A New Deal – Part 2

History is clear: we need to give a shot of adrenaline to wages and the economy with spending everybody knows we need - infrastructure. That's where FDR went.

Then, we can fix the economy, as seen in Part 3.

Income taxes helped pay for it. 30’s New Deal had higher taxes on higher incomes but MUCH lower taxes on low incomes than we do now:




Federal spending went up during the New Deal, but down as percentage share of GDP after Reagan lowered tax rates in 1984. Overall spending stayed about the same share.

We need a New Deal to keep incomes to households up so they don’t starve and can actually buy some things. Some European countries keep incomes at 80% of pre pandemic. We do not.

What happened: Effects were to create a class of super rich oligarchs.

• History

“…During the late 1920s, federal spending on public works construction averaged $200 million annually. This amounted to about 2 percent of the total public and private spending on new construction. By 1932, the last year of the Hoover administration, the federal amount had increased to nearly $400 million. Until 1930, state and local governments had been spending $2.4 billion annually on public works. By 1933, they were reduced to spending only $700 million…

The Depression brought the private construction of new factories and homes to a virtual standstill. Public works construction on the part of state and local governments also collapsed. To meet this challenge, the New Dealers vastly increased the federal funding of public works construction. This funding, however, was increased only enough to cover the amount state and local governments had been spending…

The central feature of the New Deal public works program was to provide federal support for state and local public works projects, rather than to substitute federal projects in their place.

According to Donald C. Stone, founder of the American Public Works Association and a key figure in developing the administration of New Deal programs:

'projects at the local level where people were unemployed had to be the kinds of projects that would put the kinds of persons who were unemployed to work. We couldn't just have some scattering of federal projects around and meet the unemployment problem in the country . . . You had to take the work to where the people are. (Rosen and Pudloski 1992, 45)

New Deal public works programs combined the short-term goal of unemployment relief with the long-term goal of regional economic development: As FDR himself put it, there was an obvious two-fold objective of public works policy: "to relieve unemployment (and) to develop great regions of our country in the future for the benefit of future Americans." (Daniels 1975, 4)”

[Howard Rosen is Managing Director of Program Development and Director of the Public Works Historical Society for the American Public Works Association in Kansas City, Mo.]

• Infrastructure Today, 2021

Americans know that our country is literally falling apart. Voters accept paying for needed changes.
‘…America’s infrastructure is more than just a network of roads, bridges, tunnels, ports, railroads and airports connecting our towns, cities and states. It serves as a backbone of economic growth and preserves our safety, quality of life and prosperity. The United States has long been a global leader in innovation, transportation and smart fiscal policies, yet the infrastructure that keeps our country open for business is now far out of date.

According to the American Society of Civil Engineers, the current condition of our infrastructure earns a grade point average of D+, and there is an estimated $2 trillion funding gap to bring it to a state of good repair by 2025. While we have benefited from past centuries of building, neglect has befallen our once greatest achievements – in the 1930s, 4.2 percent of the country’s GDP was spent on infrastructure investment, but by 2016, that number fell to 1.5 percent. In other words, our nation’s infrastructure is crumbling, and we need real, sustainable investment – and we need it now…’
[https://thehill.com/blogs/congress-blog/politics/435562-what-we-need-to-do-to-fix-infrastructure-in-the-us]

But Americans know we need more than just roads, dams and bridges:

• ‘Monthly Stimulus Check

According to a recent poll from OnePoll, 82% of Americans believe that a one-time stimulus check of $1,200 from the CARES Act is not enough to pay for living expenses in the wake of the COVID-19 pandemic. Instead of a one-time check, the majority of respondents say that stimulus checks should continue through the end of lockdowns. The poll, which was conducted in late April with 2,000 of individuals, also found several other results about public sentiment, including:
• Universal Healthcare: 76% of self-identified Republicans and 84% of self-identified Democrats believe the U.S. should consider universal healthcare.
• Mortgage and Rent Payments: 55% say that mortgage and rent payments should be frozen during COVID-19.
• Student Loans: 63% says that student loans should not have to be paid now.
• Unemployment: 79% say the federal government should do more to help those who are unemployed, but only 58% said that government should provide more financial support.’
[https://www.forbes.com/sites/zackfriedman/2020/05/19/stimulus-check-monthly-poll/amp/?fbclid=IwAR2kO4ax8HVzC2apKZB2z9myAw_LIKo_n3_0RDw64bp1BjdMTID6ODoEjV4]