refused to go along.2 In the mean- IL), said he would advance positive alternatives—an time, Johnson, acting under a resolution passed in approach that Richard Nixon had taken in his 1960 August 1964 when US naval ships were allegedly debates with John Kennedy. Conservative arguments attacked in the Gulf of Tonkin, vastly increased the against the expansion of government were seldom number of troops and expanded their mission in articulated and even less frequently reported by a Vietnam, increasing the number of troops deployed press that had been, on balance, conservative there from 42,000 in May 1965 to 125,000 that July. through the 1950s but was becoming overwhelm- Spending increased on entitlement programs—the ingly liberal by the late 1960s. Great Society Congress increased Social Security Despite these liabilities, Republicans did well in benefits even as it created Medicare—from 4.6 per- the 1966 congressional elections, winning back cent of gross domestic product to 6.1 percent from more House seats than they had lost in 1964. And 1965 to 1970. And despite Vietnam, entitlement in 1968, when Richard Nixon was elected president spending increased as a share of the federal budget, with a narrow popular vote but a decisive electoral a fact which Johnson tried to conceal by changing vote margin, they added a couple more House seats accounting practices and reporting Social Security and reduced the Democrats’ margin in the Senate to outlays as off-budget expenditures.3 57 to 43. These were the only two elections for the Amid all this action, the conservative coalition House between 1956 and 1980 in which House that had dominated Congress from 1938 to the big Republicans won more votes than House Democrats Democratic year of 1958 was seldom heard from. outside the South (defined as the 11 states of the The civil rights issue had split it apart, as Southern Confederacy plus West Virginia, Kentucky, and Democrats almost unanimously opposed the legisla- Oklahoma). In addition, Republicans won 36 and tion and a large majority of Republicans, including 38 percent of the popular vote for the House in the party leaders (but not Goldwater) supported it. In South in 1966 and 1968—the highest such figures the face of polls showing high support for Medicare since the 1920s. and federal aid to education, many Republicans and Were these elections repudiations of big-government Southern Democrats went along and supported the policies? It is probably more accurate to say that

24 1966 AND 1968: POLICY CHANGES AT THE MARGINS they were repudiations of unanticipated or apparent of the 1940s movies he starred in, spoke out in effects of big-government policies. The years from behalf of the goodness of basic American values and 1964 to 1968 were punctuated by a series of urban mores and the dangers of ever-larger government. He ghetto riots, campus rebellions, and antiwar demon- was on favorable ground, especially in Southern strations—events for which the American public of California. Metropolitan Los Angeles, booming from the middle 1960s was utterly unprepared. The private-sector and defense contractor growth, had ghetto riots began in Harlem in 1964, followed by given Barry Goldwater 46 percent of its votes—more the Watts riot in Los Angeles in 1965, major riots in than any other large metro area outside the South— Newark and Detroit in 1967, and riots in multiple and three of the four US House seats outside the South cities (most prominently, Washington, DC) after the that switched from Democratic in 1962 to Republi- assassination of Martin Luther King Jr. in April can in 1964 were in California. Reagan won the gov- 1968. The campus rebellions broke out first at the ernorship of California in 1966 with a 58 to 42 Berkeley campus of the University of California in percent victory over two-term incumbent Pat Brown, 1964, ironically over the administration’s refusal to who had beaten Richard Nixon four years before, allow a table to be set up on campus with campaign showing that the conservative label was not politi- literature for Lyndon Johnson. That was followed by cally fatal in a large state. California, which outgrew disturbances of varying kinds on dozens of cam- New York to become the most populous state in puses up through the early 1970s. Campus rebellion 1963, also replaced New York as the large state most died down only when Richard Nixon abolished the crucial in close national elections; in such contests, military draft. New York has been heavily Democratic since 1960, To most Americans—“the silent majority,” to use while from 1948 to 1988 California was marginal. Nixon’s term—it seemed incredible that the intended beneficiaries of social improvements were violently The years from 1964 to 1968 were punctuated rejecting the society that proferred them. The urban riots came after the enactment of the Civil Rights Act by a series of urban ghetto riots, campus of 1964, which effectively banned discrimination in workplaces and public accommodations, and in rebellions, and antiwar demonstrations— most cases after the Voting Rights Act speedily passed events for which the American public of the in 1965, effectively and almost instantly ending the exclusion of black Americans from the ballot box in middle 1960s was utterly unprepared. most of the South. The student rebellions came after taxpayers had poured millions of dollars into colleges and universities, elementary and secondary schools, The problem for conservatives throughout the and community colleges. country was not so much winning elections as gov- The politician who most effectively channeled the erning. In California, Reagan was ill prepared to be resentment of the silent majority into an electoral governor and had to accept a tax increase during his majority was Ronald Reagan in California, site of the first term; only in his second term was he able to Berkeley rebellion in 1964 and the Watts riot in enact significant welfare reform. In Congress, 1965. The two decades after World War II had been Republican leaders lacked a serious policy agenda. especially golden years for the Golden State, with a They spent much of the first days of the 90th Con- rapidly rising population, a rapidly growing econ- gress working on barring Harlem’s Adam Clayton omy, and a state government that lavished money on Powell Jr. from taking his seat—a move the Supreme freeways, water delivery systems, and higher educa- Court later overturned. They indulged in hearty tion. Now Reagan, in the universally appealing tones denunciations of Great Society programs but were

25 CAN BIG GOVERNMENT BE ROLLED BACK?

unable to repeal them or formulate alternatives. by the third-party candidacy of Alabama Governor They disapproved of Lyndon Johnson’s handling of George Wallace, who famously (and ineffectively) the Vietnam War but were unwilling to use the lever stood in the schoolhouse door to protest enforcement of funding to secure a different strategy. On this of a school desegregation order. Wallace was issue, as on civil rights, Republicans and Southern endowed with shrewd political instincts and devel- Democrats failed to coalesce, as the latter tended to oped a capacity to appeal to white working-class vot- support the war policy of the Southern Democratic ers, as he showed in winning sizable percentages president despite their misgivings. Johnson and against pro–Lyndon Johnson stand-ins in the 1964 Defense Secretary Robert McNamara concealed the Democratic presidential primaries in Indiana and cost of the war effort until Johnson reluctantly pro- Wisconsin. He launched an independent candidacy posed a tax increase to hold down the budget in 1968, managing (with the help of a US Supreme deficit; Congress considered it for a year and a half Court decision) to get on the ballot in all 50 states. and finally approved it. And Congress was unable to Wallace provided an attractive alternative for make the spending cuts conservatives wanted.4 Southern voters opposed to civil rights but still wary Conservatives in Washington were, in some of supporting Republicans and for Southern Democ- respects, going against the national current on public ratic officeholders and candidates who did not want policy. The success of the civil rights movement to give up the historic advantages of the Democratic prompted in many whites a regret that they had not Party label but bridled at endorsing Lyndon Johnson opposed racial segregation and an impulse to some- or the 1968 nominee, Vice President Hubert how make amends. Violent crime rates nearly tripled Humphrey. After 1860, 1968 was probably the most in the decade between 1965 and 1975, primarily tumultuous and tragic presidential campaign year in because of high crime in urban black ghettos. But American history. Johnson bowed out of the race after prison populations actually declined through the a narrower-than-expected victory over peace candi- mid-1960s, and in 1966 Gallup reported that for the date Eugene McCarthy. Robert Kennedy then entered first and, so far only, time that a plurality of Ameri- the race. Martin Luther King Jr. was murdered in cans, 47 percent, opposed capital punishment. Also April, and Kennedy was murdered in June. Then, the tripling during the 1965–75 decade was welfare Democratic National Convention in late August was dependency. Much of this resulted from decisions accompanied by massive antiwar demonstrations and made by state and local officials, many of them their violent suppression by the Chicago police. Republicans like Governor Nelson Rockefeller and In the popular vote, Nixon won the election with Mayor John Lindsay in New York, but Republican 43.4 percent to Humphrey’s 42.7 percent and Wal- congressional leaders also seemed to go with this lace’s 13.5 percent; in the electoral vote, Nixon had flow. In a reply to Johnson’s State of the Union 301 to Humphrey’s 191 and Wallace’s 46 (from five address in January 1967, House Minority Leader states in the Deep South). But it was close: Nixon Gerald Ford called for an 8 percent increase in Social edged Humphrey by 3 percent or less in California, Security benefits (Johnson had called for 20 percent), Illinois, Ohio, New Jersey, and Missouri, states with promised that “essential domestic programs” would a total of 121 electoral votes. In one sense, this was be “adequately funded,” supported a follow-through a clear repudiation of the Great Society: Nixon and on the popular Head Start preschool education pro- Wallace together got 57 percent of the popular vote, gram, and advocated for a homeownership act and Humphrey 43 percent—18 percent less than “enlarging the opportunities” for homeownership for Johnson won four years before. That would be those with low incomes.5 echoed in 1972, when Nixon beat Democrat George Republicans’ difficulty in combating what seemed McGovern 61 to 38 percent. On the other hand, to be the prevailing currents of opinion was increased Nixon came very close to losing.

