What were the 5 most successful New Deal programs?
The New Deal is an economic policy launched by Franklin D. Roosevelt to end the Great Depression. Americans were battered by 25% unemployment, Dust Bowl droughts, and four waves of bank failures. They welcomed the government's rescue. Show
FDR proposed the New Deal to reverse the downward economic spiral. The goals were relief, recovery, and reform for those who were hardest hit. Key Takeaways
New Deal PoliciesFDR launched the New Deal in three waves from 1933 to 1939. Congress passed dozens of programs to stabilize the U.S. financial system. They provided relief to farmers, and jobs to the unemployed. They also built private-public partnerships to boost manufacturing. FDR's New Deal policies introduced Keynesian economic theory. It said government spending could end the Depression by stimulating consumer demand. The New Deal was a far cry from President Herbert Hoover's "...hear-nothing, see-nothing, do-nothing Government," derided by FDR in his 1936 campaign speech. Hoover believed a free-market economy would self-correct. Government revenue fell as the Depression wore on, so Hoover cut spending. He signed the Smoot-Hawley tariff to protect U.S. industries. He believed that business prosperity would trickle down to the average person. The Depression worsened instead. First New Deal and Its ProgramsRoosevelt was inaugurated on March 4, 1933. FDR pushed Congress to pass 15 new agencies and laws in his first 100 days in office. Together, they created "capitalism with safety nets and subsidies," according to historian Lawrence Davidson.
Conservative businessmen criticized the New Deal for being too socialistic in 1934. Others, like Louisiana politician Huey Long, said it didn't do enough for the poor. FDR pushed for these additional programs despite their criticisms:
Second New Deal ProgramsThe Supreme Court struck down the National Industrial Recovery Act in 1935. Concerned that other programs would also be eliminated, FDR launched the second round of New Deal programs. These focused on providing more services for the poor, the unemployed, and farmers. FDR spoke about helping the "...millions who never had a chance—men at starvation wages, women in sweatshops, children at looms."
Third New Deal ProgramsFDR rolled out the Third New Deal in 1937. Concerned about budget deficits, he did not fund it as much as the previous two.
The cutback in New Deal spending pushed the economy back into the Depression. FDR urged Congress to enact a $5 billion relief program that consisted of:
FDR abolished mark-to-market accounting in 1938. Some experts believed that it forced many banks out of business. The rule forced banks to write down their real estate as values fell. FDR's new rule allowed them to keep these assets on their books at historical prices. FDR launched the Federal Security Agency in 1939. It administered Social Security, federal education funding, and food and drug safety. Congress abolished it in 1953. Why the New Deal Was a SuccessThe New Deal worked. The economy grew 10.8% in 1934 after FDR had launched the first New Deal. The economy increased by 8.9% in 1935 and 12.9% in 1936 when the second New Deal rolled out. The economy contracted 3.3% after FDR cut government spending in 1937. The debt only grew by approximately $3 billion a year from 1932, the year before the New Deal, to 1941, when the United States entered the war. Defense spending added $23 billion to the debt in 1942. The amount added tripled to $64 billion in 1943. It would have ended the Depression right there and then if that much had been spent in the first year of the New Deal. Some say that the New Deal didn't work, because the Depression lasted for 10 years. They point out that defense spending on World War II was the only thing that ended the Depression, but it would have ended the Depression if FDR had spent the same amount on the New Deal as he did on the war. New Deal programs softened the extremes of the business cycle. There were 33 major economic downturns, 22 recessions, four depressions, and seven bank runs and panics before the New Deal, from 1797 through 1932, according to Lawrence Davidson of West Chester University. They impacted 60 of the 132 years covered. Recessions were more severe than they are in the millennium because there weren't New Deal federal agencies in place to control corruption, fraud, and exploitation. NoteThere have been 11 recessions that impacted just 10 out of 60 years since WWII. They were milder than those before, thanks to the safety nets of the New Deal. How the New Deal Could Have Prevented World War IIFDR spent 30 times more in 1943 on the war than he did in 1933 on the New Deal. There was no resistance to war spending as there was to domestic spending. No one was concerned about the budget deficit when the world was worried about Hitler's military dominance. But concerns about the budget deficit sabotaged the New Deal from ending the Depression's global economic catastrophe. It would have ended the Depression if FDR had spent as much on the New Deal in 1933 as he did in the war in 1943, by creating jobs, demand, and economic growth. The Depression's misery helped propel the German people to put the Nazis and Hitler in power. The United States could have turned its resources to helping its allies, Great Britain and France, sooner if FDR and the New Deal had ended the Depression in the early 1930s. It would have at least shortened, if not prevented, World War II. New Deal Timeline
