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No new New Deal

If Barack Obama wins the presidency, comparisons will be made with FDR, another charismatic Democrat

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How dreadful it must feel to have one hand on the ultimate prize, only for it to be snatched away. Some deal with it better than others: after seeing the presidency taken from him by the Supreme Court, Al Gore grew a beard, put on some weight and turned defeat into a neatly self-deprecating joke. But defeat, after running so long and so hard, is no joke. If the polls turn out to be wrong and Barack Obama loses to John McCain, whether because of racial prejudice or some last-minute surprise, his sense of loss and waste will surely be incalculable. The only consolation, perhaps, is that there is only one thing worse than losing - winning.

No candidate since the 1960s has aroused such excitement, not only on historically Democratic college campuses but everywhere from Kansas to Kenya. Obama's glossy Blueprint for Change promises economic reform, tax cuts, health insurance, more money for education, a new foreign policy, even a new, bipartisan political culture. With both houses of Congress likely to remain in Democratic hands, the possibilities seem immense. The potential for disappointment, in other words, could scarcely be greater.

In the future, Obama may well look back and wonder whether the 2008 election was such a good one to win. The new president will inherit not merely the debilitating US military commitments in Iraq and Afghanistan but also a stock market bruised and battered, a weak dollar, a banking system in ruins and a domestic economy in the doldrums - and that is just the optimistic scenario. If Obama does indeed find himself the occupant of the White House, much of his administration probably will be devoted to rebuilding the banking system. With the economy in recession, house prices in free fall and homeowners struggling, there will be little scope or appetite for the ambitious programmes that liberals expect from their candidate. Worse, it is hard to imagine that the economy will have recovered much by 2012, when he will face re-election. (True, it is equally hard to imagine the Republicans getting their act together and reawakening enthusiasm for hands-off conservatism in just four years, though stranger things have happened.)

By the time Roosevelt was sworn in, Hitler had come to power in Germany, and the American banking system had collapsed

Yet Obama would hardly be the first president to take office during an economic downturn. The most celebrated was that supreme Democratic hero, Franklin D Roosevelt, swept to power in a landslide at the very moment the Great Depression was wreaking destruction across the western world. In those days the president had longer to wait before taking office, and the four months after FDR's victory in November 1932 were some of the bleakest in modern history. By the time he was sworn in, Japan was on the verge of leaving the League of Nations, Hitler had come to power in Germany and the American banking system had collapsed. The governor of Kansas called for "the iron hand of a national dictator"; FDR's speechwriter Ray Moley recalled that "terror held the country in its grip" when they arrived in Washington for the inauguration.

What was curious about FDR, and what makes him a decidedly imperfect role model, was that he managed to turn the economic situation to his advantage without ever coming close to resolving it. Yes, he won four elections in a row; yes, he used the crisis to push through the New Deal, the most ambitious and sweeping legislative programme in US history, and the basis for the modern welfare state. But not only did he fail to lift the nation out of the Depression, his policies may well have made it worse. On the one hand, his anti-business rhetoric and sweeping labour regulations struck at the very institutions that needed to regain their confidence if Roosevelt was to drag the economy out of the Depression. On the other, paradoxically, his obsession with balanced budgets led him to slash spending at the first signs of recovery, sending the economy into a renewed recession. As late as 1938, one in five American workers was still unemployed. Genuine recovery came only with the advent of the Second World War, with its vast arms budgets, deficit spending and conscription.

One of the lessons of FDR, in other words, is that, in bad times perhaps even more than good, style can matter more than substance. Voters were prepared to tolerate his economic failures not merely because they liked his welfare programmes, but because his breezy, optimistic charm gave them a sense of security they could get from no other politician. In that respect, Roosevelt's true heir was not Harry Truman or Jack Kennedy, but Ronald Reagan. The former Hollywood actor recognised a fellow professional when he saw one; to the horror of his conservative supporters, he always described Roosevelt as the greatest president of the century and his political hero. Like Roosevelt, Reagan came to power at a moment of economic crisis; like Roosevelt, he struggled to resolve it. And like his hero, he was re-elected by a landslide, a victory not so much for his policies as for his persona.

What this does not mean, however, is that Obama should be rubbing his hands at the prospect of presiding over four years of dole queues and soup kitchens. At one level, FDR and Reagan were able to turn economic crises into political profit because they were both supremely skilled political commu nicators whose words could rouse a nation. So far, so good, Obama might think; but then the parallels become more disturbing for modern-day Democrats.

For Roosevelt and Reagan did not owe their success to style and words alone. Ironically, given that they were generally regarded as airheads who merely parroted the views of their speechwriters, both tapped rich seams of ideology. Take Roosevelt, a man so outwardly superficial that his classmates used to call him "the Feather Duster", and so indifferent to economic ideas that he once told his speechwriter, when deciding between diametrically opposed trade policies, simply to "weave the two together". Yet his presidency, with the New Deal at its centre, marked the high point in American history for ideas of the public good and for collective action.

