The Magazine

Gotham Goes Broke?

One New Deal was enough.

Feb 24, 2003, Vol. 8, No. 23 • By VINCENT J. CANNATO
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A New Deal for New York
by Mike Wallace
Bell & Weiland, 128 pp., $18.95

In 1918, the philosopher John Dewey wrote about the "social possibilities of war." World War I presented Progressives like Dewey the opportunity to voice support for their vision of government's role over the economy. Higher taxes, economic planning, and the regulation of wages and work hours were all unthinkable in peacetime. Yet war brought with it a sense of national unity that provided a rationale for the dreams of men such as Dewey. Ever since, liberals have been looking for war's moral equivalent.

So it came as no surprise that after September 11, many American liberals saw opportunity in tragedy. The nation was more united than it had been in decades. Fighting the war on terrorism, rebuilding lower Manhattan, and strengthening national security all seemed to demand a powerful (and expensive) response from the federal government. Could this mean an end to the Reagan-era skepticism about big government?

New York senator Charles Schumer articulated this view in the Washington Post two months after the terrorist attack. He wrote that the "the tectonic plates beneath us are inexorably moving us to larger federal involvement" and that a "'new' New Deal is upon us." The article was triumphantly entitled "Big Government Looks Better Now."

But the recent off-year election shows how little has actually changed on the domestic front. Even the scandals surrounding companies like Enron have barely budged Schumer's "tectonic plates." But this will most likely not deter other voices from joining the "social possibilities of war" chorus, the latest of whom is Pulitzer Prize-winning historian Mike Wallace.

Wallace's "A New Deal for New York" begins with a compendium of ideas for rebuilding New York in the wake of 9/11--not just lower Manhattan, but the entire city. From reviving and diversifying the city's economy, to improving its infrastructure, to increasing affordable housing, many of Wallace's ideas are culled from various organizations, think tanks, and interest groups throughout the city. (Curiously, Wallace ignores the right-of-center Manhattan Institute.)

Politics aside, this section of the book teems with energy and a love for New York that is unmistakable. Ideas for the city's renewal--some reasonable and some half-baked--leap from nearly every page of the book. The redevelopment of the former World Trade Center site has opened up discussion about further improvements in the city's infrastructure. To this debate, Wallace's book is a welcome addition.

But Wallace does not stop there. Like Schumer, Wallace sees the war on terrorism as an opening for something more far-reaching. "Catastrophe," he writes in the spirit of Dewey, "has presented us with a great, historic opportunity." The answer to many of the nation's ills, he argues, is to be found "inside the box" with "a massive program to create and enhance the nation's social capital. . . . What we need, I think, is a new New Deal."

Conjuring up images of noble relief programs, compassionate social insurance plans, and grand public works projects, Wallace wants Americans to abandon their skepticism about government and their aversion to taxes and warmly embrace the spirit and policies of the New Deal, not just for New York but for the entire country.

But is this really what the country needs? The New Deal still exerts a considerable influence over modern America; take for example Social Security, the Securities and Exchange Commission, and the Federal Deposit Insurance Corporation. Yet the rationale for a "new New Deal" is hardly self-evident.

Proponents of greater government activism try to evoke memories of the Great Depression as a rationale for their policies. That's why Democrats speak of the "worst economy since Herbert Hoover." Wallace gamely tries to convince the reader that the recent mild recession is 1929 all over again with "palsied producers, listless investors, persistent unemployment, maxed-out consumers."

Yet Wallace's dark view of the American economy is unconvincing. One need not rehash the dire economic numbers of the 1930s to know that our current economic situation, if not ideal, is hardly catastrophic. Of course, if things were as bad as Wallace says, why would the average taxpayer in tight financial straits want to pay more taxes to support the grand vision of government set forth in "A New Deal for New York"?