The New Deal

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What are some negative aspects of the New Deal?

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One of the major negatives of the New Deal was that it upset the balanced Federal budget and created a huge deficit for the nation while at the same time failed to end massive unemployment. Roosevelt's program, based on Keynesian theories of economics, called for massive government spending to stimulate the economy. Roosevelt obviously could not do this with large tax increases; so instead large sums of money were borrowed to fund New Deal programs. When the economy did show some improvement, Roosevelt worried about inflation, and ordered cuts in government spending. Unfortunately, he did so at a time when the new Social Security tax had cut people's disposable income. Businesses were too scared to spend, and the economy in 1937 was in worse shape than in 1929. At the end of that year, two million people were out of work. Roosevelt eventually reinstituted government spending, but it was too little too late. Employment levels did not reach those which had existed prior to 1929 until the outbreak of World War II.

So, although the New Deal gave people hope, its program of Relief, Recovery and Reform did little to end the Great Depression other than push the country into more debt.

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We will look here at two negative aspects of the New Deal.

First, there was the fact that the New Deal was carried out in a racist manner.  Because President Roosevelt badly needed political support from Democrats in the South, he was willing to allow the programs of the New Deal to be created and carried out in a racially discriminatory way.  For example, blacks were paid less than whites in many of these programs or were not included at all.

Second, from a conservative point of view, the whole New Deal was a bad thing.  To conservatives, the New Deal paved the way for the sort of big government that we have now.  It was the time in which government involvement in the economy really took off.  To conservatives, this is something that has harmed our country in the long run and is a major negative aspect of the new deal.

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