Our Two New-Deal Parties

August 22, 1955

Adjournment of Congress provides an opportunity for taking stock of present Federal economic policies. One central conclusion emerges. Mr. Eisenhower, with minor reservations, is now another New-Deal president.

He has been pressing for the heart of what the New Deal stood for—big spending, big government, an ever-expanding paternalism. And the political situation is such that there is no real opposition to this pressure. We have now two New-Deal parties. Those millions of Americans who believe in economy, in balanced budgets, in some curb on centralization and expanded governmental power and paternalism, now have no national party to represent them.

Let us illustrate this by specific items. We have come a long way from the time when Mr. Eisenhower during his campaign suggested huge slashes in Federal spending, and even from the day of his first State of the Union message when he declared: “The first order of business is the elimination of the annual deficit.” He still pays lip-service to the need for a balanced budget, but this goal keeps receding into the future. As “the first order of business” it can no longer be reconciled with his actual policies.

The worst of them, from this standpoint, is his grandiose ten-year $31 billion Federal-state road-building program to be financed by special bond issues not to be counted as part of the national debt. This failed in the last Congress through the mere accidents of partisan jockeying for position. Mr. Eisenhower also advocated Federal aid to local school construction, and Federal reinsurance of private health plans. Both deservedly failed. The Federal government has no business in either field.

Mr. Eisenhower was successful, however, in his plan to continue foreign aid on a scale even higher than last year. He wants to scatter subsidies totaling $4.7 billion to dozens of foreign nations in a year in which we ourselves have an officially estimated deficit of $2.4 billion! For this same year, Mr. Eisenhower also insisted on appropriations for 35,000 public housing units (and got 45,000). From any standpoint such public housing is not merely unnecessary but dangerously ill-advised. It promotes subsidies and socialization at the expense of private initiative. It increases a wholly needless deficit. And it artificially stimulates still more housing at the very peak of prosperity and a housing boom.

The President insisted on other New Deal measures. At a time when hourly wages are the highest in American or world history he asked for a boost in the minimum wage from 75 to 90 cents an hour (and got $1). This measure will increase production costs and imperil the employment of the very marginal workers it is designed to aid. The Administration has also encouraged a whipping-up of the present boom by credit expansion, against which it is only now taking belated steps.

It is of course fair to point out that the President has taken some actions in the other direction. With the Dixon-Yates contract he tried to stop the growth of the Federal public-power colossus. But that whole contract was so ineptly handled and defended that the zealots of socialized power think it provides them with a crucial 1956 issue. Again, the President made an effort to put some limit on the present appallingly costly, inequitable, and dangerous farm-price-support program. But here again his action has been so timid and inadequate that the situation is becoming constantly more critical.

It is also fair to point out that the majority of House Democrats supported some shamelessly demagogic measures and that Mr. Eisenhower courageously and successfully fought them (the $20 income-tax reduction for everybody, and the slapdash social-security revisions).

Yet on balance the central conclusion remains. We are drifting, under pressure from a Republican President and Democratic Congress leaders, toward ever-expanding Federal power and paternalism. The opponents of this drift are scattered and isolated, and there is now no national party even to state their case.