He really had been duped by Communists into thinking that the USSR wasn't a threat to anyone. From New Deal scholar and committed liberal Arthur Schlesinger Jr.:
http://www.cooperativeindividualism.org/schlesinger_wallace_bio.html"The onset of the Cold War had divided American liberals. Most New Dealers believed that liberalism and communism had nothing in common, either as to means or as to ends, and joined Americans for Democratic Action, a new liberal organization that excluded Communists. On the other hand, the Progressive Party represented the last hurrah of the Popular Front of the 1930s. As the radical journalist I.F. Stone wrote in 1950, "The Communists have been the dominant influence in the Progressive Party. . . . If it had not been for the Communists, there would have been no Progressive Party."
Wallace, in a messianic mood, saw himself as the designated savior of the republic. Naively oblivious to the Communist role in his campaign, he roundly attacked the Marshall Plan, blamed Truman for Stalin's takeover of Czechoslovakia and predicted that Truman's "bipartisan reactionary war policy" would end with American soldiers "lying in their Arctic suits in the Russian snow." The United States, Wallace said, was heading into fascism: "We recognize Hitlerite methods when we see them in our own land." He became in effect a Soviet apologist."
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"In their sympathy for their subject, Culver and Hyde do not do justice to the principled objections American liberals had to Wallace's alliance with the Communists. Eleanor Roosevelt herself led the repudiation of Wallace in column after column. "The American Communists," she wrote, "will be the nucleus of Mr. Wallace's third party. . . . Any use of my husband's name in connection with that party is from my point of view entirely dishonest." Only one prominent New Dealer, Rexford G. Tugwell, supported Wallace, and the Communist presence led him to drop out of the Wallace campaign before its end.
"American Dreamer" does not make much of Mrs. Roosevelt's opposition nor mention Tugwell's withdrawal nor mention the statement signed by leading New Dealers--Ickes, Francis Biddle, Thurman Arnold, Archibald MacLeish, Aubrey Williams, Herbert Lehman, Elmer Davis and many others--rejecting Wallace and calling on liberals to vote for Truman because "the Progressive Party has lined up unashamedly with the forces of Soviet totalitarianism." Culver and Hyde do not quite defend the Wallace of 1948, but they let him down more easily than he deserves. In the end, he came in fourth, behind even the Dixiecrat candidate, Gov. Strom Thurmond of South Carolina."