From Oct. 29, 1929 until Dec. 7, 1941, the debates raged over whether the federal government should spend money to prop up the private economy. After the Japanese attack on Pearl Harbor, the debate ended.
The government poured whatever money was necessary into the war effort. Unemployment fell dramatically. The Great Depression was ended – by government spending.
Critics of the New Deal now point out that it was World War II that finally revived the U.S. economy, not the New Deal. But it took the war effort to force the government to put the money into the economy that created the jobs and the manufacturing base for a modern economy. The war effort was the New Deal in overdrive.
The New Deal programs of the 1930s had set the table. Many of these programs have also made the current economic crisis more bearable. Consider where many Americans would be today without Social Security, or unemployment pay, or Medicare and Medicaid.
New Deal programs in the 1930s also built the roads, the schools, the dams and other projects that not only provided jobs but also transformed the United States from a largely agrarian nation into the most powerful nation in history.
Still, it was a battle. President Franklin Roosevelt faced many of the same arguments and criticisms heard today. He was also combating a stronger tradition against public spending and government involvement in the economy, not to mention the taxes to pay for them. Before the New Deal, income taxes were nominal and the payroll tax didn’t exist. Sales taxes were levied mainly through high tariffs on imports.
“Taxes are what we pay for civilized society,” said Justice Oliver Wendell Holmes. So do we want less civilization?
Roosevelt, using many ideas he conceived while visiting his second home in Warm Springs, lifted poorer Americans to a better life than they had ever known. Richer Americans haven’t done badly either, even the Wall Street tycoons who are currently agonizing over how to get by on $500,000 a year.
The influence that Warm Springs had on Roosevelt has never received its proper recognition. He was a gentleman farmer at heart, who loved rural areas. He also supported balanced federal budgets and he wanted every able-bodied American to have a justified job.
But around Warm Springs, on his many visits, he saw the kind of poverty he’d never seen in the Hudson River Valley of New York State, where he lived most of his life, or even on the streets of New York City. He realized that only federal action could make a difference.
The Tennessee Valley Authority (TVA), for example, rescued a broad area of the South from enduring poverty, plus lowering electricity bills in many cities. Rural Free Delivery brought mail and Rural Electrification turned on the lights for many farm houses because of Roosevelt’s devotion to farmers – and to the South.
In fact, the South benefited the most by far from the New Deal programs because it had the largest percentage of poor people, while its residents paid less in federal taxes.
The New Deal’s most important legacy, of course, is Social Security.
In his speech to Congress advocating an overall “stimulus” plan, Roosevelt said: “At this time I am recommending, 1. Unemployment compensation; 2. Old age benefits [what we now generally think of as Social Security]; 3. Federal aid to dependent children and services for the protection and care of the homeless, neglected and crippled children; and 4. Additional aid to state and local health agencies.
“I am not at this time recommending adoption of so-called federal health insurance … although further study and definite progress is being made.”
Roosevelt made that speech on January 17, 1935, and while it produced programs that have made the United States a more prosperous, stronger and nobler nation, the health insurance he mentioned is still not a reality, 74 years later.
Franklin Roosevelt was the essential leader for his time, and if you look back at the debates of that time, you will find the same arguments against him that are heard today.
I listen to the talk shows, watch the financial channels, read the opinion columns decrying federal efforts to ease people’s suffering. They sound increasingly shrill in their attacks on President Obama and his financial proposals – and increasingly irrelevant.