26 1966 AND 1968: POLICY CHANGES AT THE MARGINS

Nixon came into the presidency as the country ticket that favor in 1960). He worked with House was reeling from a series of horrifying assassinations Ways and Means Chairman Wilbur Mills to raise and violent riots and suffering through a seemingly Social Security benefits, to take effect in the checks unwinnable war—the most difficult time to become delivered on October 3, 1972; the bill also provided president since 1861 and 1933. His claim to repre- for cost-of-living adjustments that, through misdraft- sent a clear majority of the people was shadowed ing, produced increases double the amounts by the Wallace vote, and he refused to appeal to intended.6 At the same time, liberal Republican gov- those who looked back on racial segregation with ernors like Nelson Rockefeller of New York, Francis nostalgia—if only for the fact that the large majority Sargent of Massachusetts, and William Milliken of of Americans rejected it. Plenty of conservatives Michigan vastly increased spending, did not oppose complained about current policy, but none articu- the rise of public employee unions, and cooperated in lated alternatives as they had after the elections of increasing welfare benefits.7 1920 and 1946. To shape his foreign and domestic policy, Nixon Rather than dismantle or roll back big hired two Harvard professors, Henry Kissinger, who had worked closely with Nelson Rockefeller, and government, Nixon attempted to enlarge it. Daniel Patrick Moynihan, a second-level appointee in the Kennedy and Johnson administrations. Rather than dismantle or roll back big government, Nixon The 1966 and 1968 elections did not result in attempted to enlarge it, embracing Moynihan’s pro- anything more than marginal policy changes in repu- posal for a guaranteed annual income (suggested by a diating big government. The Nixon years did include proposal of free-market economist Milton Friedman) some movement toward deregulation, as proposals and creating new government agencies like the Envi- advanced by a group headed by consumer advocate ronmental Protection Agency and the Occupational Ralph Nader called for reforming the Federal Trade Safety and Health Administration. His Justice Depart- Commission and Nixon appointees looked favorably ment, unlike Johnson’s, effectively desegregated pub- on deregulation of trucking rates; the drive for dereg- lic schools in the South, and his Labor Department ulation would accelerate under Nixon’s successors encouraged the use of racial quotas and preferences in Gerald Ford, Jimmy Carter (who pushed successfully hiring. In August 1971, at the behest of Treasury for airline, freight rail, and trucking deregulation), Secretary John Connally, a former Texas governor and and Ronald Reagan (under whom the Interstate intimate of Lyndon Johnson, Nixon imposed wage Commerce Commission was finally abolished). But and price controls to fight inflation, which at that time that work was not contemplated by Republicans in was raging just above 3 percent and encouraged the wake of their success in the 1966 and 1968 cam- Federal Reserve Chairman Arthur Burns (whom he paigns. The potential support for rolling back gov- appointed) to inflate the money supply in time for the ernment that can arguably be found in those election effects to be felt by the 1972 election (remembering results would not result in policy changes for some that Burns’s predecessor had not done the Republican time to come.

27 5

Achievements and Compromise in the Reagan Era

ll of a sudden, the GOP has become a party of ideas.2 He was not the only Republican pioneering “A ideas,” wrote Daniel Patrick Moynihan in new ideas. Members of the minority party in the 1978, when he was a Democratic senator from New House of Representatives generally have little sway York after having served in the Cabinets or Subcabi- over legislation; a speaker with a solid majority, like nets of four presidents from different parties. “As Tip O’Neill (D-MA) beginning in 1977, can control a Democrat, I call it terrifying. And to miss it is to the flow of legislation and determined outcomes. But miss what could be the onset of the transformation of in 1978, two young backbench Republicans came American politics. Not by chance, but by dint of forth with breathtakingly original proposals that ulti- sustained and often complex argument, there is a mately became law. One was Jack Kemp (R-NY), at movement to turn Republicans into Populists, a 42 a former professional football quarterback first party of the People arrayed against a Democratic elected from a suburban Buffalo district in 1970. Party of the State.”1 As usual, the prescient Moynihan Kemp, together with Senator William Roth (R-DE), was on to something, although conventional indica- proposed a 30 percent cut in income tax rates— tors at the time did not support his prophecy. After 10 percent a year for three years—and argued, with Jimmy Carter was elected president in 1976, Democ- supply-side economist Arthur Laffer, that the cuts rats won a 292 to 143 margin in the House and 61 would generate so much economic activity and rev- to 38 in the Senate. The most recently elected Repub- enue that they would pay for themselves. Tax rates as lican president, Richard Nixon, had resigned in dis- high as 70 percent, they said, incentivized tax avoid- grace. For Democrats, happy days, in the words of ance and brought in little revenue. Amazingly, Kemp Franklin Roosevelt’s 1932 campaign theme song, and Roth got just about every Republican in Congress were here again. to agree. But although Democratic congressional majori- The other influential young Republican was ties were almost as large as when Lyndon Johnson William Steiger of Wisconsin, who at 40 had served pushed through his Great Society measures, the cli- for 12 years but still looked young enough to be mate of opinion had changed. Keynesian economic mistaken for a House page. Steiger served on the policies aimed at full employment had produced Ways and Means Committee, which was more than successive bouts of inflation—higher than the 2 to 1 Democratic and considering a Carter proposal Americans of the day had ever experienced in peace- to lower rates on only low earners and increase the time. Government efforts to reduce poverty seemed capital gains rates. Steiger proposed instead to lower to have failed, and voters were increasingly bothered capital gains rates, arguing that it would liberate by rapidly rising rates of crime and welfare depend- capital and promote investment in new businesses. ency. The confident predictions of liberal policy It seemed to have no chance, but in June 1978, experts were unfulfilled. California voters approved Proposition 13, a ballot In this background, the incoming Republican measure limiting property tax increases, despite national chairman in 1977, Bill Brock, decided to do widespread opposition and against widespread something that had not occurred to previous holders expectations. This was a protest vote in a decade of of his office: publish a magazine with new policy raging inflation, when nominal price increases were

29 CAN BIG GOVERNMENT BE ROLLED BACK?

thrusting taxpayers with stagnant real incomes into outside the South and reduced Democrats’ margin higher tax brackets and California local govern- to 242 to 192, the strongest Republican position ments were reaping windfalls from rapidly rising (tied with two other Congresses) produced by any house prices, taxing homeowners’ chief source of election between 1958 and 1992. Nor could wealth. Tax-cut ballot measures cropped up across Speaker Tip O’Neill count on a united Democratic the nation, and the climate of opinion changed on caucus. The Democrats had more party cohesion Capitol Hill. Carter’s tax bill was defeated 225 to 193 since 1974, when they provided that committee in the House, and a bill with Steiger’s amendment chairmen be elected by Democratic members in passed 362 to 49 in October; 62 senators had secret ballot; this incentivized conservatives and already endorsed the capital gains cut. The final bill moderates with seniority or hopes for it to go along also included section 401(k), little noticed at the with party leaders. But Democratic ranks included time, which authorized tax-deferred retirement pen- many Southerners elected on Carter’s regional pop- sion plans; full implementation in the 1980s would ularity in 1976 and 1978 who now had an electoral result in the widespread replacement of defined- incentive—Reagan carried every Southern state benefit plans, which left employers liable for future except Carter’s Georgia—to support the incumbent pension costs, with defined-contribution plans, conservative administration. Reagan aide Lyn which left employees responsible and in control.3 Nofziger organized a “Southern blitz,” sending Looking on with approval was Ronald Reagan, administration officials into 45 Southern congres- who at 67 was preparing to run one more time for sional districts in April 1981 to urge votes for the president. After a visit from Kemp, he endorsed the administration’s budget resolution. And Reagan Kemp-Roth tax cut in 1978. This was in contrast to himself promised not to campaign against Southern most Republicans’ response to the Kennedy tax cut Democrats who supported his policies.4 proposal in the 1960s; they tended to oppose it on “In this crisis,” said Reagan in his inaugural the grounds that it would increase the federal address, “government is not the solution to our budget deficit. Reagan was of another view—that if problem; government is the problem.” To deliver on you cut off revenues, you could starve the govern- his campaign promises to cut back and reshape gov- ment beast. His primary opponent, George H. W. ernment, Reagan turned to an unlikely source, 34- Bush, accused him of “voodoo economics.” But Rea- year-old Congressman David Stockman (R-MI), gan remembered how he turned down movie roles who had been elected just four years before, after because almost all the money he would make would working as a staffer for John Anderson. Stockman go to the government. He remained steadfast and famously made himself an expert on the federal made the tax cuts a central plank in his successful budget as he worked closely with Kemp in the campaign first for the Republican nomination and House, and he made telling attacks on Carter’s hos- then, with a surge of support in the week between pital cost containment and energy plans. After the his single debate with Jimmy Carter and Election campaign, he and Kemp issued an economic plan Day, the presidency. Reagan won by an unexpectedly entitled “Avoiding a GOP Economic Dunkirk.” More wide 51 to 41 percent margin over Carter, with 7 important, he started revising the existing Carter percent for Republican Congressman John Ander- budget, which enabled the administration to take son, who vocally opposed the Kemp-Roth tax cuts. the unusual step of issuing a detailed budget almost To the amazement of Washington insiders, halfway into the fiscal year. It included many cuts, Republicans won almost all the closely contested most of which were actually reductions in spending Senate seats and ended up with a Senate majority of increases as set down in the baseline budget process, 53 to 47. In the House, they carried, for the only which assumed that previous spending would con- time between 1968 and 1994, the popular vote tinue with additions to account for population

