Essay

- Behind the New Deal andObamacare -

Supervisor: Prof. Dr. Trudie Knijn

Ilsemann, Norman

(4049322)

Date: 28.10.2013

Version: Final Version

Table of Contents:

1. Introduction p. 3

2. Theoretical Framework

2.1. Citizenship

2.2. The Power Resource Model

2.3. De-commodification and

Stratification

2.4. Political order change

p. 5

p. 5

p. 7

p. 8

p.10

3. The New Deal p.11

4. Obamacare p.13

5. Similarities and Differences p.16

6. Conclusion p.17

7. References p.19

1. Introduction

“Throughout the world, change is the order of the day”

Franklin Deleano Roosevelt, 4. January 1935.

Today, almost 80 years after the birth of the American

welfare state, we are told that changes can be difficult. The

world changed and with it the US welfare state changed over the

past 80 years enormously. At the times of Franklin Deleano

Roosevelt (FDR) the United States of America (US) established

the foundation for a welfare state. Roosevelt implemented the

first social protection policies for workers and their families

and gave the American citizens a guaranteed income. Without any

doubt, a big “change” for millions of people and also a big

“change” for the US which introduced new agencies and

administrative bodies (Finegold & Skocpol, 1995, p.3).

Barack Obama, the 44th President, wanted to “change” the US,

too. During his presidential campaign in 2007-8 the word became

his label and he declared that he will promote the introduction

of a public health insurance option as one of his priority

goals. Today, more than 5 years later, it seems like President

Obama has enormous problems with the implementation of a public

health care system (Klein & Soltat, 2013).

The president of the US is often called the most powerful

person in the world. That might be right on a supranational

level, on the national level he is not. As the example of

Barack Obama reveals, the implementation of a policy takes

time, even for the most powerful person in the world. But then

it should be asked, why does it take so long?

The question becomes even more pressing in light of other

western welfare states. In the year 1971 Canada was the last of

all western welfare states to implement a public health care

system, Countries like Belgium, Germany, Italy or Sweden had

already introduced a national health care system by the end of

the 19th century.

Seemingly, the implementation of policies in the US is not just

depending on the power of the president. Therefore, this paper

will analyze the question: “What are the reasons for

Roosevelt’s successful implementation of “The New Deal” and

Obamas stagnation in regard to the implementation of a national

health care system.” In order to answer the research question,

this paper will compare FDR´s New Deal with Barack Obama´s

Obamacare and analyses societal and political actors in the US

social policy making process.

This essay argues that a combination of actors plays a role

within the implementation process of US welfare policies.

Firstly, societal actors which can be understood as interest

groups. They are generally in favor of or against the

implementation of a policy. Secondly, political actors which

have to be understood as a combination of political aims,

political parties and a political system.

In order to analyze the research question and to proof the

hypothesis, the paper will first introduce a theoretical

framework, which is based on Thomas Humphrey Marshalls´s theory

of “citizenship”. The theory will support in particular the

evaluation of the societal and political actors. Furthermore,

the essay will make use of the so called “power resource

model”, which was developed by Walter Korpi. The model will

give help to understand the real power of the president.

Additionally, the essay determines the expected behavior of the

actors by introducing the idea of Gøsta Esping-Andersen´s

welfare regime types. In particular, the essay will reveal the

typology of the “liberal regime type” in order to stress a

better perspective on the actors. Lastly, the paper will make

use of the opportunity to compare The New Deal with the

Obamacare on Peter A. Hall´s “political order change – theory”.

Hall’s concept helps to distinguish between different types of

policies. Consequently, it should be examined generally whether

The New Deal and Obamacare can be analyzed.

Due to the fact, that this essay is limited on a certain word

limit, further theories, like for instance “Marxism” or “path

dependency” cannot be applied.

The conclusion will summarize the results and give answers to

the research question.

2. Theoretical Framework

The theoretical framework can be seen as a combination of

an explaining and an operational part. The latter part will be

framed on the “citizenship-theory” and the “power-resource-

model”. Both theories together can determine potentials and

limits of actors. As in the introduction mentioned, the essay

will focus on social and political actors, which can influence

and control the implementation process of US welfare policies.

