New Deal

The New Deal

Scholars consider the New Deal era to be the most recent transformative period in American political development


Examples for testing some of the prevailing theories of policy development

Why did social policies in the United States develop in a pattern divergent from what occurred in industrialized European nations?

What is a reconstructive Presidency?

What role do policy legacies play in policy innovation?


Pre-New Deal Social Policies


Western nations began to introduce public social provisions in the late 19th century as a response to the economic and social challenges in the transition from an agrarian to an industrial based economy
· workman’s compensation
· labor standards
· health insurance
· insurance against poverty for the elderly.

There are two major arguments in the literature used to explain why a nation adopts social welfare provisions.

The logic of industrialism - as a nation moves from an agrarian to a more industrial economy, it is more likely to adopt social welfare provisions.

National values - a nation’s cultural conditions tend to advance or impede the advancement of social welfare provisions

Helps to explain why pre New Deal programs such as workingmen’s insurance and post New Deal programs like Social Security tended to be contributory in nature.

Another argument –
The relative strength of corporate interests in the US economy compared to the working class. Remember Hartz and Huntington



American Association of Labor Legislation (AALL) - Leaders from labor, industry and the academe who argued for comprehensive social insurance modeled after European state based approaches.
· Most successful in advancing workmen’s compensation at the state level.
· Did not achieve a public health insurance program.

Scholars sattribute some of the failures of social reform during the progressive era to inefficiencies and corruption associated with benefits for Civil War veterans


The pre New Deal era also saw a cooperative position with industry and associations as an effort towards providing more efficient management of the business cycle.

Herbert Hoover’s “associative state” - involves cooperation and planning across a network of associations, business, and government
· accepted that government had a role in facilitating the economic growth of the nation while rejecting increased bureaucracy.
· public works spending
· Manipulation of monetary policy as a corrective economic measure
· Hands off approach towards private enterprise and local administration


New Deal Policy Change

Policy legacies paid a significant role in the debates over social reform during the New Deal.
· Policy debates over labor relations, insurance for the aged, and health insurance engendered similar fears of inefficiency, corruption, patronage, and a sentiment towards an “undeserving poor”
· Emphasis was placed on contributory mechanisms and decentralization during the development of New Deal policies generally, and Social Security more specifically


Pragmatism key to understanding FDR

· Roosevelt was adept at leveraging support from distinct segments from industry in advancing legislative reform.
Tactical alliances formed with farmers, while splitting banking interests. These groups were united around policy demands

Alliance of oil interests, banking, and the AFL

The Federal Reserve Act of 1935 - maintained the separation between commercial and investment banking while also keeping the Federal Board of Governors as supreme over the regional Federal Reserve Banks

The Wagner Act also known as the National Labor Relations Bill - provided the protection of unions against employer interference


FDR faced his biggest obstacles as he attempted to consolidate institutional control.
· National Recovery Administration (NRA)
· Court Packing
· Conservative Coalition in Congress

Skowronek argues that administrative challenges Roosevelt faced are ones that can be observed in subsequent Presidencies.

· The increased power of the state brought on greater institutionalization where independent centers of power lead administrators or members of congress to fiercely defend their turf.
· The President less powerful when attempting to initiate sweeping reforms
Example: when the Supreme Court upheld the Wagner Act, a policy victory for FDR led to an institutional defeat.