Modern politics makes it impossible for electoral candidates to meet and mix with the best and the brightest as they did in the 1930s

Roosevelt may have been an intellectual lightweight, but he was a good enough politician to surround himself with a brains trust that included some of the most ambitious and distinguished thinkers in the nation - men like Raymond Moley, Rexford Tugwell and Adolf Berle, steeped in the progressive tradition of state intervention, fascinated by ideas of economic "concentration and control", eager to turn university common-room concepts into the stuff of practical policy. Without Roosevelt, the perfect frontman, they would never have had the chance. Without his brains trust, however, without the legacy of the progressive movement, and without their enthusiasm for the public sector and the collective good, Roosevelt would have been a great actor without a script. What made him a great president is that he recognised that he needed one - and he knew where to look.

As for Reagan, his critics still bridle at the thought of him as a man who had any brain cells at all. Yet this position is no longer tenable: we know now that as governor of California and afterwards, he spent so much time reading conservative magazines that his staff tried to cancel the subscriptions behind his back. During the late 1970s he delivered more than a thousand radio talks on everything from the dangers of international communism to the urgent need for tax cuts, most of which he hand-wrote, without assistance. He was obviously no intellectual; like Roosevelt, he depended heavily on the ideas of others, reaping the harvest of the conservative intellectual renaissance spearheaded by Milton Friedman. Like his hero, he was a great performer in search of great writers. The only difference was that Reagan wrote a lot of his own scripts.

Whether Barack Obama is a political performer in the league of FDR and Reagan, it is too early to say; although undeniably he has been impressive so far, the comparison is hardly fair, as they sustained their performances over decades, in good times and bad. But what is beyond doubt, and should be more worrying for his admirers, is that Obama does not have anything like the same kind of ideological arsenal at his disposal.

There is a paradox here: anyone who has read Obama's memoir Dreams From My Father, written when he was 33 and before his political career began, will know that he is an intelligent and sensitive man. If he does become president, he will have good claim to be the brightest of modern times. But whatever the attractions of the candidate, in no sense could his campaign be said to resemble an ideological crusade, as was Reagan's in 1980. The vacuity of his campaign slogans - "Change you can believe in", "Yes we can" - speaks volumes about the void at the heart of his programme. The Blueprint for Change is simply a laundry list of legislative proposals, dressed up with patriotic gush and decorated with banalities. His public statements amount to everything and nothing, so vague that even prominent conservatives such as Andrew Sullivan and David Friedman (son of Milton) rally to his standard. A candidate who attracts the support of so many self- described "Obamacons" is doing something wrong.

Yet Obama can hardly be blamed for the intellectual emptiness of his campaign. Both Roosevelt and Reagan had years to build up networks of friends and allies, years to sift through their ideas, years to write and think and reflect. Obama's rise, by contrast, has been so swift that he has barely had a chance to pause for breath.

More to the point, the nature of modern American politics makes it impossible for candidates to meet and mix with public intellectuals in the way they did in the 1930s. Obama has been on the road for almost two years, every day bringing new media appointments, new requests for interviews, new airport press conferences, new speeches at suburban malls, new fundraising dinners. Even if he had wanted to spend a few days chewing the fat with the best and the brightest, he could never have found the time.

Beneath all that lies a still deeper problem. Obama's opponents have often portrayed him as a dangerous liberal, presuming that the very mention of the dreaded -word would be enough to alienate undecided voters. The man himself dislikes the label. "There's nothing liberal about wanting to reduce money in politics," he said grumpily in the spring. "There's nothing liberal about wanting to make sure [our soldiers] are treated properly when they come home . . . There's nothing liberal about wanting to make sure that everybody has health care." But the label fits: according to the conservative National Journal, which keeps a regular score, Obama was the nation's most liberal senator in 2007 and the tenth most liberal the previous year.

What does it mean, though, to be a liberal? In the 1930s, when Roosevelt was in his pomp, it meant, in effect, using the power of the state to alleviate the inevitable crises of the capitalist economy, and extending state power to provide security for those in need. Two or three decades later, when liberalism was most deeply entrenched in American public life, it meant protecting and extending the New Deal state that FDR had built, supporting civil rights laws to bring racial justice to the South, and fighting communism overseas. Liberalism was the common currency of the American intellectual, the creed of common rooms from coast to coast. When Kennedy won the presidency in 1960, or when Lyndon B Johnson succeeded him three years later, both men had only to pick up the phone and they could summon great names from Ivy League institutions, the likes of John Kenneth Galbraith and Arthur Schlesinger, to provide a stream of ideas. Liberals were confident, eager, optimistic. History was with them.