30 ACHIEVEMENTS AND COMPROMISE IN THE REAGAN ERA growth and inflation (a not inconsiderable factor at On the Ways and Means Committee, Michigan the time). However, the administration decided to Democrat William Brodhead called for cutting the spare entitlement programs.5 70 percent tax on “unearned” income down to 50 As a result, the incoming administration pro- percent. And Colorado Republican Senator Bill duced within an unusually short time packages of Armstrong pushed through an amendment indexing budget cuts and tax cuts ready for consideration in income tax rates to inflation. No longer would rising Congress. The budget cuts were rejected by the prices put you in a higher tax bracket. Reagan went House Budget Committee in April, at which point on national television to plug the plan, and it passed conservative Texas Democrat Phil Gramm joined the House in late July 238 to 195 with only token forces with Republicans to advance the Reagan plan opposition in the Senate.9 as a budget resolution. The resolution passed in May 1981 after Reagan, who had been shot four weeks The incoming administration produced earlier, spoke to a cheering House. But the spending cuts were whittled down to gain the votes of “Boll within an unusually short time packages Weevil” Southern Democrats in the final version of budget cuts and tax cuts ready for passed in June. One crucial House decision was the rejection by a 217 to 210 vote of a motion by the consideration in Congress. Democratic leadership to consider each cut sepa- rately. These were “the largest spending cuts in U.S. history, affecting hundreds of programs and [the leg- These were substantial policy victories, but islation] made some of the greatest changes ever achieved at some political and economic price. The made in a single bill by Congress.”6 They included delay and halving of the first year’s tax cut meant cuts—or reductions in scheduled spending that economic growth did not spike upward until increases—of $40 billion.7 This was the Reagan the beginning of 1983. In the meantime, Federal administration’s “new federalism,” which terminated Reserve Chairman Paul Volcker’s high interest rates, the Comprehensive Employment and Training Act which did succeed in breaking the back of inflation, (CETA) grants to local governments for public serv- led to another recession, with the gross domestic ice jobs and the Community Services Administration product declining by 1.9 percent in fiscal year and reduced eligibility for or otherwise limited Med- 1982.10 As a result, the budget deficit increased, icaid, AFDC welfare, food stamps, child nutrition, leading to pressure to raise tax rates on Reagan from public housing, job training, highway aid, and syn- all sides—not only from Democrats, but also from thetic fuel subsidies.8 The bill was passed, ironically, Senate Finance Chairman Bob Dole and White by using provisions of the Budget Act of 1974, House Chief of Staff James Baker. In addition, the designed by a Democratic Congress to limit a Repub- member of the administration with the greatest lican president. That act enabled this Republican command of the figures, Budget Director David president to put all his proposals into a single legisla- Stockman, held regular breakfasts with left-wing tive vehicle not subject to the Senate filibuster rule Washington Post editor William Greider during which and evisceration by amendments by the Democratic he denounced administration policy and called leadership–controlled House Rules Committee. Kemp-Roth “a Trojan horse” to bring rates down. More difficult to pass were the tax cuts, as Reagan These meetings were made public in an article by was assailed by O’Neill as callous. The tax cut was Greider in the November 1981 issue of The Atlantic. scaled down to 25 percent and set to take effect at Stockman had a history of turning on the ideas of the beginning of the 1982 calendar year. But two his mentors: he eschewed his student radicalism by other initiatives helped achieve Reagan’s objectives. working for John Anderson, then a conventional

31 CAN BIG GOVERNMENT BE ROLLED BACK?

conservative; he then undercut Anderson by sup- mass transit.12 The federal budget deficit rose from porting Reagan for president and serving as a stand- 2.7 percent of GDP in fiscal year 1980 to 6 percent in for Anderson in preparation sessions for the in fiscal year 1983 before subsiding to around 5 per- single Anderson-Reagan debate in September 1980 cent in the next three fiscal years and around 3 per- and as budget director continually badmouthed the cent for the following three. But unlike the policies of the Reagan administration. Reagan, per- Republican leaders from the 1920s to the 1960s, haps believing that he could not find anyone else Reagan was less concerned about balancing the with Stockman’s command of the numbers, kept budget than about reducing tax rates and increasing him on until 1985. The next year, Stockman pub- defense spending. And contrary to projections, lished a book, The Triumph of Politics. based on the static theory that tax rates had no effect Stockman’s strongest point was that Reagan never on economic activity, tax revenues did increase sought serious cuts in government spending and robustly as the Reagan tax cuts were phased in. that programs survived because they had strong In his 1984 reelection campaign, Reagan called political backing rather than because they were jus- for further tax cuts with elimination of many tax tified by strong policy arguments. Welfare spending, preferences and deductions. This was in line with for example, turned out to rise sharply, thanks to the similar proposals by prominent Democrats, includ- insistence and ingenuity of congressional Democrats ing Senator Bill Bradley (NJ) and Congressman Dick and some congressional Republicans; for instance, Gephardt (MO). Reagan did not cite specifics in his from his perch as a subcommittee chairman, House campaign and did not get around to forwarding rec- Democrat Henry Waxman (CA) was able, through ommendations to Congress until May 1985. But he the threat of withholding needed votes for spending did secure the cooperation of the key players on tax measures, to require state governments to extend policy, Republican Senate Finance Chairman Bob eligibility for Medicare, half of which is paid by the Packwood (OR) and Democratic House Ways and federal government.11 Even so, Reagan in 1983 cut Means Chairman Dan Rostenkowksi (IL); leading back on Social Security benefits and increased the roles for the administration were taken by Treasury payroll taxes in accord with the recommendations of Secretary James Baker and his deputy, Richard Dar- a commission he appointed, headed by Alan man. The process of cobbling together legislation Greenspan, and with the cooperation of Tip O’Neill that the Congressional Budget Office would score as and congressional Democrats. The program was revenue neutral was lengthy, and it seemed to break taken off an unsustainable path and put on a path down on multiple occasions. But it resulted in legis- that made it sustainable until the large age cohort of lation passed in October 1986 that reduced the top the baby boom generation would start to retire a income tax rate to 28 percent and provided for equal quarter century later. rates for ordinary income and capital gains. It is true that congressional Democrats never seri- The reduction of the top rate from 70 percent in ously delivered on promises to reduce spending 1980 to 28 percent in 1986 was comparable to the made in connection with the 1982 tax increases, Mellon tax cuts of the 1920s. The equalization of the and it is also true that Reagan sharply increased capital gains rate rendered obsolete many of the tax defense spending well above previous levels. There shelter arrangements concocted in the 1970s, which was some increased spending in other areas. In directed the animal spirits of the investor class away 1982, Congress passed the Job Training Partnership from productive investments and toward tax avoid- Act, sponsored in the Senate by Dan Quayle (R-IN) ance. During the second Reagan term, the economy and Edward Kennedy (D-MA), to replace CETA, and continued to grow at between 3.2 and 4.1 percent after the 1982 election, Congress passed a trans- each year, adjusting for inflation, while federal portation bill increasing spending on highways and budget deficits as a percentage of GDP declined

