Monday, January 12, 2009

Old Criticisms of the New Deal

Some dinosaurs will never learn:
At the start of the Bush administration, conservatives talked openly about rolling back the New Deal. They were trying to unravel the regulatory state, including protections for workers, consumers and investors. They were also promoting a favorite cause of Wall Street’s: privatizing Social Security, the crown jewel ofthe New Deal.

These days the public is in no mood, given the high costs of deregulation in the mortgage industry and the Bernard Madoff scandal, for more talk about dismantling regulations and federal oversight. But today, the new focus is Mr. Obama’s stimulus package. If F.D.R.’s New Deal spending made things worse, it follows that the Obama administration should not make the same mistake.

The anti-New Deal line is wrong as a matter of economics. F.D.R.’s spending programs did help the economy and created millions of new jobs. The problem, we now know, is not that F.D.R. spent too much priming the pump, but rather that he spent too little. It was his decision to cut back on spending on New Deal programs that brought about a nasty recession in 1937-38.

The second problem is that the criticism overlooks the relief Roosevelt’s programs brought to millions. When F.D.R. took office, unemployment was 25 percent, and families were losing their homes, living in shantytowns, even fighting one another for food at garbage dumps.

The difference that the Civilian Conservation Corps, the Works Progress Administration and other New Deal public works programs made in people’s lives is incalculable.
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Congressional Republicans say Mr. Obama’s stimulus will cost too much, and that over time the economy will cure itself. When critics raised the same objections to F.D.R.’s programs, his relief administrator, Harry Hopkins, had a ready answer: “People don’t eat in the long run. They eat every day.”

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