Reagan was obviously no intellectual. His critics still bridle at the thought of him as a man who had any brain cells at all

But the truth is that American liberalism had its heart ripped out in the economic crisis of the 1970s, and has not recovered since. Once a powerhouse of international progressive politics, an inspiration to Labour Party intellectuals such as Anthony Crosland and Denis Healey, American liberalism has not produced a single first-class idea for four decades. (It can count on distinguished and heavyweight political thinkers, to be sure - one thinks of Robert Reich, Paul Krugman and Samantha Power - but there is no sign of a clear, coherent direction for the next few decades, let alone a model for European progressives to follow. Even the most impressive liberal intellectuals are nostalgic revivalists, harking back to the good old days of J M Keynes and FDR: it is revealing, for example, that Krugman calls for a "new New Deal" based on health care and mildly redistributive taxation.) A creed born partly out of the economic nationalism of the 1930s, liberalism has never reconciled itself to the challenges of globalisation. Once history's handmaiden, it has become its victim, caught between the narrow politics of a declining and neglected American working class and vague cultural appeals to suburban campus elites largely uninterested in the plight of Joe the Plumber, the Everyman of John McCain's populist rhetoric.

Anyone who doubts that liberalism has become a weak and feeble creature need only look at the record of the past two decades. The failure to enact health-care reform in Bill Clinton's first term, the wasted potential of his second, the sheer tedium of the Gore campaign, the supine failure to challenge George W Bush's war on terror, the meek surrender on Iraq: the list goes on. Liberals may object that Clinton was never one of them and that the times were against them after the attacks of 11 September 2001, but that misses the point. A mature, confident and pugnacious movement would have asserted itself in the 1990s and fought back strongly during the Bush presidency, drawing on the ideas of intellectuals and appealing to great swaths of the American electorate. Instead, liberals largely confined themselves to wringing their hands and writing long articles for their friends to read in the hallowed pages of the New York Review of Books.

So, anyone who expects an Obama presidency to usher in a new age of liberal reform is likely to be badly disappointed. He may well prove a competent and popular chief executive, but there is no sign of any 21st-century New Deal or Great Society waiting to be unveiled. At best, he may be able to use the momentum of victory and the populist resentment aroused by the economic crisis to push through a national health insurance programme - the Holy Grail for most Democratic activists. The risks, however, are enormous. As the Clintons found in the early 1990s, any talk of health-care reform inevitably provokes powerful vested interests and brings a gruelling battle, both for votes on Capitol Hill and for hearts and minds in the country. Even if Obama takes this course and wins, the battle will dominate his first term. And if he loses, his first term will probably be his last - because, unlike Bill Clinton, he will have no booming economy to fall back on.

The nagging fear is that the real parallel is not with Roosevelt or Reagan, nor even with Clinton, but with another Democratic president. In 1976, Jimmy Carter won the presidency as the representative of a vast demographic group which had hitherto felt excluded from the high table of Washington politics - the people of the American South. He was the champion of a region and a generation, a deeply religious outsider who talked a lot about change and values but said little about substance and specifics. His critics claimed that he was all things to all men; his supporters hailed him as a new kind of politician, a good and honest man, a man who said he would never tell a lie and who would reach out across the party divide. "I think the sun's rising on a beautiful new day," he said on election night, "a beautiful new spirit in this country, a beautiful new commitment to the future."

Three years later, with the economy in meltdown, the Middle East in flames and his presidency in tatters, an exhausted and discredited Carter took a brief holiday in his native Georgia. There, fishing on a quiet lake one day, he suffered the ultimate indignity. "Rabbit attacks president", read the headline in the Washington Post, above the news that the commander-in-chief had been attacked by an aquatic swamp creature - a "killer rabbit . . . hissing menacingly, its teeth flashing and nostrils flared" as it reared up out of the water towards him. Somehow it was the perfect metaphor for an administration short of ideas and battered by events, surrounded by the debris of broken expectations.

If Obama wins, it will indeed be a landmark in the history of race relations in the US and a welcome end to eight years of disastrously incompetent government. But any celebrations must end there. It will take more than a few election victories to rebuild the broken body of American liberalism. Obama will need to put cheap campaign pieties behind him; the next four years will be a time of hard choices, affecting billions around the world. This is no time for the self-indulgence that disfigured the presidency of Bill Clinton, or the waffle and indecision that destroyed Jimmy Carter. Obama needs to get it right from the start.

Dominic Sandbrook's most recent book is "White Heat: a History of Britain in the Swinging Sixties", published by Abacus (£12.99). His essay on the lessons of the Callaghan years was published in the NS of 6 October

Dominic Sandbrook is a historian and author. His books include Never Had It So Good: A History of Britain from Suez to the Beatles and White Heat: A History of Britain in the Swinging Sixties. He writes the What If... column for the New Statesman.

This article appears in the 27 October 2008 issue of the New Statesman, The death of Gucci capitalism