32 ACHIEVEMENTS AND COMPROMISE IN THE REAGAN ERA from 5.1 percent in fiscal year 1985 to 2.8 percent continuing growth in the years that followed. This in fiscal year 1989 and government outlays as a per- vindication owed something to Reagan’s sunny centage of GDP, despite the continuing defense nature and of his embodiment of the universally building, declined from 22.8 to 21.2 percent. Eco- appealing popular culture of the 1930s and 1940s nomic growth tended to solve the fiscal problems movies and 1950s television in which he made his and reduce the national debt to a level at which it show-business career. He effectively identified con- was readily serviceable. servatism with his own persona, even though, in the The apparent success of Reagan’s policies and his words of one political scientist, he was “not intellec- own popularity—his job approval ranged around 70 tual enough for traditional conservatives, not angry percent in the first two years of his second term and enough for the new right, not single-minded enough fell, after the Iran-Contra scandal unfolded, to the for supply-siders, not grim enough for neoconserva- 50 percent level—did not entirely carry over to his tives and too fun-loving for the religious right.”15 Republican Party. Republicans lost their majority in the Senate in 1986 when they lost by very close The Reagan presidency gained vast ground margins 8 of the 12 seats they had gained, often by close margins, six years before. Republicans lost 26 for conservatism and free-market seats in the House in the trough of the recession in November 1982 and during the rest of the Reagan principles in the battle of ideas. presidency did not recoup that number despite Rea- gan’s 59 to 40 percent victory in 1984—in two elec- tions, he carried 93 of a possible 100 states—and his In his farewell address to the nation in January continuing high popularity over the next two years. 1989, Reagan summarized his economic policies. But at the same time, Republicans made substantial “We cut the people’s tax rates, and the people pro- gains in party identification during the Reagan years. duced more than ever before. The economy bloomed In the 1970s, about twice as many voters identified like a plant that had been cut back and could now as Democrats than as Republicans, and in 1983, grow quicker and stronger. Our economic program Gallup reported that self-identified Democrats out- brought about the longest peacetime expansion in numbered Republicans 42 to 24 percent. But by our history: real family income up, the poverty rate 1989, the year Reagan left office, that margin had down, entrepreneurship booming, and an explosion narrowed to 35 to 33 percent,13 and for the first in research and new technology.” This was a verdict time since World War II, a party had won the presi- most voters at the time would have agreed with— dency three times in a row. and an achievement few observers predicted at the The Reagan presidency gained vast ground for beginning of the decade. Reagan was not known as a conservatism and free-market principles in the battle master of detail. But he made sure to make key of ideas. For years, many had supposed that only appointments, notably of Stockman, no matter how higher government spending and greater govern- problematic his later behavior, and he decided to ment regulation could protect the ordinary person in seek major changes well into the government’s fiscal an increasingly complex society, especially in hard year. He built on the mandate he seemingly won economic times. Reagan confronted that dogma head from the voters by consolidating the support of con- on, even during the 1981–82 recession in which gressional Republicans and by assiduously seeking unemployment rose to 10.8 percent, insisting on through personal lobbying and political pressure the domestic spending cuts and defense spending needed votes of Southern House Democrats. Reagan increases, as well as lower tax rates and monetary did compromise to achieve his legislative successes discipline.14 He was vindicated by the robust and in 1981 and acceded to some backpedaling in the

33 CAN BIG GOVERNMENT BE ROLLED BACK?

recession year of 1982, and his party’s loss of seats in bipartisan support but bipartisan cooperation in the House prevented him from exactly duplicating achieving that goal in 1986. Reagan did not achieve his 1981 success. But he used his campaign for all his goals by any means. But he significantly reelection to call for a base-broadening, tax-cutting changed the content of public policy and the climate reform package and succeeded in getting not just of opinion for some time to come.

34 6

Major Conservative Policy Advances

t the beginning of the 1990s, conventional wis- headed. Clinton promised to “end welfare as we Adom was that the Republicans had a lock on the know it,”3 supported the death penalty and tough White House and that the Democrats had a lock on policies on crime, and promised not to raise tax rates Congress, or at least on the House of Representatives. and to whittle down the federal deficit. Republicans had won three straight presidential elec- His victory in 1992 seemed not to be a victory for tions, by decisive margins, carrying 133 of a possible expanding the size and scope of government and 150 states. Democrats had lost the majority in the was generally not seen as such. But once in office, Senate in 1980 and regained it only in 1982, but they Clinton became persuaded that a tax rate increase had held a majority in the House since 1954—and was necessary to cut the deficit and reassure finan- decisive majorities for the large majority of that time. cial markets. With Democrats holding majorities in Political scientists and journalistic pundits spun the- both houses of Congress, his proposal was passed ories of why these conditions were more or less per- with the votes of Democrats only, with suburban manent. Conservatives sought to influence public Philadelphia Democrat Marjorie Margolies-Mezvinsky policy through presidential leadership and the exec- dramatically switching positions at the last moment utive branch; liberals sought to influence public pol- and providing the decisive vote in the House and icy through control of the legislative process. Vice President Al Gore casting the tiebreaking vote But within four years, the conventional wisdom in the Senate.4 had been overturned. In 1992, 46-year-old Democ- Clinton also decided in his first term to put aside rat Bill Clinton was elected president, defeating welfare reform and push forward a health care pro- Ronald Reagan’s vice president and successor George posal to be put together by a cumbersome task force H. W. Bush. In 1994, Republicans won majorities in headed by First Lady Hillary Rodham Clinton. The both houses of Congress and 49-year-old Republican First Lady’s task force was led by Brown Professor Ira Newt Gingrich became speaker of the House.1 Clin- Magaziner and largely ignored members of Con- ton’s victory was in large part a result of the inde- gress. A 1,300-word bill was presented to Congress pendent candidacy of Ross Perot, whose calls for in November 1993 and was unanimously opposed shrinking the federal budget deficit in early 1992, in by Republicans in the House. One version was the words of Deputy Democratic National Chairman passed by the Senate Finance Committee, chaired by Paul Tully, “de-partisanized the critique of President the formidable Daniel Patrick Moynihan, in spring Bush,” and whose withdrawal from the race on the 1994. But in June 1994, another version was beaten Wednesday of the Democratic National Convention by one vote in the House Energy and Commerce enabled Clinton to zoom ahead to a lead over Bush Committee, chaired by the equally unrelenting John in the polls that he never relinquished even after Dingell (D-MI). Perot reentered the race in October.2 Clinton’s next legislative initiative was a crime bill, But the Clinton victory also owed much to the funding some 100,000 police positions and includ- Arkansas governor’s uncanny political instincts and ing a ban on “assault weapons” (defined by cosmetic adoption of the more moderate and less liberal poli- characteristics rather than mechanical capability). In cies of the Democratic Leadership Council that he August 1994, the House Democratic leadership

35 CAN BIG GOVERNMENT BE ROLLED BACK?

suffered a rare defeat on the rule-setting terms and share of the House popular vote in the 14 Southern conditions for the bill to be considered on the floor, states than in the 36 states outside the South. as Southern and rural Democrats rebelled against the A second reason is that the number of Vietnam- gun control provisions. The bill was also ridiculed for and Watergate-era Democrats who won Republican- funding midnight basketball games in high-crime leaning House seats in the 1970s and then held neighborhoods. A compromise bill that included the them by providing good constituency service would assault weapons ban and had enough votes to pass in inevitably dwindle as they ran for other offices, September 1994.5 But by then, the Clinton Democ- retired, or occasionally were beaten. Examples rats’ liberal policies—the tax increase, “Hillarycare,” included Tom Downey of Long Island, New York, and gun control—had stirred opposition in many elected at age 25 in 1974, and Dan Glickman of parts of the country. The flames were fanned by con- Wichita, Kansas, elected at age 32 in 1976. Downey servative Rush Limbaugh, then in his first years as a was beaten in 1992 and Glickman in 1994. national radio talk show host. A third reason was reapportionment and redis- Leading the opposition in the House was a for- tricting. Reapportionment moved House seats each mer minority backbencher from the outer fringes of decade from the Northeast and industrial Midwest to metropolitan Atlanta, Newt Gingrich. First elected the South and West, more favorable country then for to the House in 1978 after two unsuccessful tries, Republicans. Redistricting in states with large num- and for years the only Republican in the Georgia bers of House seats was largely controlled by Democ- delegation, Gingrich had a history PhD, a penchant ratic legislators and governors in the 1960s, 1970s, for futurism, and a determination to produce a gov- and 1980s. But in the 1990s, for the first time in erning Republican majority in Congress. As early as decades, control was split between the parties, and the 1984 cycle, Gingrich predicted to mostly skepti- redistricting did not produce net gains for Democrats. cal reporters that Republicans would win back the All this was still in the future in the 1980s, when majority they had seemingly permanently lost in Gingrich formed a group called GOPAC and distrib- 1954, when he was 11 years old and Bill Clinton uted audiotapes to Republicans running for Con- was 8. Campaign cycle after campaign cycle, Repub- gress advising how they could win. He openly licans fell far short of this goal, but Gingrich had scorned House Minority Leader Robert Michel (R- correctly identified reasons why the Democratic IL) and many ranking Republicans on committees majority was ripe for overthrow. for not fighting the Democratic leadership more One reason was the increasingly weak position of aggressively, and in 1989, after Dick Cheney the Democratic Party in the South. Southern states resigned from the House to become secretary of cast most of their electoral votes for Republican can- defense, Gingrich was elected House minority whip didates in every presidential election between 1968 over Michel’s opposition by an 89 to 87 vote. Gin- and 1988, save one (1976).6 Elderly Southern mem- grich led half the Republicans in opposition when bers had to take liberal stands on issues that were George H. W. Bush acceded to Democratic congres- increasingly unpopular in their rural constituencies sional leaders and supported a tax rate increase in to keep their chairmanships after those positions 1990. He led opposition in the House to Clinton’s became the gift of the Democratic caucus in 1974. As tax increases, Hillarycare, and the crime bill. In they retired or died in office, they were sometimes 1993, he announced he would run again for party replaced by Republicans (as had happened with Gin- leader even against the well-liked Michel after the grich). In the 1992 congressional elections, even as next election, at which point Michel announced he George H. W. Bush was going down to defeat, was retiring. Republicans actually gained seats in the House and, It had been conventional wisdom among House for the first time since Reconstruction, won a larger Democrats that, as Speaker Tip O’Neill put it, “all

