More federal spending: New deal or raw deal?
THE ECONOMY
More federal spending: New deal or raw deal? History has a lesson for those who want to pump up government spending to “stimulate” the economy and create jobs: During the Great Depression, President Franklin D. Roosevelt’s New Deal programs never drove unemployment lower than 20 percent. The jobless rate actually climbed during the second phase. The onset of World War II, not government spending, prompted America’s economic recovery.
Unemployment Rate for Non-Farm Workers, 1926-1947 FDR’s first New Deal
40%
Supreme Court declares much of New Deal unconstitutional New Deal, Part 2, begins
35%
World War II begins
30%
U.S. creates “war economy” U.S. enters WWII
25% 20% 15%
Stock market crash
5.5% — Normal unemployment rate, 1970–2008 WWII ends
10% 5% 0
’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 ’34 ’35 ’36 ’37 ’38 ’39 ’40 ’41 ’42 ’43 ’44 ’45 ’46 ’47
For updates on federal spending plans, visit heritage.org and click on Rapid Response. Sources: Department of Commerce, Census Bureau, Global Insight
The Heritage Foundation
More federal spending: New deal or raw deal? History has a lesson for those who want to pump up government spending to “stimulate” the economy and create jobs: During the Great Depression, President Franklin D. Roosevelt’s New Deal programs never drove unemployment lower than 20 percent. The jobless rate actually climbed during the second phase. The onset of World War II, not government spending, prompted America’s economic recovery.
Unemployment Rate for Non-Farm Workers, 1926-1947 FDR’s first New Deal
40%
Supreme Court declares much of New Deal unconstitutional New Deal, Part 2, begins
35%
World War II begins
30%
U.S. creates “war economy” U.S. enters WWII
25% 20% 15%
Stock market crash
5.5% — Normal unemployment rate, 1970–2008 WWII ends
10% 5% 0
’26 ’27 ’28 ’29 ’30 ’31 ’32 ’33 ’34 ’35 ’36 ’37 ’38 ’39 ’40 ’41 ’42 ’43 ’44 ’45 ’46 ’47
For updates on federal spending plans, visit heritage.org and click on Rapid Response. Sources: Department of Commerce, Census Bureau, Global Insight
The Heritage Foundation
