I would have to disagree that American liberalism broke down and could not solve the problems of the country effectively. "Before the New Deal gave the term liberalism its modern American meaning, it was a little-used word that referred to a belief in laissez-faire economics and limited government." (http://college.hmco.com/history/readerscomp/rcah/html/ah_053200_liberalism.htm) The New Deal, The Fair Deal, The New Frontier, and The Great Society all brought about social change within the United States.
"Franklin D. Roosevelt, the president who defined liberalism for most Americans, came to power in the midst of blinding economic misery at home and barbarism abroad." (http://college.hmco.com/history/readerscomp/rcah/html/ah_053200_liberalism.htm)
When Roosevelt began his program called the New Deal, his approach to the difficult problems of the Great Depression was to experiment. With this experimentation, Roosevelt gave relief to the unemployed through programs such as the Civilian Conservation Corp or the CCC which provided work for men between the ages of eighteen and twenty-five.
Roosevelt also helped the unemployed by creating the Federal Emergency Relief Administration that helped to assist states and cities in caring for unemployed workers. The president also helped business to recover by passing the National Industrial Recovery Act that was intended to help business revival with self-regulation. Also to help business recovery, the National Industrial Recovery Act established the Public Works which built roads, school buildings and other projects in order to stimulate local economies. Lastly Roosevelt helped to reform banking by the passage of the Emergency Banking Act, which allowed for the president to reorganize the national banking system. The New Deal liberalism as Roosevelt explained, "was plain English for a changed concept of the duty and responsibility of government toward economic life."( http://college.hmco.com/history/readerscomp/rchah/html
As for President Truman's Fair Deal program, liberalism also helped to create social legislation for the American people. First Truman set about...