Fdr’s New Deal In The 1930’s Vs. President Obama’s Economic Recovery Plan

By Author: Henry Ford
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The new deal was a stimulus plan that was enacted by Franklin Roosevelt back in 1930 to jumpstart the American economy which had been adversely affected by the great depression. Obama, just like FDR, took over a government that had been hit by a recess due to the credit crunch experienced during Bush’s administration. Both men from the Democratic Party were voted in by Americans under the promise that they would help jumpstart the economy which would lead to a decrease in unemployment. Obama has come up with a recovery package which is massive and has been approved by the senate, commonly dubbed as the Economic Recovery Plan or the Stimulus Plan (Bowman, 2009).

FDR’s New Deal in the 1930s vs. President Obama’s Economic Recovery Plan
Similarities
Both recovery plans were enacted in America after going through an economic recession, with the New Deal after the 1930 Great Depression and the Stimulus Plan after the global recess of 2007, culminating from the credit crunch experienced by banks. Both plans aimed at jolting the private sector which is a major source of employment and had been duly ...
... affected by the recess. During both recesses, massive layoffs happened and this led to less spending which would lead to further losses of jobs (Bergeron, 2009).

The plans aimed at involving the government which is the only one with available resources, to revive the economy and break the vicious cycle that the recess had created. When both FDR and Obama came into power, the unemployment rate had plummeted in America. Both the stimulus and new deal first priority was to abate unemployment by creating more jobs through government spending. Both governments aimed at involving the citizens in invigorating the moribund economy, through working in projects such as, improving the infrastructure and getting money to support their families (Bowman, 2009).It was acknowledged that FDRs plan helped in lowering unemployment in 1933 – 1937 from 25 to 24 percent and Obama’s plan aims at doing the same or even better. Also, both plans aimed at getting people to work so that money would be circulated back in the economy.

The recess in 1930 had been caused by the collapse in the stock market while the current one was a result of the collapse in the house market. In both recesses, the stock markets plummeted and both plans aimed at reviving the stock market and restoring confidence in investors (Bergeron, 2009). During both recesses, banks were adversely affected and during the depression, some of them even collapsed. The packages aim at increasing federal spending to revive the banks which in turn will revive the economy through lending and provision of other services.
Both recovery plans were put in place when people had low national morale and lacked confidence in the government due to the mistakes made by the previous administrations. Americans received both of them happily as they aimed at building confidence in the government and increasing the national morale. Though there are many similarities between the two plans, there are also many differences.

Differences
Obama’s approach is different from FDRs which was blamed for prolonging the recess. The two programs which were famous under FDR were CCC and WPA where workers were given moderate wages while workers in the stimulus plan will be paid money which is equivalent to the wages that are prevalently paid to members of the labor union. This is seen as a good strategy since these better wages are expected to improve the livelihood of many families. The current recess resulted from the bust in the house market something that led to the loss of homes for many people through repossessions and foreclosures (Bergeron, 2009). The stimulus addresses this problem by refinancing mortgages and modifications on the loan to help millions of Americans in keeping their homes. FDR new plan main priority was providing food for millions of Americans who were starving due to the effects of the depression.

Although both plans aimed at creating jobs through improvement of infrastructure it is done in a different way. During the depression, the first resort employer was the federal government while money from the stimulus plan under Obama, will be channeled through privately owned companies. It was common for the government to sign individual checks during the depression, something that won’t happen during Obama’s time (Bowman, 2009).

FDRs plan was seen to be least effective since the money budgeted for the recovery was not sufficient. This minimal spending was blamed for prolonging the recess and which ended when World War 2 commenced in 1940, as the government injected lot money into the war. Obama who has learnt from this mistake has allocated $786 billion in the stimulus plan which aims at ending the current recess as soon as possible. Although some critics argue that FDRs plan was a failure, the increase in expenditure in Obama’s plan is projected to bring positive changes (Bowman, 2009).

Conclusion
Both president Obama and Roosevelt came into power when America was going through a recess. Their recovery plans were aimed at jumpstarting the economy which had been battered by the previous regimes. Both are Democrats who received a lot of opposition in trying to get approval from the congress to pass the plans. The two plans aimed at increasing the government spending in the economy through improvement of infrastructure which would in turn create more jobs and curb unemployment. Although most people hail FDRs plan as a failure, it was responsible for the building of many parks and roads that are present in America today. There are a few differences between the two plans, but they both aimed at bringing back glory to the American economy and restoring the national morale of the people.

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