Donald Trump’s crippling of basic government functions should prompt the citizenry to remember why they value government. After this hurricane season—and already after the floods in Texas—there will be little support for a weakened FEMA or a failing National Weather Service. Cutbacks of Medicaid will do palpable harm to tens of millions of people, many in red states. Conservatives into hunting and fishing do not back the evisceration of the Bureau of Land Management or the sell-off of public lands. Air travelers, whether Democratic or Republican, don’t support a ruined air traffic control system.
But just as democracy was badly hollowed out even before Trump, so too was the public sector. Ever since Jimmy Carter, Democratic presidents and the corporate wing of the party have joined Republicans in attacking government and sponsoring various forms of privatization and deregulation. Carter bragged about his efforts “to get the Federal Government off the backs of private industry by removing needless, burdensome regulation which benefits no one and harms us all.” In his 1996 State of the Union address, Bill Clinton declared, “The era of big government is over.”
Privatization was supposed to marry the efficiency of the private sector with the public purpose of government. While there were some semi-successes, such as tradable emission rights, the policies that followed were mostly disasters. Instead of the discipline of market competition producing more efficient delivery of services, the typical pattern was for the vendor to be parasitic on government, enjoy windfall profits, and make public services more complicated and annoying to use. Contracted-out government provided new opportunities for corruption. Deregulation promoted monopoly.
The government covers the direct or indirect cost of about half of all health care expenses in the U.S. But with the exception of the public VA (increasingly privatized under both Democrats and Republicans) and traditional Medicare (likewise), private for-profit vendors have invaded the health care system to extract those public funds. The result is a system riddled with middlemen and consolidation, onerous to clinicians and patients alike. The mixed public/private health system did not improve efficiency; mainly, it added complexity and cost while charging monopoly rents.
The Affordable Care Act proposed to use the power of market incentives to restrain costs. Consumers would shop around for the private, government-approved insurance policy that best met their needs. Dream on. Hyper-concentration among insurers meant that in the majority of U.S. counties, just one insurance company is offering a policy under the ACA. The same extreme concentration has enabled pharmacy benefit managers, which were supposed to contain drug costs, to use their information advantage about where the money goes in transactions to increase prescription costs and shortchange consumers and independent pharmacists.
Public prisons have plenty of problems. But privatized prisons make their profits by skimping on food, medical care, and properly trained guards. There is far less accountability for abuses, and so much money to be made that a prime expense for private prison companies is investment in politicians.
The whole premise that young people should go deeply into debt to pursue higher education is badly flawed. But the use of private lenders to operate the student loan program makes a bad system worse. Even when this was half-reformed in 2010, private servicers manage day-to-day operations for publicly issued loans, which doesn’t work because servicers have a basic conflict of interest. The more that a student fails to be informed about the most affordable repayment plan or the possibility for debt relief, the more money the servicers make.
The government spends billions of dollars subsidizing quasi-social housing provided by private developers and landlords, such as the Section 8 voucher program. As soon as it becomes expedient, the landlord can convert the unit to market-rate housing and evict the tenant. The government subsidy—tens of billions annually—fails to create permanent social housing. True social housing, such as the federally subsidized public-housing program, has been capped by Congress and is chronically underfunded; in many cities, it is unattractive and unsafe. If you deliberately wanted to display a public good as an inferior one, it’s a perfect model.
Policies don’t look like this because policymakers are stupid. As my colleague Paul Starr co-wrote in a classic article titled “Passive Intervention,” the U.S. often clumsily privatizes public functions because progressives seldom have the votes in Congress for the real deal. So we end up with an inefficient hybrid that tries to bribe the private sector into meeting a public need. In the process, the public loses faith in a badly flawed service and in government itself.
Conversely, the biggest, most expensive, and most efficient of all government programs is Social Security. Its administrative costs are about half of 1 percent, which compares favorably with any private investment product. Public power, likewise, is cheaper, more efficient, and more climate-friendly than power generated and sold by private utilities. Deregulation of electric power was supposed to increase competition and lower costs to consumers. It only invited reconcentration and monopoly pricing. In recent years, the retail cost of electricity has increased far faster than the underlying price of energy.
