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The word covenant means an agreement or compact or contract between at least two beings. In political thought, this comes primarily from the Bible view of the covenant between God and his people, or Israel. In several places in scripture, God declares, "I will be your God and you will be my People" (for example, Exodus 19:5: ". . . if ye will obey my voice . . . and keep my covenant, then ye shall be a peculiar treasure unto me above all people . . ."). This covenant involves God giving his people blessings, protection, prosperity, and love in return for them obeying his laws, commandments, and guidance. A divinely "covenanted people" are chosen by God, for special favor but also special obligations: to live moral, holy, reverent, godly lives, individually and socially. When the people with whom God has made a covenant and whom he has blessed disobey his laws, God brings curses and punishments upon them. The Jewish Bible, or Old Testament, is the story of God's chosen people, the Jews, alternately being faithful to their covenant with God (and prospering) and breaking their covenant with God (and suffering defeat and destruction). This covenant view is taken up by several Protestant Christian churches, especially John Calvin's, and later English and American Puritans. Besides the Old Testament covenant, they added the covenant of grace (or forgiveness through Jesus Christ), church covenants, and governmental covenants. The covenant between God and his people was to be enlivened and represented in the church among Christian believers (who pledged to help each other live a godly life) and the Christian commonwealth (who pledged to serve God, obey his laws, and spread his gospel).

When the English Puritans arrived in America, they wrote and signed the Mayflower Compact, a covenant among themselves, God, the church, and their government. America saw itself as a New Israel, God's people under special divine blessing and protection as long as they followed God's laws, but who were able to lose God's provision if they sinned. Early Massachusetts governor John Winthrop said, "Thus stands the cause between God and us; we are entered into Covenant with him for this work. . . . We shall be as a City on a Hill." Such a view of Christian America's unique calling and responsibility to build a godly society continues in U.S. culture down to Ronald Reagan's presidency. The fear of U.S. conservative Christians that their country has broken its covenant with God through immorality, greed, and secularism fuels the political movement of the Religious right.

Covenant theology also known as "federal" theology influences modern political theories of social compact, social contract, and federalism, as well as a providential view of U.S. history.

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