The next New Deal? Does Elizabeth Warren want to be the next FDR?
The 2020 Democratic primaries have focused on the contest between Vermont Senator Bernie Sanders, Massachusetts Senator Elizabeth Warren and Obama’s former Vice President Joe Biden. Now that Beto O’Rourke has announced the end of his campaign, it is looking increasingly likely that one of the three candidates mentioned above will secure the 2020 Democratic nomination.
Biden is a typical New Democrat who intends to continue with the policies he and his boss implemented during the Obama era. It is this stance that helped propel Hillary Clinton to victory in the 2016 South Carolina primary where she won 74 per cent of the vote, with black voters helping her win this battle by voting for her over Sanders by six to one.
But this strategy is not working for the former Vice President. The New York Times reports that Warren has a five per cent lead over Biden in the Iowa race. His lacklustre performance where he interrupted himself twice whilst making an impassioned case for protecting undocumented immigrants is generating increasing concern among voters that he is not capable of defeating Donald Trump, even though national polls indicate he is still the favourite to win the 2020 Democratic ticket.
This is only working to Warren’s advantage. Betting markets rank her the clear favourite, with a nearly 50 per cent chance of winning the nomination. Other polls indicate that she is the only candidate who can defeat Trump. But she is not as similar to Sanders as many suggest. If anything, her policies indicate that she wants to create another New Deal similar to the ones President Franklin Delano Roosevelt (FDR) implemented in the 1930s.
Whilst the Vermont Senator labels himself a “democratic socialist”, Warren proclaims herself “a capitalist to my bones.” In 1936 FDR welcomed ‘the hatred’ of big businesses campaigning against him that year. After a cable news personality reported that company executives feared a Warren victory, the Massachusetts Senator tweeted that she “approves” this message.
FDR believed that the American economy needed “relief, recovery and reform.” As Ronald Reagan wrote in his autobiography An American Life, Roosevelt hated waste and hoped that the New Deal programmes he created would only be temporary. They were not an excuse for big government.
Warren also believes in reform and wants to introduce fairer markets. For her, the problem with capitalism is that carbon emissions remain unpriced, tech companies accumulate too much power and oligarchies dominate health care. In her eyes, this harms competition and widens income inequality.
Furthermore, FDR legislated the 1935 Revenue Act that introduced a 75 per cent progressive tax on America’s wealthiest individuals.
Similarly, Warren proposes an idea called “Predistribution”, which seeks to boost the incomes of America’s lowest-paid by breaking up big firms and she wants to end Trump’s tax cuts. Under the Massachusetts Senator’s plans, companies would face an extra 7 per cent tax on all profits above $100 million and new levies worth 15 per cent on the top 2 per cent of households.
She intends to revive Roosevelt’s Glass-Steagall Act, separating banks’ deposit-taking activities from their riskier investment activities.
But Warren’s healthcare plans are more radical than anything FDR proposed. The latter wanted to implement universal healthcare, but failed to include it as part of his 1935 Social Security bill due to a lack of time. Instead, the Massachusetts Senator wants to end private health insurance altogether and introduce ‘Medicare for all.’ This is a plan Sanders introduced which she endorses. Her team has failed to answer journalists’ questions as to whether her Medicare plan will result in increased taxes for the middle classes.
Under Roosevelt, private health insurance was exempted from the National War Labor Board that could prevent businesses from increasing salaries or wages without authorisation. Companies could still offer private healthcare to their workers.
Warren intends to introduce 1930s-style policies to curb ‘excessive’ capitalism that could pave the way for another new deal similar to the ones Roosevelt introduced. The most left-wing policy the Massachusetts Senator intends to implement is Medicare for all, but that is her only similarity to Sanders. But if either the Vermont Senator or Warren win the 2020 Democratic nomination, they will both end the New Democrat era. It is no wonder there are rumours Hillary may make a comeback when Biden, the only hope the Democrats have left for preserving their centrist strategy, is failing so badly.