The explaining part deals mainly with the concepts of “de-

commodification” and “stratification” in connection with the

theory of different “political order changes”. Since The New

Deal and the Obamacare are consisting of different social

policies, the framework of “de-commodification”,

“stratification” and “political order changes” will assess

whether they can meaningfully be compared way. Due to the fact

that different schools of thought will be combined within the

theoretical framework, it has to be mentioned that the essay

assumes a combination of different factors, which will play a

certain role in answering the research question. However,

firstly the essay will explain the operational part, which will

be followed by the explaining part. It has to be stressed, that

the concepts and theories shall be explained only briefly, due

to the limited extend of this paper

2.1 Citizenship

Marshall explains the rise of the welfare state with the

expansion of the citizenship, with regard to the process of

modernization, which took place all over the world. He proposed

that citizenship has to be divided into three elements, the

civil, the political and the social citizenship (Marshall,

1950, p.30). At the beginning of the 19th century, a “growing

interest in equality as principle of social justice and an

appreciation of an equal capacity for rights was not enough”

(ibid, p. 35). Thus, the consequence was that citizens claimed

more individual rights and more independency from the state.

The demanding of individual rights led to the emergence of

organized interest groups, such as worker unions or political

parties. As a result, the former relationship between the state

and the market was added by another organized shape (ibid,

p.38). The demand for more individual rights was not directly

accepted and led to conflicts between organized interest groups

and the capitalist class system (ibid). One result was the

development of further participation forms, for instance

collective bargaining, and the emergence of social rights.

In short, civil rights have been established around the 19th

century with the composition of rights “for individual freedom

liberty of the person, freedom of speech, thought and faith,

the right to own property and to conclude civil contracts and

the right to justice” (ibid, p.30). The political rights have

been established around the turn to the 20th century and

exercised the political power of the individual by the right to

vote and the right to be elected. Social rights developed

gradually at the beginning of the 20th century. They extended

the rights of citizens in respect to social justice and

economic independency.

The concept of the citizenship identifies the welfare state as

more than merely a set of policies. It explains the welfare

state as the citizen’s right on social protection and economic

independence. Thus, social policies are adjusted to the rights

of the individual.

The concept will be used to enable a broader understanding of

the concepts of “de-commodification” and “stratification” and

supports the analysis of societal and political actors.

Hypothesis I:

2.2 The Power Resource Model

The power resource model is based on the assumption that

power can be distributed among several actors. However, a clear

definition of “power” has not been provided yet, since scholars

like Gerhardt Lenski, Theda Skocpol, Esping-Andersen or Korpi

The absence of a public health care system in the US can

be explained by the weak development of social rights.

The Hypothesis could be examined on the total number of

homeless people with regard to the implementation of

social policies and governmental support.

did not agree on it. Nevertheless, what all scholars provided

is a common view on a distribution of possibilities to act.

Lenski offers the following explanation: “democratic polities

created the possibility for the “many” to combine against the

“few” (the elites)” (Lenksi, 1966, p.44). Thus, the “people”

became an actor within the implementation process.

The control over power resources is a major factor affecting a

policy process, the outcomes of the process and which elements

and instruments might be implemented (Korpi, 1983, p.80).

Consequently, the control over power resources plays a major

role in the development of the welfare state. According to

Korpi power resources are related to a democratic class

struggle (ibid, p. 83). That means that the forms of power

resources that can be mobilized can differ among classes.

Therefore, the possibility to mobilize as well as the position

of an actor plays an important role within the policy process.

Furthermore, the balance between actors reveals the level of

democratization within a country.

The theory of power resources will help to identify and to

understand different actors that can play a certain role within

the implementation process of social policies in the US.

Moreover, the theory can reveal the reasons for a successful

implementation and the interconnection of political and social

motives.

In order to establish a comprehensive understanding of the

acting of actors, the next part will explain the concepts of

“de-commodification” and “stratification”.

Hypothesis II:

2.3 De-commodification and Stratification

Esping-Andersen categorized three different

welfare regime types, namely the social-democratic, the

conservative-corporatist and the liberal welfare regime

(Esping-Andersen, 1990. p.168). The characteristics differ, but

before this essay will reveal the differences, two main

concepts ought to be clarified, the concepts of “de-

commodification” and “stratification”.

