The origins of American liberalism lie in the political ideals of the Age of Enlightenment. The Constitution of the United States of 1787 set up the first modern republic, with sovereignty in the people (not in a monarch) and no hereditary ruling aristocracy. However, the Constitution limited liberty, in particular by accepting slavery. The Founding Fathers recognized the contradiction, but they needed a nation strong enough to survive in the world.
From the time of the American Revolution to the present day, the United States has extended liberty to ever broader classes of people. The states abolished many restrictions on voting for white males in the early 19th century. The Constitution was amended in 1865 to abolish slavery, in 1870 to extend the vote to black men, in 1920 to extend the vote to women and in 1971 to lower the voting age to 18. The civil rights movement and new federal laws in 1964 and 1965 overthrew the Jim Crow system of the South that had relegated blacks to second-class citizenship since the 1890s.
Thomas Jefferson believed that the United States should remain a nation of small farmers. As the United States economy began shifting to manufacturing and services, liberals started to view corruption and monopolies (called trusts at the time) as threats to liberty. During the Progressive Era of the early 20th century, laws were passed restricting monopolies and regulating railroad rates. According to James Reichley, it was during this era that the term liberal took on its current meaning. Prior to the early 1900s, the term had usually described classical liberalism, which emphasizes limited government and the free market. During the 1920s, the term progressive became associated with politicians such as Robert M. La Follette, who called for government ownership of railroads and utilities in his 1924 third-party presidential bid; and Theodore Roosevelt, who came out of retirement to run again for president under a third party called Progressive Party. Political figures such as Franklin D. Roosevelt later adopted the term liberal to describe an individual in favor of some government activism, but opposed to more radical reforms.
After 1933, modern liberals used the New Deal to provide jobs during the Great Depression. The Social Security Act of 1935 provided retirement and disability income for Americans unable to work or unable to find jobs. In the Social Security Act of 1965, this was extended to provide benefits for Americans unable to work due to illness.
A reaction against modern American liberalism began with Barry Goldwater in the 1960s. Deregulation began in the mid-1970s. In the 1980s, Ronald Reagan successfully lowered marginal tax rates, most notably for those at the top of the income distribution while his Social Security reforms raised taxes on the middle and bottom of the income distribution, leaving their total tax burden unchanged. Democratic President Bill Clinton (1993–2001) worked with conservatives and against strong liberal opposition to end some of the main welfare programs and to implement NAFTA, linking the economies of the United States, Canada and Mexico. Clinton pushed to extend liberal ideals in the areas of health care (where he failed) and environmental protection (where he had more success). On the whole, he came under fierce attack from the left and from many liberals who charged that he betrayed the New Deal traditions of activist government, especially regarding welfare and his collaboration with business.