A New Era or the New Deal?
President Barack Obama aims to “hit the ground running” in his attempt to fix the current economic situation. This immediacy has enabled a public discussion that equates Obama’s American Recovery and Reinvestment Plan (ARRP) with that of Franklin Delano Roosevelt’s first “New Deal” and the “Three Rs”—Relief, Reform, and Recovery. Little discussion, however, has been made of three Rs themselves, muddying the comparisons between Obama's New Deal and FDR's.
So what were the three R's exactly?
The first New Deal (1933-1935) included a series of policies and programs designed for the relief of individuals, the recovery of the economy, and the reform of institutions. Relief was a precondition for Recovery, which, it was hoped, would lead to Reform—including, but not limited to, the elimination of financial and business abuses, centralization of economic authority, augmentation of workers’ economic power, and the nationalization of social welfare services.
The Relief component of FDR’s plan comprised:
- The Civilian Conservation Corps (CCC), which was created in March 1933, and provided for jobs for young unemployed men in agriculture and forestry.
- The Federal Emergency Relief Act (FERA), which was passed in May 1933 and devoted $500 million from the Reconstruction Finance Corporation (RFC) to state and local authorities for direct assistance to the unemployed.
- The Civil Works Administration (CWA), which, created in January 1934, provided jobs on public works projects such as roads, buildings, and other public spaces. The CWA was a “national” program, in the sense that the federal government issued checks directly to individual recipients. The goal was to dignify relief by providing work, not handouts, to employees. Unlike FERA, CWA was federally administered. Creating federal agencies enabled Roosevelt to combat corruption at the local and state level and have successes attributed to his plan and administration, thereby leveraging political power.
Relief was seen as a precondition for eventual economic and social recovery. This aspect of the New Deal included initiatives such as the Agricultural Adjustment Act (AAA), which tried to confront the “severe and increasing disparity between the prices of agriculture and other commodities.” The National Industrial Recovery Act (NIRA), June 1933, tried to stimulate business by nullifying antitrust laws, permitting price fixing and ensuring fair competition through new codes. NIRA led to the development of the Public Works Administration (PWA), which created jobs by implementing new public infrastructure and building projects.
The central agency for recovery during the New Deal era was the National Recovery Administration (NRA). The NRA controlled prices, wages, hours, and working conditions and “codes of fair competition.” The Federal Housing Administration (FHA) was created to help prospective homeowners and builders. Components of the Recovery program, such as NIRA and AAA, fed directly into the overall goals of Reform.
What was the difference between programs aimed at Recovery and those at Reform? Recovery programs had a more immediate effect while those billed as Reforms sought permanent, institutional change. Examples of reforms include:
- The passage of the Banking Acts of 1933 and 1935, which increased the power of the Federal Reserve Board to regulate banking and put control of the Fed in its board, not its bankers.
- The creation of a permanent Federal Deposit Insurance Corporation (FDIC) .
- The establishment of the Securities and Exchange Commission (SEC), which was designed to prevent lenders’ misuse of insider information; regulate stock and bond trading; require the disclosure of fair stock information; and create “financial transparency.”
- The establishment of the National Labor Relations Board (NLRB), which followed a wave of strikes, which shut down entire cities. The law required businesses to negotiate with union representatives and allow for the institution of a unionized majority rule.
- The passage of the landmark Social Security Act.
Given that serving of alphabet soup, how, if at all, can President Barack Omaba’s ARRP be compared to the New Deal?
President Obama’s plan hinges on the creation of 3 to 4 million jobs: 80 percent in the private sector. To accomplish this, initiatives will be put in motion to double renewable energy production and make public buildings more energy efficient; rebuild crumbling roads, bridges and schools; computerize the health care system; modernize classrooms, labs and libraries; and provide tax breaks to workers. According to Obama, "we must make strategic investments that will serve as a down payment on our long-term economic future.” Obama will try to reform the process by banning earmarks.
A Recovery Act Accountability and Transparency Board is envisioned to review the management of recovery dollars and warn against possible problems. The Government Accountability Office and the Inspectors General of the Transparency Board will review recovery funding. “We must demand vigorous oversight and strict accountability for achieving results,” according to Obama, “and we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down.”
Even with all of the hopes and reports of a “new New Deal,” Obama’s plan promises to be new, but not exactly a New Deal. Obama himself has been careful to signal a stronger commitment to the free enterprise system than Roosevelt. But he has sounded like FDR. In a recent speech, Obama, clearly alluding to FDR, said “the need for this action has never been more urgent.” Obama has echoed Roosevelt's famous commitment to try something and see if it works, but to above all, try something: “We’ve looked ahead to the next big idea, that next new breakthrough,” Obama said a few days before his inauguration. “We’ve experimented and innovated, and when we’ve failed, we’ve picked ourselves up and tried again.
Obama’s rhetoric illustrates a desire to acknowledge history and create something his own. With any hope, his experimentation and innovation will lead to successful recovery and reinvestment and a “new era.”
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Ricardo Luis Rodriguez - 2/15/2009
"With any hope, his experimentation and innovation will lead to successful recovery and reinvestment and a 'new era'.”
I am a surgeon, and this reminds me of the multiple times you get called for a consult on a deteriorating patient. The family, as always, is frantically pleading "do something, please". Woe be to the family that takes the advice of the rookie surgeon to "take the bull by the horns" and operate before all the diagnostics are in.
The main problem is accumulated debt, and the solution proposed is more debt. At best, it's like harvesting an anemic patient's own blood to give him a transfusion.
DWIGHT BAKER - 2/9/2009
WAKE UP MY FELLOW AMERICANS
The use of the Internet is not going to save our nation. Just because we can air our wishes and desires to bring coalitions together to discuss between ourselves the needs of others and us is far from a FIX for our GOVERNMENT.
The Internet is not the fix it is just one step along the way to bring saneness back as a core of thought between us.
But WAKE UP WE HAVE NO POWER for our thoughts and desires to be pushed along inside of our corrupt affairs of our GOVERNMENT.
Petitions and Pleas and all our blogging trying to tell each of our stories best as we can will never bring the kind of POWER to bring about the needed changes.
The bill being discussed has had the LOBBYIST in Washington DC in a feeding frenzy adding the things that their clients WANT ADDED to the bill and some call that PORK.
I call it GREED. The give and take and chit chat and back slaps and ballyhoo are just a repulsion to me how about you?
We have the number of folks to start our own LOBBY in Washington DC. When done we would have power to affect the changes needed to bring a halt to our run a way GOVERNMENT for a time.
Our LOBBY would represent us. They would snoop too to give all of us the day by day LOW DOWN what and who were pushing for what to be added to a bill to get a FREE RIDE in our DEMOCRACY.
Our LOBBY would be seen on CSPAN each night for the nightly NEWS not VIEWS from the elites and EAST COAST BLUE BLOODS needs to have their agendas pushed down our throats.
WAKE UP MY FELLOW AMERICANS
Contact for firstname.lastname@example.org on how you can help push the concept of
WE THE PEOPLES LOBBY along.
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