In the words of Esping-Andersen “De-commodification occurs when

a service is rendered as a matter of right, and when a person

can maintain a livelihood without reliance on the market”

(ibid, p. 163). In other words, de-commodification explains

the (in) dependency of an individual on the market. The level

of de-commodification can be influenced by politics and

political institutions in terms of assessing welfare function

to the state, the market and the family. As a consequence, the

state plays a significant role within the development of

policies, hence the emergence of the welfare state. Closely

linked to the concept of de-commodification is the concept of

“stratification”.

The strong power position of the market and the capital

influences the outcome of policy making processes.

The Hypothesis could be examined on a comparative

analysis of social policies with regard to economic

factors and actors that played a role within the policy

The concept of de-commodification is focused on the

relationship between the individual and the market.

Stratification focuses on the relationship between the

individual and the society. In order to avoid a

misunderstanding, it has to be mentioned, that whether de-

commodification or stratification, both can have an influence

on all types of actors (the state, the market, the individual

etc.). However, the state can effect what kind of

stratification system shall be promoted and which will be

neglected (ibid, p.165). Esping-Andersen goes even further and

determines that: “the welfare state is not just a mechanism

that intervenes in, and possibility corrects the structure of

inequality, it is, in its own right, a system of

stratification. It is an active force in the ordering of social

relations” (ibid). Thus, by implementing policies, the state

structures the society and consequently also the balance of

power among actors. In other words, the state influences the

equality of the society.

Esping-Andersen identified the US as a liberal welfare regime.

That means the US has exposed a rather low-level of de-

commodification. The worker is highly dependent on the market

and influenced by the economy. With regard to stratification he

found out, that the US ought to have a rather low level of

social rights for the weakest part of the society. Furthermore,

the society can be defined as a two-part system, the upper part

ruling over the lower part, which has rather low chances to

participate in the market and the society.

The concepts of de-commodification and stratification provide a

deeper understanding of the motives of actors and consequently

of their point of view on The New Deal and Obamacare and

secondly, they can provide an overview of power resources among

actors, hence a pattern of the main actors within the process

of policy implementation.

Hypothesis III:

The last part of the theoretical framework will give an

overview of the concept of “political order changes”.

2.4 Political order change

Hill made a distinction between first, second and

third order changes. By “first order changes” he meant

adjustments of policies that have been already implemented

(Hall, 1993, p.280). In other words, the changing of settings

of basic policies, like the raising or decreasing of a benefit

could be seen as “first order change”. Normally, first order

If a president could unite both parts of a society, than

his/her power could lead to a welfare regime shift.

The Hypothesis could be examined on a case study among

welfare states. In order to examine, whether a shift might

be possible, the analysis could make use of the Esping-

Andersen welfare regime model indicators and could adjust

changes are performed by civil servants and experts, which are

routinized and familiar with the policy (ibid).

Second order changes are intensive alternations of policy

instruments. For instance, when the hierarchy of basic

techniques becomes altered, “as a result of dissatisfaction

with past experience” (ibid, p. 278). Hall provides as an

example the implementation of “cash limits” and clarifies that

within second order changes the goal of the policy remains the

same (ibid, p.279). They are initiated by politicians, experts

and civil servants.

Lastly, third order changes, which can be briefly explained as

“paradigm shift”, are the most concentrated modification for a

state. Paradigm shifts can modify policy structures within a

state, even entire policy fields can be affected by “paradigm

shift”. So, paradigm shifts might alter an entire system. With

regard to welfare states, the introduction of a health care

system or an insurance system could be seen as a paradigm

shift. A third order change is initiated by a combination of

actors, politicians, academic experts or the media, a crisis or

even society can play a significant role for a “paradigm shift”

(ibid, p. 287).

The concept of political order changes frames the pattern for

the comparison, due to the fact that The New Deal and the

Obamacare might be seen as “paradigm shifts” within US

politics. Thus, a comparative analysis can be conducted.

Hypothesis IV:

A paradigm shift in US policy is always a reaction to a

crisis.

