The election of 1932 was a turning point in the fortunes of the Democrats and Republicans. Democrats had won just three of the previous ten presidential elections and had held a majority in both the House and the Senate in only four of the previous 20 sessions of Congress. After the “critical election” of 1932, Democrats won seven of the ten presidential elections from 1932 to 1968 and majorities in both the House and the Senate in all but two of the 19 Congressional elections. The New Deal, of course, was not foreshadowed in Roosevelt’s 1932 campaign, and could not be the cause of the 1932 election results. Hoover and the Republicans lost that election more than the Democrats won it. But there was nothing inevitable about the Democrats’ becoming the majority party for the next fifty years, they could have squandered the opportunity handed to them by the nation’s deepest depression, but they did not.
No they did not. What Roosevelt (FDR) did in his first four years, according to Shawn Kantor, University of California, Price V. Fishback, University of Arizona and John Joseph Wallis, University of Maryland, was to use fiscal expenditure programs critically based on aid to state and local governments (who often received non refundable grants which they themselves administered) to obtain a (long-term) shift of allegiance from the GOP to what is today’s Obama’s party.
Our instrumental variables estimates indicate that increasing a county’s per capita New Deal relief and public works spending from nothing to the sample mean ($277) would have increased the long-run support for the Democratic party by 10 percentage points… While the voters the Democrats gained in the 1932 election reflected Hoover’s failure and indeed could have been ephemeral, the votes gained in the 1936 and 1940 elections reflected the political benefits of the New Deal and those effects persisted well into the 1960s.
There are lessons for today’s politics to be learned.
Obama might never be like FDR: his shy expansive fiscal policy, reneged after the midterm, will likely leave no equally long-lasting prize for the Democratic party, whether he will win or lose tomorrow.
But there are lessons for today’s Europe too.
In the midst of a dramatic recession, FDR managed to obtain another significant and momentous change that would last even longer, till today: the shift to a Federal structure dominated by Washington. “As a share of government expenditures at all levels, the New Deal raised the proportion of federal spending from 30 percent in 1932 to 46 percent by 1940”.
How could such a shift – toward federal government away from the states – impossible in today’s Europe, occur?
Smart FDR in his first mandate centralized fiscal policy but left autonomy of using the (very large and unprecedented) grants to local and state power. In his second mandate centralization was stronger and “significantly less likely to be influenced by political factors”.
But by then the main effect had already taken place: Roosevelt had – at the end of his first term in 1936 – already captured power for decades to come for his party and had obtained, by showing smart solidarity and by pouring money where it was needed during the Great Depression, the authorization to do so with gratitude.
Oh, if only Europe could have understood this.