36 MAJOR CONSERVATIVE POLICY ADVANCES politics is local,” and that you won elections—and ties even when voters opposed their policies but kept winning them every election year, despite also, as Gingrich recognized, were atrophying in changes in public opinion—by stressing your work strength over the years. In 1993–94, Clinton mis- on local issues and attention to local affairs. This read public opinion; Gingrich had been reading it enabled Democrats to retain legislative majorities correctly for some time. even when their issue positions were unpopular. Gingrich sought to nationalize the 1994 election. He Gingrich sought to nationalize spurred Republican candidates to emphasize their disagreement with Clinton policies and helped put the 1994 election. together a Contract with America, which almost every Republican House incumbent and candidate With overwhelming support from the newly signed on the steps of the Capitol in late September elected freshman Republicans, Gingrich moved to 1994. It included 10 issues that Gingrich pledged to exert control over the House and set the national bring to a floor vote in 100 days if Republicans won agenda. After the big liberal victory in 1974, House a majority, including tax cuts, welfare reform, Democratic leaders moved to limit the power of increased defense spending, a line-item veto, one committee chairmen by having them elected by the constitutional amendment requiring a balanced Democratic caucus. Gingrich imposed three-term budget, and another imposing term limits on Con- limits on committee chairmen and required them, gress. Issues were chosen because large majorities of and chairmen of appropriations subcommittees, to voters supported them; cultural issues like abortion be elected by a steering committee on which the that might split the party were left off the list. speaker, majority leader, and majority whip would Republicans gained 52 House seats and emerged have multiple votes and conservatives would get the with a 230 to 205 majority; House Speaker Thomas other seats. In the meantime, he appointed chair- Foley was defeated in his Washington district, the men himself and abolished two committees (sparing first House speaker to lose his seat since 1860. Small Business because it would have the Republi- Republicans also regained a majority in the Senate, cans’ only female chairman) and 31 of 115 subcom- augmented to 53 to 47 when Alabama Senator mittees.7 Gingrich began his speakership with a Richard Shelby switched parties a day after the elec- nearly hourlong nationally televised speech in tion. Republicans won the House popular vote in which he set out his vision for a conservative oppor- the North 51 to 46 percent, their best showing since tunity society. The Contract with America provisions 1966 and 1968; they won the popular vote in the were, with some difficulty, brought to the floor South for the first time since the Reconstruction by within 100 days and were approved, except for the a 55 to 43 percent margin. Their standing in the congressional term limits amendment, which failed South was 9 percent higher than in 1992 and 12 to get the required two-thirds majority. percent higher than their next best showings in The initiative on policy seemed to be on the 1988 and 1980, when Republican presidential can- House Republicans’ side, to the point that Clinton didates were sweeping the South. This vote was a felt obliged to say in an April 1995 press conference, clear repudiation of the liberal Clinton policies of “The president is still relevant here.” But the next day, 1993–94. But it reflected not just a change in atti- domestic terrorists set off a bomb in an Oklahoma tudes, which was registered in both Senate and City federal building, killing 168 people, including House contests, but also the removal of the institu- 19 children. Clinton presided over the memorial tional advantages that House Democrats had service and deftly conflated the terrorists with the enjoyed over the preceding 20 years. These advan- “angry white men,” as liberal commentators depicted tages enabled Democrats to maintain House majori- the House Republican freshmen. “There is nothing

37 CAN BIG GOVERNMENT BE ROLLED BACK?

patriotic about hating your country,” Clinton said, Majority Leader Bob Dole (R-KS, also a backer of the “or pretending that you can love your country but 1982 tax increase) took the initiative and agreed on despise your government.” Gingrich’s popularity a one-month extension of government funding. with the public, in his first months of heavy expo- Another shutdown followed days before Christmas. sure, was already withering and never recovered.8 In early January 1996, Dole pushed a bill funding Convinced that Republicans had erred when the government through the Senate; Gingrich and David Stockman and George H. W. Bush accepted conservative House Republicans capitulated three tax increases in 1982 and 1990, Gingrich was deter- days later.9 mined to advance a budget that substantially cut That same month, however, Clinton conceded in spending in line with what he had cause to believe his State of the Union address, to a mixed response was a mandate from the voting public. The budget in the House chamber, that “the era of big govern- prepared by Gingrich and House Budget Committee ment is over.” As negotiations over the budget con- Chairman John Kasich (R-OH) proposed to produce tinued, House Ways and Means Human Resources a balanced budget in seven years, based on Con- Subcommittee chairman Clay Shaw (R-FL) was gressional Budget Office figures, by cutting many preparing a welfare reform bill. For the past seven domestic discretionary programs, reforming welfare, years, governors, starting with Republican Tommy and holding down the future growth of the Thompson of Wisconsin, were working at reshaping Medicare and Medicaid entitlements. Clinton welfare policy so that instead of continuing to add responded with his own proposal, based on more more women to Aid to Families with Dependent optimistic Office of Management and Budget projec- Children (AFDC) rolls, social workers were focusing tions, that cut the future growth of Medicare by on helping them find jobs. Step by step, Thompson about half the Republican figure and envisioned a shrewdly reshaped the thinking of these social balanced budget within 10 years. House Democrats workers, with spectacular results. Spending did not were furious. “Most of us learned some time ago that drop greatly because it costs money to help women if you don’t like the president’s position on an issue,” seek jobs, but dependency dropped precipitously; said former Appropriations chairman David Obey by 1994, the welfare rolls in Fond du Lac County (D-WI), “you simply need to wait a few weeks.” were down to zero. Welfare was wildly unpopular Gingrich seemed convinced Clinton would com- with voters and other governors—mostly Republi- promise rather than suffer a government shutdown, cans but including some Democrats. A few mayors, and both seemed, to the dismay of many of their notably Rudolph Giuliani of New York City, adopted supporters, to want to reach agreement. But in Sep- similar policies with similar results. Welfare was tember, Clinton began running campaign ads accus- regarded by most voters as an undeserved handout, ing Republicans of “Medicare cuts.” Gingrich but the reformers saw it as an integral part of a responded in a November White House meeting by vicious cycle in which welfare mothers raised chil- threatening to shut the government down. Clinton dren, too many of whom became criminals or wel- countered by vetoing the Republicans’ bills, and the fare mothers themselves. Shaw’s legislation set a government was shut down. Gingrich complained five-year limit on AFDC (renamed Temporary Assis- that he had been unable to discuss the issue with tance for Needy Families) benefits and placed a pre- Clinton on a long Air Force One plane ride to attend mium on placing recipients in jobs. the funeral of Israeli Prime Minister Yitzhak Rabin. Gingrich and Dole pushed it through the House Polling showed that most voters, in line with the and Senate twice, only to have it vetoed twice by coverage of most news media, disliked the shut- Clinton, despite his 1992 campaign promise to “end down and blamed Gingrich and the Republicans. welfare as we know it.” But in July 1996, after Dole The shutdown ended after several days when Senate had resigned from the Senate to pursue his presi-