The Hypothesis could be analyzed on a historical

comparative approach that compares paradigm shifts in the

US with the implementation of policies with regard to

In order to analyse the reasons that played a role for the

implementation of The New Deal. The next part will introduce a

short overview of it and identifies actors by the use of the

abovementioned concepts. Subsequently, Obamacare will be

depicted in order to accomplish a basis for a comparative

analysis.

3. The New Deal

When Roosevelt was elected in March 4, 1933, the US

was at the peak of the worst depression in its young history.

Around 30% of the population were unemployed, the industry and

farmers had to deal with a big slump in prices and around 2

million people were homeless. The New Deal was a series of

economic programs enacted between 1933 and 1936, which

established a social security system with instruments such as

an old age pension system or an unemployment insurance system.

The New Deal can be seen as the inauguration of the US Welfare

system or in other words “, there is near universal agreement

that the “social” side of the New Deal, embodied in the 1935

Social Security Act, declared the birth of the [American]

welfare state and established a basis for its growth and

development” (Pierson, 2006, p.123).

Social Actors

Before the implementation of the New Deal the US had just

barely social protection services, the most influential and

prominent was the civil war pension, which attained just civil

war soldiers (Skocpol, 1992).

So, social protection was for the biggest part of the American

society not reachable. The breadwinner, normally the men, would

be in case of unemployment or illness and with him his entire

family unprotected and destitute (Leuchtenburg, 1995).

It has to be stressed that welfare provisions existed, but just

on the federal and not on the national level. “At the turn of

the twentieth century, such limited public relief as there was

in the US was largely locally administered according to local

poor law customs” (Pierson, 2006, p.122).

With regard to Esping-Andersen the range of “de-

commodification” was low, since a social insurance system,

which could cover the loss of income was not in existing.

As a consequence, the need for a protection system must have

been quite high and brought into existence interest groups,

which developed out of the “growing interest in equality as

principle of social justice and an appreciation the an equal

capacity for right” (Marshall. 1950, p. 35).

So, “a number of U.S. trade union officials and reformers hoped

to transform Civil war pensions into more universal publicly

founded benefits for all workingmen and their families”

(Skocpol, 1992, p.2). One result out of those hopes and wishes

was a big support of the lower class and the working population

(Leuchtenburg, 1995).

We can conclude that the demand for the establishment of

welfare policies in the US around Roosevelt´s election was

high. In other words a social need for social rights was given.

Political actors

The time before, during and after the first election of FDR

brought long-term shifts in voting behaviour. Thus, a broad

coalition of labour unions, liberals, religious, ethnic and

racial minorities, southern whites, poor people arose

(Rosenbaum & Bartelme, 1987). Over the following decades the

coalition formed a majority of voters and hands the Democratic

Party seven victories out of nine presidential elections, and

the control of both houses. It has to be mentioned that this

“coalition” has been never formally organized. Even though, an

organized structure never existed, a common view on social and

liberal policy proposals on domestic affairs was established

(ibid, p.189).

With regard to the implementation of policies is the coalition

important, because of two reasons. The implementing of acts is

legitimized on the will of the American citizens; hence their

implementation is backed on political and social support.

Secondly, it gave FDR the possibility to act. He was able to

gain support for policies in both houses. Thus, only the

Supreme Court had the chance to stop them (ibid, p. 199).

At the beginning of the New Deal FDR had enormous problems with

the Supreme Court, which was not in in favour of the

implementation of welfare policies, due to a republican judge

majority and high suspicion (Lanzuela, 2011, p.113).

Furthermore, “the Court plan was greeted with predictable

outrage by conservative Republicans and Democrats highly

alienated from the New Deal” (ibid, p.114). The court was

divided between liberal and conservative viewpoints.

Thus, Roosevelt had to replace conservative judges by liberal

ones gradually between 1933 and 1935 in order to change the

attitude of the Supreme Court and to implement welfare policies

such as the social act (ibid, p.115). Before, the Supreme Court

even had the possibility to influence actively the

implementation process and to stop policies.

In the scope of Korpi, is the change of a conservative /

balanced towards a liberal / unbalanced Supreme Court likely

the cornerstone for the implementation of welfare policies.

