FDR Nods at the Stimulus Package

The American Recovery and Reinvestment Act of 2009 (stimulus package) has created controversy in the past several months because of the economic recession. The plan will use deficit spending, or the spending of money that the government doesn't really have, to inject $800 billion into the economy for various programs, such as healthcare, education, alternate energy sources, and tax relief. Conservatives tend to believe that too much money is being spent on unnecessary programs, while liberals believe that the money is necessary to aid all sections of the damaged economy.

In 1964, during the presidency of John F. Kennedy, the Congress declared War on Vietnam. Little did it know that the war would be incredibly difficult to fight for Americans because of their poor understanding of the region, the diseases prevalent in the area, the guerrilla warfare, and the determination of the Vietnamese. But, only 60 years earlier during the presidency of William McKinley, the United States had been at war with an extremely similar enemy: the Philippines. While only one thousand soldiers died in combat, four thousand had died from dysentery, malaria, and other diseases. They were constantly beaten by enemy guerrilla attacks because they did not know the region, and could not defeat the persistent Philippine motivation for independence. Why couldn't JFK simply have studied at bit more history and saw that engaging in war with Vietnam was a really bad idea?

We've been in a recession before, a far worse one: the Great Depression. And we're here now, so whatever was done to get out of it must have worked. Shouldn't President Obama not make the same mistake as JFK, and instead, look back at history to see what FDR did to repair the broken economy? Well, what did FDR do?

During the Great Depression, FDR had three main goals for the economy in his New Deal: relief, recovery, reform. Relief provided immediate relief for the unemployed and those in need, recovery provided funds for businesses to get back on their feet, and reform passed legislation to ensure that no recession could ever be as bad as the Great Depression. Despite the Roaring 20's, the government did not have enough money to pay for all of this. Thus, deficit spending was introduced. With the help of his Brain Trust, originally consisting of university professors Adolf Berle, Raymond Moley, Rexford Tugwell, and James Warburg, FDR spent money that the government didn't have to rescue the economy. With programs like the Civilian Conservation Corps (CCC), the Workers Progress Administration (WPA), Public Works Administration (PWA), and Tennessee Valley Authority (TVA), FDR employed the majority of the unemployed on construction, conservation, and other public services. He saved businesses by declaring a Bank Holiday, and restored American confidence in banks with his famous fireside chats. He reformed the economy by enacting welfare for the unemployed, creating the Securities and Exchange Commission (SEC) to monitor the stock market, and established Social Security to assist the retired. The government did not actually have this money, though; instead, he used deficit spending to pay for all of these federal programs and bail the economy out of the Great Depression.

On the other hand, critics of FDR would argue that while some of his programs were important, it wasn't really him that saved the economy. Fortunately, at least for the American economy, World War II was right around the corner. This caused for all of the problems that plagued the United States during the 1930s to disappear. Big business needed labor, so people had jobs; foreign countries needed American supplies, so America profited from selling them their war inventories. Critics maintain that the Great Depression would have ended with or without the assistance of FDR because of the breakout of World War II. However, this is not the case. The Great Depression was clear, at least in the GDP of the United States: a rapidly declining number since 1929. When FDR had established the majority of the programs, employing the unemployed and restoring American confidence in businesses, the GDP had ended its freefall. While World War II did return the United States to a long forgotten rising GDP, it is clear that FDR ended the consistent decay of the economy.

With the passage of the stimulus package, President Obama is trying to do what FDR did during the Great Depression: inject money into the economy. One may wrongly jump to the conclusion that, because FDR was successful during the Great Depression, the stimulus package should be just as successful during the recession that currently plagues our economy. The problem, however, is that history is not the present. Times have changed. We can't bet on a Third World War to spark the economy like the World War II did during FDR's presidency. We can't account for the numerous technological changes that have made this recession an international crisis. Knowing this critical piece of history, neither the conservatives or liberals can easily justify their position. Rather, we can only wait, see, and hope for the best.

Sources:
"Franklin D. Roosevelt." Wikipedia.
"The Philippine-American War." Wikipedia.