Diary: 'Failure' of the New Deal

Republicans in Congress stand firm on their opposition to the Obama administration's so-called "economic stimulus" legislation, modeled somewhat after the New Deal program of Franklin Delano Roosevelt that has been credited with getting the United States out of the Great Depression of the 1930s. All the Republicans have to offer for our newest "depression' is the same as conservatives offered President Herbert Hoover as the economic calamity exploded in 1929 and which he followed for his entire administration. That is, cut taxes and reduce government spending to balance the budget and let the "invisible hand" of free enterprise work its magic.

That, they say, is the way out of a depression or recession and they insult our collective intelligence to claim the New Deal was a failure. Let reality determine if the New Deal failed or if their approach is correct. Let's look at some facts concerning the New Deal's "failure" and the success of the "invisible hand."

Conservatives tell us it was World War II that finally solved the Great Depression not the New Deal. So we stop examining data before the war started to see if there is any validity to their claims.

Gross Domestic product under Hoover's conservative "invisible hand" approach:

1929 GDP stood at 104 billion dollars.
1930 GDP was 91.1 billion
1931 GDP was 76.3 billion
1932 GDP was 58.5 billion
1933 GDP was 56.0 billion

Gross Domestic Product under the New Deal approach:

1934 GDP was 65.0 billion dollars
1935 GDP was 72.5 billion
1936 GDP was 82.7 billion
1937 GDP was 90.8 billion
1938 GDP was 85.2 billion *
1939 GDP was 91.1 billion
1940 GDP was 100.6 billion
1941 GDP was 125.8 billion

* The reversal of progress occurred when Roosevelt ceased what was working and tried conservative calls to end deficit spending and balance the budget in 1937.

In the quest to balance the budget, Hoover had a slight surplus in 1929 of $1.2 billion and $300 million in 1930 but ran deficits the rest of the way. Roosevelt ran deficits the entire time but except for 1936 and 1941 (start of war) the deficits were similar to those of Hoover but Hoover wasn't producing growth in the Gross Domestic Product. In 1931, Hoover's do-nothing approach produced a deficit of 2.75% of a $76.2-billion-and-falling GDP while a similar GDP of $72.5-billon-and-rising GDP under FDR had a 3.59% deficit.

Unemployment under Hoover's conservative "invisible hand" leadership

1929 unemployment stood at 3.2 percent Americans out of work.
1930 8.7% unemployed
1931 15.9% unemployed
1932 23.6% unemployed
1933 24.9% unemployed

Unemployment under the New Deal programs:

1934 21.7% unemployed
1935 20.1% unemployed
1936 16.9% unemployed
1937 14.3% unemployed
1938 19.0% unemployed*
1939 17.2% unemployed
1940 14.6% unemployed
1941 9.9% unemployed

* The reversal of progress occurred when Roosevelt ceased what was working and tried conservative calls to end deficit spending and balance the budget in 1937.

It should be noted that the Works Progress Administration (WPA) and Civilian Conservation Corps (CCC) were implemented early in FDR's administration and had an immediate effect on unemployment statistics. But Social Security and minimum wages had no effect until late in the 1930s. Social Security was created in 1935 but didn't pay out significant retirement money until much later. A minimum-wage law was passed in 1935 but declared unconstitutional by a right-wing Supreme Court. It was brought back in 1938 and began having an economic effect in 1939.

Figures for both Gross Domestic Product and unemployment should reflect the impact FDR's actions had on the Great Depression.

Republicans have recently discovered the "American taxpayers" and claim to be fighting for them to oppose Barak Obama's stimulus package and its deficit spending. They appear to be a bit tardy in that discovery after piling $10 trillion of debt onto American taxpayers during the regimes of Ronald Reagan, George H. W. Bush the Daddy and George W. Bush the Deluded. During those 20 years of right-wing accumulation of debt it was "the taxpayers be damned."