If and when progressives get a chance to reclaim and rebuild the public realm, we need to create a genuinely public one.
IN THE AFTERMATH OF THE STOCK MARKET COLLAPSE of 1929 and the Great Depression that followed, Franklin Roosevelt successfully pursued two core functions: providing services directly, and housebreaking capitalism. That model undergirded the postwar boom, because the New Deal system constrained the predatory and extractive aspects of capitalism and promoted a relatively benign form. There were no hedge funds, no private equity, no share buybacks, and market manipulation and insider trading were punished. There was serious enforcement of the antitrust laws. Government’s guarantee of the right to unionize allowed labor to create a serious counterweight to capital. As a consequence, financial markets largely performed their textbook role of supplying capital to the productive parts of the economy, rather than just feathering their own nests.
Just as importantly, the public parts of the New Deal order were genuinely public. For example, the great Western dams, the Tennessee Valley Authority, and the network of rural electrification co-ops created a parallel system of public power that was more efficient and more accountable to the public than the private power companies. FDR, with his gift for homey metaphors, referred to this as “yardstick competition.” Public ownership could demonstrate just what it cost to generate a kilowatt of electric power and hold a yardstick up to private power company rates. This helped complement government rate regulation of privately owned utilities, which was prone to corruption by the power companies.
Yardstick competition reversed the premise of free-market economics that private enterprise was more efficient. A utility company, as FDR understood, enjoyed a degree of monopoly power. Private utilities sought to hide their true cost structure and extract excess rents. Government could provide the same electricity more simply, transparently, and cheaply.
The New Deal also remade America’s housing and mortgage systems, again with public institutions. The Home Owners Loan Corporation literally invented the long-term self-amortizing mortgage, and made direct loans to people losing their homes to foreclosure. The original Fannie Mae, the Federal National Mortgage Association, invented the secondary mortgage market. It was another public institution, financed by direct Treasury debt. Its purpose was to anchor the mortgage market, not to enrich traders.
Social Security, our must truly public program, was of course a child of the New Deal. As Roosevelt intended, it has managed to resist all attempts to privatize it, even (so far) under Trump.
Chris Hughes’s recent book, Marketcrafters, describes the efforts of government in the New Deal and post–New Deal eras to contour capitalism. This reached its zenith under FDR, when the Great Depression and Roosevelt’s own radicalism allowed government to play a more expansive role in the economy than it has before or since.
His best and most instructive chapters are on the New Deal’s most protean agency, the Reconstruction Finance Corporation. The RFC was created late in the Hoover administration to provide emergency loans to banks. Jesse Jones, a wealthy Houston businessman and longtime donor to Democrats, was given the one minority-party seat on the RFC’s three-person board. Upon FDR’s election, he became its chairman.
One of Roosevelt’s first and most successful acts was his declaration of a “bank holiday,” coupled with quick legislation for deposit insurance. During the holiday, banks were examined and unhealthy ones merged into healthy ones. What has gotten far less attention in the success of this maneuver was the RFC’s role in buying equity in banks to recapitalize them. By September 1934, it was a part-owner of half the country’s banks. Without the RFC, deposit insurance or no, thousands more banks would have failed.
The RFC went on to be a mass purchaser of crop surpluses, allowing farmers to either borrow against their crops at a higher-than-market price or sell directly to the RFC, depending on what was more advantageous. The ad hoc system was soon institutionalized as the Commodity Credit Corporation. The RFC went on to recapitalize the nation’s railroads and invested billions in other industries, often taking seats on company boards.
The RFC played an even more central role during World War II, when it capitalized war production plants, often owning them and then leasing them to contractors. So while deficit spending came to define the New Deal, much of that spending financed public works. And new public institutions epitomized by the RFC were key to ending the Great Depression and winning World War II. The war also led to the thinking about government’s key role in underwriting scientific research, as spelled out in Vannevar Bush’s classic report, The Endless Frontier, which became the blueprint for postwar investment in science and technology under the National Institutes of Health (NIH) and the National Science Foundation (NSF), and later the Pentagon agency that helped invent the internet.
