An End to the New Deal

1. An End to the New Deal Chapter 33, p. 793-798

2. The Court Changes Course • FDR’s “court-packing scheme” failed, but he did get some of the justices to start voting his way, including Owen J. Roberts, formerly regarded as a conservative. Shortly after the debacle, others retired, allowing FDR to appoint new justices favorable to his programs. • So, in the long run and at much damage to his reputation, FDR did ultimately achieve his purpose of getting the Supreme Court to vote his way. • However, his failure over the court-packing scheme also showed how Americans still did not wish to tamper with the sacred Constitution.

3. Twilight of the New Deal • In 1937, the economy took another downturn. As a result of this “Roosevelt Recession”, FDR finally embraced the policies of British economist John Maynard Keynes, who believed in planned deficit spending. • Basically, it’s the old Alexander Hamilton idea that it was okay to have debt since the people that were owed $$ would back the government’s recovery if they ever wanted to be paid back! • During Roosevelt’s first term, the depression did not disappear, and unemployment, down from 25% in 1932, was still at 15%.

4. Economic Policies • So in 1937, FDR announced a bold program to stimulate the economy by planned deficit spending (ie. Keynesian Economic Theory) • In 1939, Congress relented to FDR’s pressure and passed the Reorganization Act, which gave him limited powers for administrative reforms, including the key new Executive Office in the White House. • The Hatch Act of 1939 barred federal administrative officials, except the highest policy making officers, from active political campaigning and soliciting.

5. 2009 Stimulus Package (ie. Planned Deficit Spending):The New New Deal?

6. New Deal or Raw Deal? • Foes of the New Deal condemned its waste, citing that it had not defeated the Depression. • Critics were shocked by the “try anything” attitude of FDR, who had increased the federal debt from $19.487 million in 1932 to $40.440 million in 1939. • It took World War II, to really solve the Great Depression, though the war actually created monumental debt compared to what Roosevelt had done with his New Deal.

7. FDR’s Balance Sheet • FDR also may have actually saved the American system of free enterprise, though business tycoons hated him for taxing and regulating them. • New Dealers claimed that the New Deal had alleviated the worst of the Great Depression. • Later, he would guide the nation through a titanic war in which the democracy of the world would be at stake.

8. Ultimately, Franklin D. Roosevelt’s New Deal was most notable for providing moderate social reform without radical revolution or reactionary fascism. • Thus, unlike Germany, Italy, and Japan, FDR provided bold reform WITHOUT revolution or resorting to hatred, scapegoating, or dictatorship!

9. New Deal or Raw Deal? • Graft did exist, but it was minimal considering the desperation of the time. • Some businesses were gouging customers. (ex. A government project in electricity could find out if that was true as well as giving jobs and raising the standard of living in the area.) • The federal government was morally bound to step up to prevent mass hunger and starvation by managing the economy. • Without spending, chaos might ensue (like in Europe). The budget could be fixed when good times reoccurred. • Graft was in all of the “Alphabet Soup” agencies. 2. Government interference into the business realm made it seem socialistic and competing with its own citizens. (ex. TVA vs. private electrical utility companies) • Federal government got too big with all the agencies, in effect, further pushing states into the background. • Promise of budget balancing went just the opposite from $20 billion to $40 billion by 1939.

10. 5. Citizens were able to get work, retain their dignity, and not resort to mass violence and crime. 6. Fairer distribution of the national income; capitalism was saved by acting drastically. 7. Big government was a necessity as the country was in dire straits and needed something done. 8. Relief – not the economy – had been FDR’s primary objective, and the worst of the crisis was relieved by his actions. • 5. USA became a “handout” welfare state, in effect, destroying the American hard-work-ethic by enabling us to be lazy. • 6. Brought about class turmoil between the rich and poor by blaming business owners while favoring labor; ruined capitalism. • 7. Too close to a dictatorship, as evidenced by FDR’s Supreme Court-Packing scheme, plus the attempted ouster of congressional members who didn’t support him. • 8. Failed to cure the Depression – the New Deal just put band-aids on it.

11. New Deal? Raw Deal? • FDR as a Conservative: Business should have loved him instead of loathed him because he saved capitalism by playing the middle ground between the right (Republican) and left (Democrat). In fact, he may have killed the socialist movement in the United States and surely the radical movements that swept throughout Europe. • FDR as a Liberal: He was a socialist who did things by spending so much over budget and enacting so much executive power that was totally unprecedented in peacetime. Even worse? He inched toward dictatorship by attempting to ignore the checks and balances system (ie. Court-packing scheme).