Obama and the New Deal Philosophy
Repeating Roosevelt's Programs Being Questioned by Doubters
Jan 8, 2009
Obama has chosen to follow the path of President Franklin D. Roosevelt with a reaffirmation of the pragmatic worth of strong government. It has been called a 21st century New Deal that promises jobs, and a huge public works program to rebuild America. Meanwhile, historians are still debating the long-term merits of Roosevelt's economic strategy.
Roosevelt and the New Deal
In 1933, when President Franklin D. Roosevelt (FDR) assumed the presidency, the situation was dire.
- Unemployment was somewhere between a quarter and a third of U.S. workers.
- The stock market had not recovered from the 1929 crash.
- In 1932 1,500 banks had closed their doors.
- Thousands of Americans were losing their homes and farmers were desperate.
FDR has been quoted as telling America it had, "nothing to fear but fear itself" and pledging himself "to a new deal for the American people. This is more than a political campaign. It is a call to arms."
Within the first 100 days of his presidency, FDR brought forth:
- A bank bill.
- Regulation of the stock exchange.
- Prescribed a minimum wage.
- A subsidy package for farmers,.
- Underwriting home ownership.
- The public works program.
The Civilian Conservation Corps, name the "tree army" planted more than 3 billion trees, built log cabins, and park campsites. The additions to the infrastructure included New York's Lincoln Tunnel, building the San Francisco Zoo and many reservoirs, roads and harbors. Seventy years later, some historians are questioning whether the result was long term growth. Its failings were piling on costs for business which crowded out capital, failed to grow the private sector employment, and deepened the 1937 recession. It is their opinion that it neutered the creative powers of capitalism and that the U.S. economy only survived was from the demands of WWII rearmament. (Guardian, 01/04/09)
Obama and New Deal Echoes
During the primary presidential campaign, FDR's playbook seemed to be Obama's plan for the U.S. depressed economy. Plans to increase the capital gains tax on those making over $200,000 a year as part of his shared prosperity plan, his public works employment plan, health care extension to all, the bailouts for the auto industry and others similar to it that have not responded to the threats of foreign producers, banks that had made unwise loans, re-regulation of the financial services industry, are examples of the Obama and Democrat Congress program. In addition, Obama will be tackling energy independence, climate change/global warming.
The first order of business will be the two-year economic stimulus package which could be as much as $775 billion. It will include about $300 billion in tax cuts, $350,000 billion in infrastructure spending, and billions more in aid to states and other measures. (WSJ, 01/06/2009)
Only time will tell whether FDR's New Deal strategy will work for Obama in the 21st century with similar problems such as a depressed economy, job losses, taxes and budget realities that faced the earlier president.
Sources:
Badger, Anthony. FDR: The First Hundred Days. London: Hill&Wang, 2008
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