Korpi, stated that the control over power resources gives an

actor the possibility to act, hence the chance to implement

policies (Korpi, 1983, p.87).

To sum up, the New Deal coalition and the majority of the

Supreme Court made FDR relatively powerful. He was nearly

independent from other actors, since the majority of the

population, the two houses and the Supreme Court backed his

actions.

4. Obamacare

When Barack Obama was elected in January 20, 2009,

the US was facing economic upheavals caused by the global

financial crisis of 2008. Some economists are calling it the

worst financial crisis since the Great Depression of the 1930s

(Navarro, 2012; Page, 2013). Banks went bankrupt and millions

of people lost their jobs due to the impacts of the crisis

(Blackman, 2013).

The proper name of the so called Obamacare is the Patient

Protection and Affordable Care Act (PPACA) or commonly known as

Affordable Care Act (ACA). It ought to increase the quality and

affordability of health care, by expanding the public and the

private insurance coverage and by reducing the costs of

healthcare of individuals. Obamacare is a series of policies

including mandates, subsidies, insurance exchanges and the

requirement for insurance companies to cover all applicants

with a minimum standard for the same rates (Blackman, 2013).

Social Actors

“Fifty million people, one out of every six people in the

United States have no health insurance at all” (Brissenden,

2012, p.232). The live expectancy rate lags behind weak

developed countries such as Chile or Cuba and even those that

have insurance are facing big problems with a weak supply of

medical health care and extra costs. Thus, a demand for an

improved health care system should be given.

Though, this is rather not case, since “Americans would have to

agree on the need to subsidise the poor and compel those who

aren´t poor to take up insurance with penalties of some sort,

but the American public has had a long, historical, deep-seated

anxiety about both subsidisation and compulsion” (ibid, p.234).

And it seems like this assumption is right, several polls

revealed, that a majority disapproves the implementation of the

law, even after the recent Shutdown (Gallup, 2013).

Furthermore, “At the core, Americans still view health care as

a privilege, not a basic right” (Lanzuela, 2011, p.110).

The protests of the Tea Party movement can be referred back to

this quote. Many State republicans, certain small business

organizations and the Tea Party itself, believe the law will

cause the disruption of existing health plans and that

insurance should be seen as any other commodity and not as a

social benefit (Brissenden, 2012, p. 234).

Nevertheless, it should be stressed, that the introduction of a

public health care system is not supported by the entire

society. We can conclude, that a social need is just partly

given and that Obama has not the entire support of the society.

With regard to Marshall, we could argue, that the need for

health care is still in the process to become a part of the

social rights, which then might lead to a society demand

(Marshall, 1950, p.35).

Political Actors

As above already mentioned, many republicans don’t agree with

the implementation of a public health care system. Thus, the

political parties are divided, which has led to the emergence

of an ideological conflict on the implementation (Blackman,

2013, p. 142).

Due to the fact, that Obamas democrats are not holding the

majority at both houses, the republicans could avert the

implementation of further related policies (Brissenden, 2012,

p. 238). That even led to a governmental shut down at the

beginning of October 2013 and reveals the tense situation among

both parties at the moment.

Besides the partisan problematic, the ACA faces several

judicative problems. Firstly, the Supreme Court judged1, that

most provisions of the ACA, including a requirement for most

Americans to have health insurance by 2014. However, this legal

decision has a Janus Face, since it created a coverage gap

between people, which are below and which are over the poverty

line (Blackman, 2013, p.150). Thus, more adjustments have to be

done. This ruling was rather unexpected, due to the fact that

those judges who have been nominated by republican’s presidents

are still in the majority 5 to 4.

Secondly, federal courts can freeze the implementation due to

federal debt ceilings. Some states consequently refer to the

federal court, which might freeze the implementation process;

hence states like Texas, South-Dakota or Oklahoma already have

frozen the implementation process until the financial situation

is stable (ibid, p.151).

1 National Federation of Independent Business v. Sebelius, 567 U.S. ___ (2012).

It is obvious, that Barack Obama political situation is

tensioned. He has to share the political power in the country

with another party, which makes nearly any further step

impossible. Even in the case that an act passes both houses,

the Supreme Court could judge against the implementation or

federal courts could attempt to find a path to avoid the

implementation.