38 MAJOR CONSERVATIVE POLICY ADVANCES dential campaign, Gingrich and the new Senate asserted his authority in June by vetoing a disaster majority leader, Trent Lott, decided to pass a third, relief bill to which Republicans attached measures slightly modified version. The Dole campaign would preventing government shutdowns and banning sta- have preferred to make an issue of Clinton’s vetoes, tistical sampling in the 2000 Census. House Repub- but Gingrich wanted legislation and, true to his pre- licans again backed down. Gingrich’s leadership diction and against the advice of some appointees colleagues, angry at his willingness to compromise, who resigned in protest, Clinton signed the third bill tried and failed to oust him in a coup in July 1997. in August.10 In August, the negotiations resulted in passage of a That move helped to ensure Clinton’s reelection by balanced budget bill, including a capital gains tax a 49 to 41 percent margin in November; he probably cut, the largest tax cut in 16 years, and Clinton’s would have gotten one-third of Ross Perot’s 6 percent State Children’s Health Insurance Program. This was had Perot not been on the ballot. Democrats had possible because the vibrant economic growth of the hopes of retaking the House, capitalizing on Gin- mid-1990s produced revenues considerably larger grich’s unpopularity and high visibility. But they fell than either the Congressional Budget Office or short, leaving Republicans with a 227 to 207 House Office of Management and Budget had forecasted; majority, while Republicans actually gained two seats revenues increased from 18 percent of GDP in 1994 in the Senate, raising their majority to 55 to 45. to 19.8 percent of GDP in 2000, even as federal out- The budget fight was then and has been later lays fell from 21 percent of GDP to 18.2 percent. “If hailed as a political and policy victory for Bill Clin- you were to look at our speeches in 1994 and what ton. It turned out to be a political victory for Clin- passed today, you’d have to say the world is a lot ton, who was reelected in 1996, but not for his closer to what he campaigned on than to what any- party, which failed to win majorities in the House or body else did,” Gingrich told reporters.12 Both had Senate again during his terms in office. But in policy reason to celebrate: the federal budget was balanced terms, it resulted in a continuing decline of federal for the first time in 29 years, and surpluses occurred outlays as a percentage of gross domestic product in the next three fiscal years as well. and led to a balanced budget in just four years—far short of the 7 years Gingrich demanded or the 10 The budget fight turned out to be a political Clinton was willing to promise. Outlays shrunk from 21.4 percent of GDP in fiscal year 1993 to 18.2 victory for Clinton, who was reelected percent in fiscal years 1999, the last year Gingrich in 1996, but not for his party. was speaker; the annual increase in outlays in nom- inal dollars fell from 3.7 to 3.2 percent and in one fiscal year was as low as 2.6 percent.11 After this success, Clinton decided to address the After the 1996 election, Clinton replaced his entitlement issues of Social Security and Medicare. chief of staff, Leon Panetta, a former Democratic With more recipients than projected because of congressman, with Erskine Bowles, a North Car- longer lifespans and new medical techniques, and olina investment banker with a Democratic pedigree fewer taxpayers than projected because of the sharp (his father was the unsuccessful Democratic nomi- decline in birth rates in the 1960s, both programs nee for governor in 1972) but few ties to the con- were on a trajectory to insolvency despite the Social gressional Democratic leaders who resented Security compromise fix in 1983. Members of a Clinton’s compromises with Gingrich and the Social Security commission appointed by the Clinton Republicans. Bowles supervised negotiations administration in 1994 recommended adding some between Clinton and Gingrich staffers while holding investment component to the system, such as private House Democrats at bay in angry meetings. Clinton investment accounts, and key Democrats like Senate

39 CAN BIG GOVERNMENT BE ROLLED BACK?

Finance Chairman Daniel Patrick Moynihan and tape of Starr’s interrogation of Clinton was released. committee member John Breaux agreed. In fall 1997, In October, the House voted for an impeachment Clinton, without informing House Democrats or inquiry to be conducted in the Judiciary Committee. Vice President Gore, reached out to House Ways and Congressional Republicans felt that lying under Means Chairman Bill Archer and Bowles initiated oath, a felony, was inconsistent with the president’s discussions with Gingrich; both responded posi- oath to faithfully execute the law. Congressional tively, with Gingrich promising to forgo additional Democrats felt that removing a president from office tax cuts. In an October meeting, they agreed that over a flaw in his personal life after he had been Clinton would propose Social Security reform in his reelected was an offense against electoral democracy. State of the Union address in January 1998 and that Serious arguments could be made for either posi- Archer would get a bill through Ways and Means, in tion, and in the impeachment votes that followed, the hope that a final version could be passed in a only a few House members and a dozen senators lame-duck session of Congress in December 1998. crossed party lines. In the November 1998 elections, Early in January 1998, they also agreed on appoint- Republicans lost five seats in the House. Ordinarily ing a bipartisan Medicare commission, including that would be a minor setback. But they went in John Breaux and Ways and Means Republican Bill with a narrow majority, and it is highly unusual for Thomas (CA). But all these plans were thrown awry a president’s party to gain seats in an off-year elec- on January 21, 1998, when newspapers reported tion. (It had last happened in 1934, though it would that independent counsel Kenneth Starr was going to happen again in 2002.) Enough House Republicans investigate whether Clinton committed perjury in a announced that they would not vote for Gingrich for civil case when denying a sexual relationship with speaker in the first vote of the new House; without former White House intern Monica Lewinsky. Clin- their votes, Republicans could not organize the ton did call for Social Security reform in his State of House, and Gingrich was forced to announce he the Union address eight days later, but Gingrich and would step down.14 Lott did not respond. As Bowles said, “Monica Bill Clinton spoke favorably about Social Security changed everything.”13 reform in January 199915 but soon dropped the subject. Al Gore, whom he was supporting for the The Republican victory in 1994 was Democratic nomination, opposed it so strongly that only one other serious Democrat, former Senator followed by serious conservative Bill Bradley, ran against him. In March 1999, the Breaux-Thomas Social Security commission did advances in public policy. produce majority support for Medicare reform, including a premium support plan, which would Congressional Democrats, as well as majorities of allow seniors to choose from private insurers, with the public, rallied around Clinton, while Republi- premium subsidies for those with low incomes. But cans started talking about impeachment. Clinton the reform lacked the requisite supermajority was in no position to undermine his support from required to bring it before Congress and languished the Democratic left, and Gingrich was in no position without serious legislative action. to undermine his already shaky support among his In his 2000 campaign, George W. Bush called for Republican colleagues. The scandal unfolded as Social Security reform, and in 2004, he indicated it Lewinsky confessed to Starr in July and Clinton con- would be a major priority if he won a second term. fessed to Starr and to the nation in a televised However, he was unable to gain any significant evening speech in August. In September, Starr’s Democratic support in 2005, and the House Repub- report was transmitted to Congress and the video- lican leadership refused to seriously consider the

40 MAJOR CONSERVATIVE POLICY ADVANCES issue. In 2011, House Budget Chairman Paul Ryan Despite this failure, the Republican victory in 1994 (R-WI) persuaded almost the entire Republican was followed by serious conservative advances in pub- majority in the House to vote for a budget resolution lic policy. Government spending was rolled back, tax that included Medicare reform with premium sup- rates were cut, and the federal budget balanced for port, and the House voted for a similar resolution in four years, the last an achievement no one was even 2012. But it advanced no farther legislatively. prepared to promise in 1995. Following examples in In retrospect, the stars aligned for entitlement the states and in New York City, welfare was reformed reform in late 1997. It had support from a lame-duck in a way that reduced dependency by more than half Democratic president and in Congress not only from while improving the standard of living of the target leaders of the Republican majority but also from key population. Thus, even despite the challenges of Democrats in the Senate. But the moment the Lewin- divided government that climaxed in showdowns and sky scandal broke, the stars abruptly fell out of align- scandals, the 104th and 105th Congresses remain sig- ment, leaving Social Security and Medicare on a nificant examples of persistence and compromise in continuing trajectory for insolvency. wrestling with the tough decisions of their time.