The successful model of a robust public realm went into slow decline after FDR’s death, which accelerated under Carter and then Reagan. Government went from being a master planner to merely exercising some influence around the edges—a market crafter in a more minimal sense, as private capital and its Republican allies shook loose government’s salutary restraints and recovered the political influence that had been suppressed after the disgrace of the Great Crash. Business continued to value the research subsidies, but the regulation of finance was gutted, and toxic practices prohibited under the New Deal order proliferated.
The real debate throughout this period, often tacit, was over the degree to which government would be a counterweight to the more unsavory aspects of capitalism, or just a source of subsidy and profit for capitalists.
MARXISTS OF A CENTURY AGO, WITH CHARACTERISTIC HYPERBOLE, described the state as “the executive committee of the ruling class.” Given the chronic instability of capitalism and its propensity for periodic crisis, the state was a useful stabilizer, subsidizer, and enforcer of the rules and rights of property. Only occasionally, as during the New Deal, did the working class and its allies in government get hold of the instruments of government, so that the state could be even partially an instrument of the working class.
Because the state has been so useful to economic elites, while libertarian conservatives have sought to weaken social and economic regulation and cut taxes, no previous conservative president set about destroying the state itself. In that respect, Trump is a complete outlier.
He’s also something of an outlier among fascists. The classic fascists of the 1930s—Hitler, Mussolini, and Franco—did not try to destroy the state. They strengthened it and turned it to their ends. The state as an engine of economic development and recovery, via both rearmament and public works, was a big part of the fascist appeal. Mussolini made the trains run on time. Hitler built the autobahn and expanded Germany’s welfare state. The Reich, a term of pride, referred to both the efficient German state and German territorial expansion.
Trump, by contrast, would destroy the state. But there is a method in Trump’s madness. As the political scientists Stephen Hanson and Jeffrey Kopstein point out in their 2024 book, The Assault on the State, written before Trump’s second term, the modern state is essentially rationalist and professionalized, the opposite of Trump’s ultra-personalist rule, which they call “patrimonial,” following a distinction first made by the great social scientist Max Weber.
In the Trump era, the opposite of FDR liberalism is not libertarian in the sense of Friedrich Hayek or Milton Friedman; it is personalist. If you have dictatorial aspirations and your method is ad hoc dealmaking, the institutions of the rationalist state are an obstacle and a nuisance.
Traditional libertarian conservatives correctly saw the modern state as the bearer of FDR liberalism. They didn’t like its taxes, its redistribution, its regulation of business, and its “social engineering.” They viewed it as trampling liberties and clumsily interfering with both the efficiency and liberty of free markets. They preferred a “night watchman state.” Project 2025 was a shrewd combination of this libertarian attack on government and a more Trumpian assault on state institutions that might slow down or block his personalist rule.
There are some areas where Trump’s state is enriching private business: the enormous buildup of ICE will be a boon to the private prison companies. But other agencies doing useful work that help his allies in corporate America, such as NIH, are seen as unacceptably restraining his impulses. The weaker the state, the more personalist power the dictator has.
And the narrower the oligarchy, the easier it is to govern by dealmaking. If there are just a handful of billionaire oligarchs, all of whom do business with the state, it is not difficult to keep them in line: Witness Jeff Bezos of Amazon and The Washington Post. All of the platform monopolies and their billionaire owners are dependent on Trump’s goodwill, Putin-style.
By the time of Trump’s first presidency, the evils of the deep state (which was central to QAnon) had become part of the MAGA narrative. Steve Bannon, speaking at the February 2017 meeting of the Conservative Political Action Conference, called for “the deconstruction of the administrative state.” The phrase already had enough currency in MAGA circles that the line produced extensive applause.