According to Korpi, we can conclude that the balance between

actors reveals a high level of democratization within a country

and further shows the will of the population. So, the problems

in the implementation process are intended by the population

and the political parties and further obstacles could appear.

5. Similarities and Differences

The New Deal and Obamacare are “paradigm shifts”

with regard to Hall. Consequently, both can be seen as third

order changes, which entails that not only settings or

instruments, have been changed or ought to be changed. A third

order change alters even the goal and the intention of a policy

or the way how a policy should be implemented (Hall, 1993,

p.287).

Thus, both programs can be analysed and ought to reveal

similarities and differences in the implementation process.

Similarities

FDR and Barack Obama started nearly with the same economic

background. Both had to face an enormous crisis and a high

number of unemployed and homeless people. Even more, both had

to face a decreasing economy and great expectations by the

society that they can solve these problems.

The people of the lower class supported both and have seen in

these presidents, persons which might enhance their lives.

For both presidents can be stated, that the level of de-

commodification is rather low as well as the level of

stratification.

At the beginning their plans have not been taken granted by

their political opponents and the Supreme Court was not in

favour of their programs.

So, they have in common weak economic pre-conditions, rather

support from the poor class and pressure from the political

opponent and the judiciary.

Differences

FDRs New Deal was backed by a need for a change and the demand

for the extending of social rights. His support increased

during his legislation and helped him to implement further

laws.

The support for Obamas health insurance did not increase and a

strong demand for an extension of social rights didn’t emerged.

Even movements, like the Tea party started to mobilize against

the health insurance.

That FDR had the majority in both houses supported the

implementation of policies too. He had not to face a political

shut down or a blocking majority. Furthermore, he had the

advantage to lie back on a legislative and judiciary majority,

since the Supreme Court turned into his political ideology as

well. Thus, FDR bundled the political power of the 1930s under

one seat.

Barack Obama has to face a quite different situation. He has to

implement policies against the political willingness of the

population and the House of Representatives and even if these

obstacles are taken, he still has to overcome the Supreme Court

that could reject his acts.

6. Conclusion

To sum up, this essay analysed the question: “What

are the reasons for Roosevelt’s successful implementation of

“The New Deal” and Obamas stagnation in regard to the

implementation of a national health care system.”

In order to answer the question, a brief comparison between

Roosevelt’s New Deal and Barack Obama´s Obamacare was presented

with regard to societal and political actors within the

implementation process.

The essay made the assumption, that a combination of actors

plays a certain role within the implementation process of US

welfare policies and not merely the US President. However, the

essay made us of the theories of Marshall, Korpi, Esping-

Andersen and Hall in order to answer the question and to proof

the hypotheses.

The reason for the successful implementation of the New Deal

can be referred back on an accumulation of power. Roosevelt

developed to strong and powerful actor and had the possibility

to nearly act independently. Furthermore, a demand for the

extension of social rights and hence for social policies was

given.

Barack Obama has not the same conditions as Roosevelt. His

societal support is weaker and he has more political obstacles.

Especially, the fact that both houses are political divided and

that the Supreme Court is represented by justices, who have

been appointed by republican presidents, makes the

implementation of welfare polices complicated.

With regard to the theory of power resources, the answer to the

question could be referred on the mobilization of power.

Roosevelt had several possibilities to mobilize different

actors, even an entire “coalition” of supporters, but Barack

Obamas has rather problems to activate actors, besides the poor

and the weak ones.

Consequently, the power resource theory has shown that strong

interest groups in combination with political actors can change

the welfare state.

It has to mentioned, that further research has to be done, in

order to give a full answer on the research question. The

influence of civil servants, federal governments and economic

actors could give occasion for further analyses.

Due to the fact, that this essay was limited on a certain word

limit, further theories, like for instance “Marxism” or “path

dependency” could be applied and might reveal a different

perspective on the answer to the research question.

Last but not least, it has to be stressed that Barack Obama is

still in office and hence has the chance to change the US

welfare state.

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