41 Conclusion

hat general conclusions can we draw from elections in which voters seem to have repudiated Wthese occasions when American voters have big-government policies? repudiated big-government policies? How effective One lesson is that those who wish to reverse pub- have public officials and politicians opposed to such lic policies must be prepared to act, and to act rap- policies in reversing them or rolling them back? idly. They need not just general ideas but also As we have seen in the preceding chapters, their specific policies that legislative action or executive efforts have never been entirely successful. Govern- authority can put in place. The 1920s Republicans ment expands enormously in times of major wars. were well prepared with budget reorganization and Although military spending can be cut back mas- tax cut policies, for example. The Republican Con- sively, as it was after both World War I and World gress elected in 1946 similarly had a clear and spe- War II, those wars also created constituencies seek- cific agenda for 1947. The Reagan policy team was ing a continuation of what began as temporary pro- very well prepared, thanks to David Stockman’s grams. The existence of large armed forces generates deep and detailed knowledge of the budget, and a demand for veterans’ programs, a demand met acted with great swiftness. The Gingrich Republi- with unsatisfactory policies after 1918 and much cans in 1994 had their Contract with America better policies after 1945. Farm price supports dur- agenda, but also moved ahead with detailed budget ing World War I, intended to maintain food pro- and welfare reform legislation. duction to feed our forces and our allies, created a In contrast, the conservative coalition that demand for farm subsidies thereafter. Price controls emerged from the 1938 election lacked specific during World War II sparked continued rent con- goals beyond defunding some New Deal programs. trols in major cities, still in force in New York City And conservatives in Congress after 1966 and in the nearly 70 years later. Nixon administration after 1968 either lacked spe- Two other factors account for much of the cific policies or moved farther in the direction of big increase in government as a percentage of the econ- government, in accord with what seemed to them to omy over the last century. As a general rule, the exis- be the spirit of the times. tence of government programs channeling money to Another lesson is that it is possible to gain public constituency groups and policies favoring one inter- policy successes from either the executive or the est group, such as labor unions, generate often- legislative branches. The Harding and Coolidge powerful constituencies for continuation of such Republicans were able to do so despite unwieldy con- policies. And transfer programs like Social Security gressional Republicans who, after the progressive and Medicare have created even more numerous years, were not always opposed to government constituencies, even while existing policy puts them activism. And the Reagan Republicans had impressive on a trajectory to insolvency. success considering they faced a Democratic House Nevertheless, movement toward free-market where leaders tended to control legislative procedures. policies is possible and has happened on several In the other branch, the conservative coalition occasions. What are the lessons of such successes— that coalesced between Republicans and Southern and of the failures to achieve such success—following Democrats was large enough to pass important

43 CAN BIG GOVERNMENT BE ROLLED BACK?

legislation like the Taft-Hartley Act over Harry Tru- ment policies, tended to favor expansion of govern- man’s veto. So while Republicans lost their legislative ment as in his guaranteed income plan. majorities in 1948, the conservative coalition was Persistence can also be important when conserva- still strong enough to block efforts to reverse its poli- tives who are elected in repudiation of big-government cies. Similarly, the Gingrich Republicans achieved policies remain in office for a time. Mellon pursued considerable success despite Newt Gingrich’s unpop- tax cuts through thick and thin. Reagan was willing to ularity among the general public and in his own make concessions on tax policy in 1982, but also Republican Conference. The Republicans, in a time pressed in 1984 for what became the tax reform of of more cohesive parties, narrowly held on to their 1986. Gingrich, after significant policy successes in majorities not only in 1996 but also in the succeed- 1995 and 1996, was willing to work with Bill Clinton ing four congressional elections. In both cases, con- on the balanced budget agreement of 1997 and on gressional Republicans may have been helped by the entitlement reforms, which were short-circuited by fact that they generally supported the Democratic the Lewinsky scandal and the impeachment process. president on foreign policy, always a chief preoccu- No public policy victories are final. Political pation of presidents. Arthur Vandenberg provided strategists concentrate on gaining long-term majori- powerful support for Truman’s Cold War policies, ties for their parties. But as political scientist David and Gingrich did not oppose Bill Clinton’s military Mayhew has persuasively argued, those natural interventions in Haiti and the former Yugoslavia. majorities are actually a mirage.1 Political analyst A third lesson is that, as the old adage goes, per- Sean Trende has extended this argument.2 A more sonnel is policy. Harding and Coolidge had Charles achievable goal is to set in place enduring public Dawes set the culture of the Budget Bureau and policy—enduring in the sense of lasting one or two Andrew Mellon to press for both balanced budgets generations—in a way that gains public acceptance and tax cuts. Robert Taft provided invaluable and and shapes public thinking. The 1920s Republicans respected leadership for Republicans in the 80th achieved this until the disaster of the 1930s depres- Congress. Ronald Reagan was assisted by many able sion, the 1946 Republicans shaped public policy executive branch appointees and legislative allies, successfully but had less success in shaping public ranging from the mercurial David Stockman to the opinion, the Reagan Republicans had vast success in steady James Baker. The Republican leadership and both regards, and the Gingrich Republicans had committee chairmen in Newt Gingrich’s House were somewhat less success on both counts. History sug- even stronger conservatives on policy than he was. gests that such public policy triumphs are possible In contrast, Richard Nixon’s chief domestic adviser, but far from inevitable, and while it is impossible to Daniel Patrick Moynihan, while always open to free- restore the minimalist federal government of the market initiatives and with a deep understanding of early 20th century, it is still possible to roll back big- the perils of unforeseen consequences of govern- government policies.

44 Notes

Introduction 9. David Cannadine, Mellon: An American Life (New York: Random House, 2006), 285–92, 314–18. 1. Schlesinger’s theory is most fully presented in Arthur 10. Robert H. Van Meter Jr., “The Washington Confer- M. Schlesinger Jr., The Cycles of American History (Boston: ence of 1921–22: A New Look,” Pacific Historical Review 46 Houghton Mifflin, 1986). (1977): 603–24. 2. Gross national product was developed as an eco- 11. Margo J. Anderson, The American Census: A Social History nomic concept in the 1920s and 1930s and used by statis- (New Haven: Yale University Press, 1988), 140, 149–58. ticians as a measure of the size of the economy. The 12. Some of the farm bloc Republicans called themselves somewhat different concept of the gross domestic product Progressives; one critic labeled them “the sons of the wild was developed later and used by US government agencies jackass.” For a good brief description of the group, see starting in 1991. Economists measured the size of the Clyde D. Weed, The Nemesis of Reform: The Republican economy retrospectively using both concepts, but not for Party during the New Deal (New York: Columbia University all years. This study will use gross domestic product data Press, 1994), 13–14. whenever available; when they are not, as here, it uses 13. John D. Hicks, The Republican Ascendancy (New York: gross national product. Harper & Row, 1960), 54–55, 196–201; Robert K. Murray, The Politics of Normalcy: Governmental Theory and Practice in Chapter 1: The 1920s Republicans the Harding-Coolidge Era (New York: Norton, 1973), 43–48. 14. Murray, The Politics of Normalcy, 72–76. 1. US Bureau of the Census, Historical Statistics of the United States, 1789–1970, vol. 2 (Washington, DC: Bureau Chapter 2: 1938 to 1946: of the Census, 1975), 1114–16. The Conservative Coalition 2. Robert H. Ferrell, Woodrow Wilson & World War I, 1917–21 (New York: Harper & Row, 1985), 207–08. 1. Michael Barone, Our Country: The Shaping of America 3. Kendrick A. Clements, The Presidency of Woodrow Wil- from Roosevelt to Reagan (New York: Macmillan Free Press, son (Lawrence: University of Kansas Press, 1992), 143–62. 1990), 73–78, 104–7. 4. Ibid., 209–22. 2. Ibid., 75, 77. 5. Ferrell, Woodrow Wilson and World War I, 227. 3. Alan Brinkley, The End of Reform: New Deal Liberal- 6. Fritz Morstein Marx, “The Bureau of the Budget: Its ism in Recession and War (New York: Random House, Evolution and Present Role,” American Political Science 1995), 57. Review 39 (1945): 653–68. 4. Weed, Nemesis of Reform, 171. 7. Bascom N. Timmons, Portrait of an American: Charles 5. Weed, Nemesis of Reform, 172–73. G. Dawes (New York: Henry Holt, 1953), 199–210. 6. Brinkley, End of Reform, 18–20; Amity Shlaes, The 8. Ibid.; Harold D. Smith, “The Bureau of the Budget,” Pub- Forgotten Man: A New History of the Great Depression (New lic Administration Review 5 (1941): 106–15; and Richard York: HarperCollins, 2007), 296–317; Sidney M. Milkis, Neustadt, “Presidency and Legislation: The Growth of Cen- The President and the Parties: The Transformation of the tral Clearance,” American Political Science Review 48 (1954): American Party System since the New Deal (New York: 641–71, quotation on 645, n. 7. Oxford University Press, 1993), 107, 125–26.

