The Democratic Party has been facing an existential crisis for several months, deciding whether it wants to follow a more liberal populist direction, or continue along the neoliberal path that it has been walking since the late 20th Century. This crisis is causing severe divisions within the party and threatens to create a long-term divide.
When people say that they are a “Democrat” this really doesn’t tell you a great deal. There is a massive gulf between the New Deal positions and the neoliberal positions, and the simple letter D next to your name indicates nothing as to which side of the divide you are on.
New Deal Liberalism
The term “New Deal liberalism” dates back to the 1930s and was coined by Franklin D. Roosevelt to describe his political platform for improving the nation and recovering from the Great Depression. It was a dominant political ideology for decades and only began to fall out of favor in the 70s and 80s, when the entire American political spectrum began to move to the right.
New Deal liberals are essentially social democrats (similar to left-parties in the EU) who believe in a strong social safety net, significant investments in public institutions, tight regulation of industry, and highly redistributive tax schemes. They expect the government to provide these basic services and protections to their citizens and do not typically support privatization or unregulated markets. The believe that the government is more suited to provide key services—including infrastructure, education, health, environmental, and welfare—than the market, and are often very skeptical of corporate power.
Programs implemented by New Deal liberals include Social Security, Medicare, Medicaid, worker protections programs (e.g. OSHA), and environmental protections programs (e.g. Nader and the EPA).
New Deal Democrats represent the more progressive side of the party. With the losses of Bernie Sanders to Hillary Clinton and Keith Ellison to Tom Perez, New Deal Democrats currently find themselves outside of leadership positions within the Democratic establishment.
The term “neoliberalism” refers to an economic and political movement that began in the late 20th Century and has had great influence over the Democratic Party since the 1980s—neoliberals are also referred to as “Third Way Democrats,” “moderate Democrats,” or “New Democrats.” The neoliberal ideology attempts to use some conservative and pro-market economic policies to achieve some more progressive goals (e.g. better public schools through more choice and innovative charters).
Neoliberals subscribe to many of the same broad ideals as New Deal liberals—including universal college and healthcare—but have dramatically different policy ideas on how to achieve these goals.
First, they subscribe to a much more conservative economic ideology, where they believe that the market is much more efficient in providing services than the government. They often support privatization (e.g. private schools), market-solutions to social problems (e.g. cap-and-trade), and the use of subsidies and incentives instead of publicly provided services (e.g. using ObamaCare to give everybody access to private insurance rather than creating a public option).
Second, neoliberals favor less stringent regulatory regimes than New Deal liberals. They believe that the market can regulate itself in many cases and agree with conservatives that “big government” hurts more than it helps.
Third, neoliberals commonly support “free trade deals” and open markets for goods and services across international borders. Neoliberals like Bill Clinton were the driving force behind NAFTA and permanent normal trade relations with China, and neoliberals in the Obama administration sold the TPP.
Because of their pro-market and pro-corporate stances on many issues, neoliberals have received a great deal of funding from big money donors. In fact the Democratic Leadership Council—which was a key tool that helped neoliberals take over the Democratic Party in the late 20th Century—was founded using money from a variety of conservative groups, including the Koch Brothers, DuPont, AIG, and Verizon.
Policy Fights Between Neoliberals and New Deal Democrats
Despite the fact that both neoliberals and New Deal liberals are described as “liberal,” and often reside within the Democratic Party, they have dramatically different policy proposals.
The debate over health care financing is a perfect example of a policy fight that demonstrates the real differences between New Deal liberal and neoliberal policies within the Democratic Party:
- Neoliberals: Health care should be available to everybody, but financing care should remain in the private market and be run primarily through for-profit insurers. The government should regulate these markets where needed and provide subsidies for poor Americans to provide care, but shouldn’t try to replace private insurers or set prices. ObamaCare is an example of this neoliberal policy being implemented.
- New Deal Liberals: Health care is a right and the government should provide it through implementing a single payer or public option open to all Americans. Tax revenue should pay for universal insurance coverage that is separate from the private market and not run with a profit motive.
Obviously, while both types of liberal have the same stated goals—universal access to care at an affordable price—the actual mechanisms of achieving these goals are dramatically different. This difference stems from the fundamental divide between the two faction as to whether the government or the market should provide services.
In addition to this disparity, Neoliberals often subscribe to a social justice framework that focuses on race and gender, while New Deal liberal focus on class. For example, many neoliberals are fine with CEOs making enormous salaries and worker wages lagging behind, just as long as those CEOs are demographically representative (e.g. 50% female, African American and Hispanic leadership reflecting population numbers, LGBT representation, etc.). Conversely, New Deal liberals tend to support stronger worker protections that cut across demographic groups and also address class disparities (e.g. higher minimum wages, more vacation time etc.).
This disparity in focus between demographics and class was a key distinction in the fight between Hillary (for neoliberalism) and Bernie (for New Deal liberalism). Hillary made women’s pay equality a major plank of her campaign and utilized successful female and minority elites as campaign proxies in an attempt to garner votes—that said, she didn’t support a $15 minimum wage and it appeared that she was more concerned with increasing the diversity of the elite than decreasing the disparity between the elite and the worker. Conversely, Bernie focused a great deal on the minimum wage, which would help all workers and help reduce wage inequality across class lines—this would have had an indirect impact of disproportionately benefiting women because women are more likely than men to be employed at minimum wages.
I am a firm supporter of New Deal Liberalism and personally consider neoliberalism to be a natural byproduct of the right wing moving into the extreme. Neoliberal Democrats hold many of the policy ideals that moderate Republicans did during the late 20th century (e.g. market-centered solutions rather than government services), while New Deal Democrats represent a continuation of the policy traditions of presidents like FDR, JFK, and LBJ.
In a sane political spectrum (i.e. one not including lunatics like Trump, Pence, Ryan, and McConnell), the neoliberals would largely populate the conservative party, where they would act as a counterweight to the more progressive and government-focused New Deal liberals.
Unfortunately, the US political spectrum has gone insane and the neoliberals are grouped together with the New Deal liberals as the people in the room who actually want to look for solutions to real problems, while the GOP simply attempts to tear the government apart. As this is unlikely to change in the near future, it appears that the Democratic Party will continue to be torn between these two factions and forced to navigate between mutually-exclusive ideas of how public services should be provided.
Edited by Lydia McMullen-Laird