If you were puzzled by Trump’s appointment of Elon Musk, whose wreckage of public institutions seemed wanton and almost random, that was the whole point: destroy government entities for the sake of destroying them. Trump’s other tactic was to appoint people to high office whose main qualification was their incompetence. There was more to it than his infatuation with Fox News and his preference for people who looked good on TV. The more someone like Pete Hegseth is totally out of his depth, the more he is totally reliant on Trump.
WHAT DOES THE MODERN STATE DO? As Ganesh Sitaraman (the Prospect’s board chair) has written in an important forthcoming law review article titled “The Secular Decline of the American State,” it basically does four things. It ensures that public questions are decided based on reason and the rule of law, rather than on personal whim or cronyism. It delivers valued services, from broad public goods such as clean air and water to individual programs like Medicare and Medicaid. It prevents bad behavior, both on the part of the state itself and on the part of powerful private players such as banks and corporations. And it addresses new social and economic problems as they arise, adding to the system’s resilience. I would add a fifth function, which is to give meaning to participatory citizenship and extend it to those who have been excluded, such as the descendants of slaves.
Sitaraman makes a persuasive case that every one of these key functions was in long-term decline before Trump. And as he points out, it is far easier to destroy than to build or rebuild. It took decades to develop the system of peer-reviewed research sponsored by the NIH and the ecosystem of research universities and biotech startups that made the U.S. the world’s leader. Trump, Musk, and OMB director Russell Vought managed to wreck that ecosystem in just a month. First-rate government statistical series, at the Census Bureau or the Bureau of Labor Statistics or the National Weather Service, once wrecked, will be difficult to recreate.
The whole point of a civil service, invented as a reform in 1883, was to protect public workers from partisan vulnerability. As Trump destroys public agencies, competent people who want a decent career and not an extended trauma session head for the exits. Institutional memory is lost. Even if Democrats get a turn at government, it will be difficult to persuade new recruits that their jobs will not be at risk the next time Republicans govern.
Assuming that Trump does not end American democracy once and for all, we have no choice but to rebuild the public realm. And when we do, we need to think big. If we merely recreate the same kind of badly flawed, heavily privatized and corrupted public sphere that lost public confidence and set the stage for Trump, we will repeat the cycle of progressives building and conservatives destroying. Even if we fail because we lack the votes in Congress, we need to assert the case for a truly public public realm.
One aspect of this challenge is to make the public sphere more visible. Under FDR, it was hard to miss the myriad things government was doing to help ordinary Americans survive the Great Depression. It is hardly accidental that Social Security has been the best bolstered of our public programs because it is the most universal and the most well known. Under Eisenhower, the public could hardly miss the government-sponsored public works project known as the Interstate Highway System.
But when Barack Obama sponsored the $831 billion American Recovery and Reinvestment Act, there was no big and visible program. One of its biggest elements, a working-class tax cut, was deliberately hidden through lower withholding. Signs crediting local ARRA projects were barely visible. Later, Obama badly bungled the kludgy rollout of the Affordable Care Act, which was far too privatized to begin with.
Under Joe Biden, with no small assist from Sen. Elizabeth Warren (and allies Lina Khan at the FTC, Jonathan Kanter at the Justice Department’s Antitrust Division, and Rohit Chopra at the CFPB), government did effectively point out all the benefits of pro-consumer enforcement. Banning noncompete clauses or hidden nuisance charges, and making it easier to cancel automatic renewals, had vivid concrete benefits. The problem was that many of these advances proceeded through a rulemaking function that fell subject to obstruction by the right-wing courts.
The truth is that the public realm is all around us: public libraries and public parks and public swimming pools and public schools and more. But we don’t sufficiently remind the citizenry of the benefits of all things public. If progressives do get another turn at governing, one task is not just to make government more effective but to make it more visibly and palpably effective as a public realm.
IN ORDER TO PASS ANYTHING AT ALL, Democrats would need a trifecta beginning in 2028—the presidency and both houses of Congress. That is more probable if Democrats present a vivid picture of how life could be affordable for ordinary Americans.