45 CAN BIG GOVERNMENT BE ROLLED BACK?

7. Barry D. Karl, “Constitution and Central Planning: Chapter 3: Reacting to Roosevelt: The Third New Deal Revisited,” Supreme Court Review The 80th Congress and Beyond (1988): 188. 8. Brinkley, End of Reform, 21–23. 1. Franklin D. Roosevelt, “State of the Union Message to 9. Weed, Nemesis of Reform, 175–76; Brinkley, End of Congress,” January 11, 1944, www.fdrlibrary.marist.edu Reform, 102. /archives/address_text.html. 10. Weed, Nemesis of Reform, 183–85. 2. National Resources Planning Board, Committee on Long- 11. Shlaes, Forgotten Man, 352. Range Work and Relief Policies, Security, Work, and Relief Poli- 12. Brinkley, End of Reform, 171. cies (Washington, DC: US Government Printing Office, 1943), 13. Shlaes, Forgotten Man, 334–51; Brinkley, End of www30.us.archive.org/details/securityworkreli1942unitrich. Reform, 23–30. 3. Brinkley, End of Reform, 245–64. 14. Barone, Our Country, 100–01, 104. 4. Barone, Our Country, 185. 15. James T. Patterson, “The Failure of Party Realignment 5. Ibid., 175. in the South, 1937–39,” The Journal of Politics 27, no. 3 6. Ibid.,185–86. (1965): 604. 7. See the definitive biography, commissioned by the 16. James T. Patterson, “A Conservative Coalition Forms Taft family and entrusted to a Democratic historian: James in Congress, 1933–1939,” The Journal of American History T. Patterson, Mr. Republican, A Biography of Robert A. Taft 52, no. 4 (1966): 758. (Boston: Houghton Mifflin, 1972), 95–96, 349–50. 17. John Robert Moore, “Senator Josiah Bailey and the 8. Ibid., 305–07. ‘Conservative Manifesto’ of 1937,” Journal of Southern 9. Barone, Our Country, 190–93; Patterson, Mr. Republi- History 31 (1965): 21–39. The signers included Democ- can, 352–66. rats Harry Byrd of Virginia, Edward Burke of Nebraska, 10. Jones, Minority Party in Congress, 92. Royal Copeland of New York, and Millard Tydings of 11. Patterson, Mr. Republican, 373–75, 389. Maryland and Republican Warren Austin of Vermont— 12. Ibid., 389–90. a regionally diverse coalition. Milkis, The President and 13. Barone, Our Country, 188–90; Patterson, Mr. Republi- the Parties, 80. can, 391–92. 18. Milkis, The President and the Parties, 137–39. 14. Jones, Minority Party, 91. 19. John W. Jeffries, “The ‘New’ New Deal: FDR and 15. Patterson, Mr. Republican, 392–93. American Liberalism, 1937–45,” Political Science Quar- 16. Barone, Our Country, 204–9. terly 105, no. 3 (1990): 405; Brinkley, End of Reform, 140. Chapter 4: 1966 and 1968: 20. C. E. Noyes, “Spending vs. Economy: A Ten-Year Policy Changes at the Margins Record,” Editorial Research Reports 1 (1940): 9. 21. Milkis, The President and the Parties, 126–27. 1. Doris Kearns Goodwin, “Lyndon Johnson’s Political 22. Noyes, “Spending vs. Economy,” 7. Personality,” Political Science Quarterly 91, no. 3 (Autumn 23. Floyd Riddick, “First Session of the Seventy-Sixth 1976): 409. Congress, January 3 to August 5, 1939,” American Political 2. Barone, Our Country, 396–409; John R. Stark, “The Science Review, 36 (1939): 1022. Economic Case for the Great Society,” Challenge 15, no. 3 24. Brinkley, End of Reform, 141. (January/February 1967): 22–25. 25. Charles O. Jones, The Minority Party in Congress 3. Ira Katznelson, “Was the Great Society a Lost Oppor- (Boston: Little, Brown, 1970), 105–07, 137. tunity?” in The Rise and Fall of the New Deal Order, 1930–1980, ed. Steve Fraser and Gary Gerstle (Princeton, NJ: Princeton University Press, 1989), 197. 4. Irving Bernstein, Guns or Butter: The Presidency of

46 NOTES

Lyndon Johnson (New York: Oxford University Press, 12. Caraley and Schlussel, “Congress and Reagan’s New 1996), 360–77; Ronald F. King, “The President and Fiscal Federalism,” 51. Policy in 1966: The Year Taxes Were Not Raised,” Polity 13. Jeffrey M. Jones, “Democrats’ 2008 Advantage in 17, no. 4 (Summer 1985): 685–714. Party ID Largest since ’83,” Gallup, January 23, 2009, www 5. Congressional Quarterly 1967 Almanac (Washington: .gallup.com/poll/113947/Democrats-2008-Advantage- Congressional Quarterly, 1968), 1240–41. Party-Largest.aspx. 6. For an overview of this period, see Barone, Our Coun- 14. Stephen Skowronek, The Politics Presidents Make: try, 431–512. Leadership from John Adams to George Bush (Cambridge, 7. Nicol C. Rae, The Decline and Fall of Liberal Republi- MA: Harvard University Press, 1993), 417. cans from 1952 to the Present (New York: Oxford University 15. Sloan, “Meeting Leadership Challenges,” 801. Press, 1989), 94–95, 146–50. Chapter 6: Major Conservative Chapter 5. Achievements and Policy Advances Compromise in the Reagan Era 1. Newt Gingrich is a former senior fellow at the Amer- 1. Daniel Patrick Moynihan, Miles to Go: A Personal ican Enterprise Institute. History of Social Policy (Cambridge: Harvard University 2. Michael Barone, “Who Does Mayor Mike Hurt?” US Press, 1996), 9–10. News and World Report, June 21, 2007, www.usnews.com 2. Milkis, The President and the Parties, 266. /opinion/blogs/barone/2007/06/21/who-does-mayor- 3. Steven Hayward, The Age of Reagan: The Fall of the Old mike-hurt. Liberal Order, 1964–1980 (Roseville, California: Prima Pub- 3. Barbara Vobejda, “Clinton Signs Welfare Bill Amid lishing, 2001), 523–30. Division,” Washington Post, August 23, 1996, A01. 4. James P. Pfiffner, “The Carter-Reagan Transition: Hit- 4. Steven M. Gillon, The Pact: Bill Clinton, Newt Gingrich, ting the Ground Running,” Presidential Studies Quarterly and the Rivalry That Defined a Generation (New York: 13, no. 4 (Fall 1983): 628. Oxford University Press, 2008), 113–14. 5. Ibid., 629. 5. Ibid., 115–19. 6. Ibid., 631. 6. In 1968, though, the South split between the Inde- 7. Michael Schaller and George Rising, The Republican pendent George Wallace and the Republican candidate, Ascendancy: American Politics, 1968–2001 (Wheeling, IL: Richard Nixon. Harlan Davidson, 2002), 87. 7. Elizabeth B. Drew, Showdown: The Struggle between the 8. Demetrios Caraley and Yvette R. Schlussel, “Congress Gingrich Congress and the Clinton White House (New York: and Reagan’s New Federalism,” Publius 16, no. 1 (Winter Simon & Schuster, 1996), 38–39. 1986): 51–62; John W. Sloan, “Meeting the Leadership 8. Gillon, The Pact, 139–45. Challenge of the Modern Presidency: The Political Skills 9. Ibid., 147–72. and Leadership of Ronald Reagan,” Presidential Studies 10. Ibid., 173–80. Quarterly 26, no. 3 (Summer 1996): 797. 11. Economic Report of the President 2012 (Washington, 9. Lou Cannon, President Reagan: The Role of a Lifetime DC: White House, 2012), 411–12. (New York: Public Affairs, 2000), 78–94; Hayward, The 12. Gillon, The Pact, 191–203; quotation at 201. Age of Reagan, 82–95, 145–66. 13. Ibid., quotation at 224. 10. Figures are from Economic Report of the President 2012 14. Ibid., quotation at 224. (Washington, DC: White House, 2012), 411, 318. 15. Personal reporting. 11. Lee Edwards, The Conservative Revolution (New York: Free Press, 1999), 228–30.

47 CAN BIG GOVERNMENT BE ROLLED BACK?

Conclusion 2. Sean P. Trende, The Lost Majority: Why the Future of 1. David R. Mayhew, Electoral Realignments: A Critique Government Is Up for Grabs (New York: Palgrave Macmil- of an American Genre (New Haven, CT: Yale University lan, 2012). Press, 2002).

48 About the Author

Michael Barone, an AEI resident fellow and a political analyst and journalist, studies politics, American government, and cam- paigns and elections. The principal coauthor for many years of the biannual Almanac of American Politics (National Journal Group), he has written many books on American politics and history. Barone is also senior political analyst for the Washington Examiner.

49