What New Deal?

Rumor has it that Obama’s advisors are planning some sort of a Big Bang program in January. As Rahm Emanuel told the Wall Street Journal’s CEO Council:

You should never let a crisis go to waste. [It lets us address long-term problems] in the health care area, the energy area, the education area, the fiscal area, [and] the tax area.

You can see what is coming, given that President-elect Obama represents the progressive educated elite. What is coming is an intensification of the power of the progressive educated elite expressed through the power of the political sector. They want to enact a hugely dirigiste program that puts government even more deeply into every area of American life. It’s a “new” New Deal.

That’s all very well, but as Holman W. Jenkins, Jr. writes in the Wall Street Journal, how about Obama cleans up the festering problems of the old New Deal that are just now wiping out the economy.

His real problem is the crack-up of the world FDR built.


Fannie Mae was a New Deal creation, subsidizing the securitization of mortgage debt. FDR’s successors piled on the subsidies for housing debt and incentives directed at low-income borrowers. Kaboom.


Then there’s the UAW, born in 1935. For decades the UAW steadily traded away domestic auto market-share to imports and transplants to keep its aging membership toiling away toward their golden pensions and collecting wages and benefits twice those of their competitors. It worked for a while.

But now Kaboom. Rahm Emanuel thinks that the answer to all these failed government policies is more of the same.

Of course, the problem wasn’t so much with the original New Deal policies, but the fact that the powers granted to the government and to its favored interests were so shockingly abused. The bright young men of the New Deal may have designed some useful programs. But then the bright young men went on to the next new thing, and the programs got taken over by time servers and placemen.

The same will happen to Obama’s government-centric ideas—assuming that they even work in the first place.

In my view, the increased centralization of health care, energy, education, and so on will hasten the day when the whole project of the progressive educated elite hits the buffers.

And the people that get hurt will be the trusting independent voters who just voted innocently for Hope and Change.