We need a few big, transformative, easy-to-grasp themes that rebuild the public realm while restoring decent living standards. And if Democrats do take back even one house in 2026, that process can begin in 18 months. Democrats can bargain hard for the restoration of public services that Trump has cut, such as Medicaid, and for the rebuilding of public institutions, from NIH to the civil service itself.
For instance, going into 2028 a transformative agenda that addresses the cost of living should include a variant of Medicare for All. For the past two decades, according to Gallup, Americans have supported universal health coverage by margins of around 60-40. Universal Medicare is not only more reliable and consumer-friendly. It more than pays for itself by getting rid of parasitic middlemen. Yes, it will be difficult to enact. But let’s embrace it.
We have a good recent example of the benefits of public provision of health care. Fed up with paying more for prescriptions and watching independent pharmacists go bankrupt, a half dozen states have transformed their Medicaid programs by taking over their pharmacy benefit management systems, eliminating the conflicted private middlemen. The single PBM has been in place in Ohio since 2022, and a recent independent analysis of the first two years showed that the state saved $140 million, even as pharmacist reimbursements went up an average of 1,200 percent and nearly all pharmacists joined the system, making medicine more available to patients. Simply ending the middleman profit extraction was a win-win-win.
We should make higher education affordable by ending the debt-for-diploma system, as we had from the establishment of land-grant colleges under Lincoln until the great hike in tuitions at state universities in the 1980s. A good start would be the Bernie Sanders proposal to make public universities free for students with less than $300,000 in family income, with the federal government covering two-thirds of the costs if the state agrees to pay one-third. Community college should also be tuition-free, as it now is in several states.
A national infrastructure bank is also a good idea. Legislation sponsored by dozens of progressives proposes a $5 trillion bank initially capitalized by $500 billion in federal funds, borrowing in money markets at a ratio of 10-to-1. The bank would underwrite myriad public projects, RFC-style, and create millions of jobs.
As a general proposition, restoring decent incomes is particularly challenging, given how stable salaried employment is being displaced by gig work. Artificial intelligence will compound the problem. A higher national minimum wage and stronger unions will only take us so far. A promising idea is a second stream of income from royalties and dividends as a citizens’ share of wealth created by state-sponsored private innovations that draw on the commons.
There is also a connection between a caregiving agenda and the need to create good service-sector jobs to replace the manufacturing jobs that are never coming back. In addition to providing universal pre-K and enhanced long-term care, a progressive strategy could provide that anyone who takes care of the old, the young, or the sick should earn at least $20 an hour.
This is a radical agenda. But even if Democrats sponsor a tepidly moderate agenda that makes little difference in people’s lives, Republicans will still accuse them of being radicals. For more than half a century, each Democratic administration has been less bold on ideas that could make a transformative difference. President Truman proposed national health insurance. LBJ settled for Medicare for the elderly and Medicaid for the working poor. Carter proposed “play-or-pay.” Clinton offered managed competition. And Obamacare, a variant of the Clinton approach, covered just 7 percent of the population with private insurance.
There have been only three periods in the past century when Democrats had a trifecta with a true working majority in Congress. FDR, elected in 1932, increased his legislative majority in 1934 and more so in 1936 because his transformative program was popular. LBJ in 1964 built the legislative working majority that had eluded JFK in 1960 and 1962. Carter, thanks to the Watergate class of 1974, had a near FDR-scale Democratic majority in Congress of almost 2-to-1, but Carter moved to the center and accomplished nothing of significance.
What about the ideological split in the Democratic Party? Won’t that be disabling of anything bold? The answer to that is simple. You define the Democratic Party by winning primaries and getting elected. Zohran Mamdani’s success shows that in the hands of the right candidate, a progressive narrative rooted in the struggles of the common people wins. A big, bold agenda will be energizing.
Repairing the deep damage to government while calling government to much bolder purposes and reclaiming democracy itself is like nothing Americans have ever accomplished. Let’s not kid ourselves about how hard this will be. But we have to try.