Senator Grassley says the New Deal "didn't work"; historians have other ideas

Historians say...

Once the Democrats decided to reference FDR’s New Deal in their latest attempt to combat global warming, it was only a matter of time before their opponents resurfaced the charge that the wide-ranging response to the Great Depression didn’t work. As Robert S. McElvaine points out in The Great Depression: America, 1929-1941, the Great Depression has become akin to the Holy Grail among economists. The need to claim or disclaim the unprecedented set of policies that comprise the New Deal is similarly urgent among politicians for obvious reasons: If it worked, maybe we should think big about public programs. If it didn’t, maybe the government should stay far away from the economy.

Senator Grassley’s statement about the New Deal is stark and definitive. Quite simply, in his mind, it did not work. The historians who responded to our request for input disagreed strongly, as a glance at their ratings will show, but they were not hesitant to discuss how the New Deal occasionally fell short.

We received responses from six historians and ratings from four of them. Their full responses appear below the summary. We’ve also included below two additional comments from Senator Grassley regarding the New Deal in order to reveal more of his argument and his thinking.

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Steel Industry by Howard Cook, fresco, 1936, Pittsburgh US Post Office and Courthouse

Summary

There’s a history to this history. The New Deal has long been a battleground and the source of broad, ahistorical thinking. Robert McElvaine quotes Senator Mitch McConnell in 2009, who held forth on how he was “reading history” and learning that “for sure” the “big spending programs” of the 1930s “did not work.” Eric Rauchway details the history of the debate in “New Deal Denialism,” published in 2010. The idea that the New Deal was a failure is one of the most pervasive and persistent historical beliefs on the political right.

But instead of arguing directly from the data or focusing on particular failures, many critics of the New Deal very strangely pivot to the assertion that the depression ended because of the war, not because of FDR’s economic, monetary, and social policies. In other words, massive government spending didn’t end the depression; it was really, really, really massive government spending that did it. This is baffling in its self-defeating logic. Several historians who responded took this up. Read more...

Robert F. Himmelberg, Professor of History, Emeritus, Fordham University

Senator Grassley wants to deflate the proponents of the “Green New Deal” who take advantage of the popular idea that the New Deal was a bold and effective counter to a grave national emergency. Both are generalizing too much, for the New deal was neither a complete failure or a roaring success.

The Senator is correct in saying heavy unemployment lingered until the war came, but neglects to note that GNP had returned to the 1929 level by early 1937.  Read more...

Anya Jabour, Regents Professor History, University of Montana, author of Sophonisba Breckinridge: Championing Women's Activism in Modern America (University of Illinois Press, 2019)

The problem with Senator Grassley’s comment is that his view is short-sighted. While it is admittedly difficult to credit the New Deal with “ending” the Great Depression, it is equally undeniable that the policies implemented then, in particular those legislated by the Social Security Act of 1935 and the Fair Labor Standards Act of 1938, profoundly reshaped the American economy and U.S. society by creating federally-funded programs to provide essential aid to the young, the elderly, and the disabled as well as by establishing groundbreaking workplace regulations, including a federal prohibition on child labor and a national minimum wage. Read more...

David M. Kennedy, Donald J. McLachlan Professor of History Emeritus, Stanford University

Rating: 1.6
Three thoughts:

1. The FDR administration managed to knock the unemployment rate down from 25% in 1932 to about 14% in 1936—a pretty impressive counter-punch to the greatest economic shock in modern history.

2. Counter-cyclical policy was poorly understood in the 1930s; the New Deal faced the task of inventing policy tools to cope with what history still regards as an unprecedentedly huge “Black Swan,” the sources and dynamics of which were and still are something of a mystery. Read more...

Robert S. McElvaine, Professor of History, Millsaps College, author or editor of five books on the era of the Great Depression and New Deal

Rating: 0.9

This ... is a gross misreading of history. What the fact that the Depression did not end until World War II shows is the exact opposite of what McConnell and Grassley argue: It proved that big spending does work, but FDR was unwilling to spend enough, until forced to do so by the war, to stimulate the economy sufficiently to end the Depression. It wasn’t that the policies of the New Deal didn’t work; it was that they were not taken far enough. New Deal policies did not dampen economic growth or hurt jobs. Trickle-down economics does that. Read more...

Kathryn Olmsted, University of California, Davis, author of Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism

Rating: 0.3
The economic growth rates during the New Deal were phenomenal: about 9 percent a year, with the one exception of 1937. The reason 1937 is an exception is that Roosevelt cut back on spending that year. In other words, the recession of 1937 proved that the New Deal policies worked, and the president quickly returned to them. It’s true that unemployment rates did not return to pre-Depression levels until the war. But that’s only because the economy had shrunk so much under President Hoover. Read more...

Eric Rauchway, Professor of History, University of California, Davis; author of Winter War: Hoover, Rosevelt, and the First Clash over the New Deal (Basic Books, 2018)

Rating: 0.1

This statement combines one near-truth (while there’s no official way of marking an end to the Depression, unemployment did not return to pre-1929 lows until the U.S. entered World War II) with a number of major untruths.

The New Deal did work; economic recovery was rapid and effective by the measures we ordinarily use. During Franklin Roosevelt’s first two terms in office (excluding the recession of 1937-1938) GDP growth averaged around 8 or 9 percent per year, rates that are (the economist Christina Romer says) “spectacular, even for an economy pulling out of a severe depression.”  Read more...