Biden’s Plan vs the New Deal

Biden has often compared what he wants to do with his Build Back Better plan to Franklin Roosevelt’s New Deal.  When Roosevelt was elected during the Great Depression, unemployment was a huge problem.  People needed money, and there was no work.  Roosevelt created a number of programs to put people to work.  These included the Civilian Conservation Corp, the Tennessee Valley Authority, the Public Works Administration, and the Works Progress Administration.  

Unemployment was a big problem only at the beginning of the Covid pandemic.  It soon developed that many office workers could work from home over the Internet.  Many of those who couldn’t work from home continued to work in their service jobs at grocery stores, farms, etc.  Those who lost their jobs, mainly lost them because many travel-related businesses closed or became much smaller, hotels, restaurants, airlines, etc. Thee was a huge spike in unemployment, but it did not last long. 

Covid meant that a jobs program like the CCC was inappropriate because of fears about infection from concentrations of workers.  Thus the government just gave money to citizens to support them while they had to stay home.  There were some relief programs like this under the New Deal – the Federal Emergency Relief Act and the Social Security Act – but relatively few compare to jobs programs. 

Now, as the threat of Covid is reduced and people can go back to work, they don’t want to.  There are many jobs that cannot be filled, as more people drop out of the labor force.  Whether they will return for higher salaries remains to be seen.  What effect the higher salaries will have on the national economy remains to be seen.  It is not clear that there will be enough skilled workers to build Biden’s infrastructure projects.  Workers may have to come from other countries. 

In addition to paying people to stay home, the government reduced interest rates to almost zero in order to spur the economy.  The worked almost immediately.  After a big loss, the stock market recovered robustly, making many people rich in the process.  The government response had the perverse effect of increasing the gap between the rich and the poor in America.  While it prevented the poor from starving, it made the upper classes much wealthier, so that the pandemic was the best thing that had happened to them in a generation. 

The New Deal probably made some people rich, but not nearly as many as the pandemic did. It was quickly followed by World War II, which put everyone to work, but also used up all the nation’s resources, so that almost everything was rationed, for rich and poor. People made sacrifices for the Depression and for World War II, but nobody has made any sacrifices to deal with the pandemic, except for some doctors, nurses, and other service employees like grocery workers and meatpackers.    

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