Thesis on "Compare and Contrast Roosevelt's New Deal and Obama's Stimulus Plan"

Thesis 5 pages (1971 words) Sources: 5 Style: MLA

[EXCERPT] . . . .

President Roosevelt's New Deal and President Obama's stimulus plan, the circumstances surrounding both plans and the possible ramifications of both plans.

President Barack Obama came to office in 2009. To have an African-American in the White House was unprecedented. Soon after Mr. Obama took the oath of office he articulated a vision of what he meant by "hope and change" during the campaign. He offered hope and change from the doldrums that the United States was facing. Doldrums, the word is about a sense of malaise accompanied by a feeling that circumstances are not moving in the positive direction. The word finds its origins from sailors of the past who often found themselves (and their sailing vessels) stalled on high seas for days and weeks on end because of a lack of wind. This was demoralizing, and problems among crew members, including mutinies arose because of the malaise that arose from doldrums. Barack Obama rode on this wave of popularity where people believed that he would restore the nation. It did not hurt matters that his Republican opponent was weak and not popular among the party faithful. Besides, the country was facing difficulties on several fronts: the War on Terror was not uppermost on people's minds, which was taken over by a significant downturn in the last two years.

The President's first initiative on taking office was to push through, quite successfully, a stimulus package, that would result in the government either taking over or helping several facets of the United States life and its economy. The United States has been through this before. A similar set of economic circumstances prevailed upon the then newly inaugurated President to create a massive stimulus package. The President was Franklin Delano Roosevelt. This was called the New Deal and this was the first time that the government took upon itself the responsibility (which some might aver as transferring power to itself from the people, where it really belongs) of the people of the United States.(Alter, 2006) in 2009, it was the financial crisis brought on by the home mortgage loan mismanagement. In 1933, it was the financial crisis brought on by the Great Depression that threatened to derail the economy. (Hanes and Hanes, 2002)

Before listing the ingredients of both stimulus packages, it would be appropriate to list the criticisms of both bill, which are essentially the same. The United States is founded on the ideals of individualism and a market-based economy, versus one based on the principles of socialism encapsulated by the statement "from each according to his ability, to each according to his mean." Indeed, virtually all the amendments in the United States Constitution are about protecting the individual against the hegemony of an all powerful government. The first amendment is not strictly about the right to free speech and expression; it clearly states that "Congress shall not pass any laws that abridge the expression of an individual & #8230;" While the economy of the world is not a zero sum entity, one must recognize that financial stimuli, whether as a knee jerk reaction to the Great Depression or the circumstances surrounding the last two years, especially initiated by the Government will mean that money will be derived from the earnings of people, through taxes. Clearly, the only way increased taxes can be justified on a populace that is already burdened from the effects of economic downturns is to tax those in financial brackets that are above a certain level -- the rich. And Barack Obama, during his campaign, could not effectively identify exactly what constitutes the rich and kept lowering the level at which taxes would apply. While the rich also are wealth creators, it is easy to pursue the populist notion that the rich are that because they have won some sort of lottery.

While the application of the Obama stimulus package has just begun, the results are yet to be seen. The application of the New Deal was met with a lot of resistance by both the political conservatives and those on the left. Conservatives decried it because it brought on socialism. Indeed, in some situations the New Deal was so overreaching, that the Supreme Court had to intervene since some of Roosevelt's moves were deemed unconstitutional. (Gray and Burroughs, 1987) One of the pet peeves of the Conservatives was that the spending took away from balancing the budget. Others averred that many from Roosevelt's cabinet and advisers were closet Communists. Those on the left decried aspects of the New Deal because they did not think it went far enough. Similar criticisms are being leveled at President Obama from both sides of the political aisle.

There were two New Deals. The first consisted of broad and sweeping financial stimuli, which were designed to be short-term fixes. The second involved long-term stimuli. One of the major outcomes of the second New Deal, something a worker takes for granted today was the Social Security Act. This act sought to have workers contribute a portion of their salaries as a sort of government mandated retirement funds. These funds are then allotted also to those in need of money. There is currently a criticism of Social Security that it is bankrupt, and will place burdens on the generations to come. There is also a move to privatize Social Security. This has not been achieved, simply because it takes the initiative from the hands of the government. A part of the Second New Deal also involved the establishment of minimum wages and maximum hours for work. The labor unions got a fillip from the Labor initiatives of the plan through the Works Progress Administration. Prohibition, which was possibly responsible for the rise of the Mafia, was removed. Regulations were established at different aspects of the U.S. fabric. The Securities and Exchange Commission (SEC) was established to ensure that the irrationality and excesses by bankers, stock brokers and others on Wall Street could be curbed. This watch dog agency has significant power which it wields even today. Another agency that was established during that time was Fannie Mae, the agency which provided financing. The misappropriation of funds at Fannie Mae contributed to the collapse of the housing industry.

Not a single aspect of the United States remained untouched by both New Deals, from protection of farmers, through the initiatives for Arts and the Humanities. Subsidies were granted for farmers, for the lumber and mining industries. Indeed, this was in response to the Great Depression, which rendered what were the fruited plains into a vast Dust Bowl. Unemployment after Black Tuesday rose to 25% and by 1933 rose to higher than 40%. The social impacts were tremendous. Families broke apart. People died of starvation. And there was one suicide for every 100,000 people. Those in the rural environment were the most affected.

It has already been mentioned that some programs were deemed unconstitutional, despite the support of noted jurists such as Louis Brandeis. While the New Deal was popular, and indeed brought relief to a beleaguered populace, one might surmise that the Second World War came about just in time. With the booming markets to supply war materiel, the depression and economic problems were soon forgotten. The war effort put a large amount of money into the Government coffers, which allowed a lot of Roosevelt's programs to come to fruition. Indeed, the war necessitated that several of the New Deal programs be suspended. And the conservative movement of the 1980s brought on by Reagan's two terms in office resulted in the curb on government regulations on several parts of the U.S. economy. However, program such as the Social Security, the Federal Crop Insurance, the Federal Deposit Insurance, Federal Housing Authority, Fannie Mae, the Tennessee Valley Authority still remain. Lyndon Johnson expanded several social programs during his single term in office.

President Obama's stimulus bills calls for the expenditure of $787 billion. (Aravosis, 2009) the initial price was lower (190 billion dollars), but the programs that were to be stimulated grew and so did the expenditure. (Calmes, 2009) the United States of today is a highly consumerist society and it is not likely that the populace is likely to revisit the scenarios following the Great Depression. But the principle is still the same. The stimulus plan can be sub-categorized thusly: A short-term relief has been proposed for families that would cost over $260 billion dollars over ten years. It would involve marginal tax cuts, help with contributions to Social Security, protection of the Alternate Minimum Tax, and child credit for people who fall within a yet undefined level of poverty. This relief also includes tax relief towards payment of tuition, help towards payment of first mortgage, deduction of taxes on new cars purchase and an extension of unemployment benefits. To modernize federal infrastructure, money will be infused into improvement of transportation facilities, federal building and for water projects. Money will also be spent on exploring modes of alternative and renewal energy. Health care will… READ MORE

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