Four Ways the New Deal Affects YouMany of the New Deal's programs are still safeguarding your finances. The four most significant are Social Security, the minimum wage, the Securities and Exchange Commission, and the FDIC. Social SecurityThe Social Security program provides a guaranteed income for workers who have paid into the system. Most people are familiar with the retirement benefits which can also be extended to the retiree's spouse. Social Security also pays disability benefits to eligible beneficiaries who become disabled before reaching retirement age. It pays children, surviving spouses, and dependent parents of eligible beneficiaries who die or become disabled. It will even pay benefits to divorced spouses in some cases. There's also a Supplemental Security Income program that pays benefits to disabled children and adults with limited income. A Special Benefits program provides for qualified World War II veterans. Minimum WageThe minimum wage is the lowest legal wage that companies can pay workers. Its purpose is to prevent employers from exploiting desperate workers. The U.S. federal minimum wage was $7.25 per hour as of January 2022, although President Joe Biden signed an executive order on April 27, 2021, requiring all federal contractors to pay a minimum wage of $15 to workers on federal contracts beginning on Jan. 30, 2022. The minimum wage should provide enough income to afford a living wage. That's the amount needed to provide sufficient food, clothing, and shelter. NoteUnfortunately, Congress hasn't raised the minimum wage enough to keep pace with inflation. The minimum wage translates to $15,080 a year at 40 hours per week for 52 weeks. That's more than the federal poverty level for a single person, but it's lower than the poverty level for a couple. Someone trying to support a family by earning minimum wage would qualify for federal poverty assistance. SECThe SEC regulates stocks, bonds, and mutual funds, making investing safer. The SEC also provides information through Investor.gov that can help you invest. It provides basic education, such as how the markets work, asset allocation, and a review of the different retirement plans. It has a section on "Selecting Your Broker." It provides financial planning tools, such as how much money you'll need to retire. FDICThe FDIC insures savings, checking, and other deposit accounts up to $250,000 for each account ownership category at each bank. It insures $250,000 per owner for some joint accounts. The FDIC also examined and supervised more than 5,000 banks and savings associations as of 2020. The FDIC steps in when a bank fails. It sells the bank to another bank and transfers the depositors to the purchasing bank. The transition is seamless from the customer's point of view. Frequently Asked Questions (FAQs)When was the New Deal passed?The New Deal wasn't passed on a single date. FDR's New Deal ideas were rolled out in a series of laws passed throughout the 1930s. The first piece of the New Deal, the Emergency Banking Act, was passed on March 9, 1933. What was the basic idea of the New Deal?The central goals of the New Deal were to stabilize the financial system, provide relief to farmers, find jobs for the unemployed, and boost manufacturing. Historians have described it as "capitalism with safety nets and subsidies." What are the 5 programs of the New Deal?Major federal programs agencies included the Civilian Conservation Corps (CCC), the Civil Works Administration (CWA), the Farm Security Administration (FSA), the National Industrial Recovery Act of 1933 (NIRA) and the Social Security Administration (SSA).
Which of the first New Deal programs was the most successful?Works Progress Administration (1935)
Created with the passage of the Emergency Relief Appropriation Act, the WPA was the largest of all agencies established under the New Deal. The administration returned millions of unemployed citizens to work primarily with construction projects for new buildings and roads.
What were the 3 programs of the New Deal?The New Deal programs were known as the three "Rs"; Roosevelt believed that together Relief, Reform, and Recovery could bring economic stability to the nation. Reform programs focused specifically on methods for ensuring that depressions like that in the 1930s would never affect the American public again.
Which New Deal program is most significant?Perhaps the most notable New Deal program still in effect is the national old-age pension system created by the Social Security Act (1935). Read more about Fannie Mae, the Federal National Mortgage Association (FNMA). Learn about this agency, designed to facilitate home financing and improve housing standards.
|