The New Deal

Franklin Roosevelt's New Deal was a watershed period in US politics. It was prompted by the massive economic collapse that began with the 1929 Wall Street crash, and continued throughout most of the 1930s, only ending with the onset of the Second World War.
Roosevelt's first two terms saw a massive programme of legislation aimed at breathing life into the American economy, and although most observers are agreed that it did little to prompt industrial recovery and increase employment, it left lasting impressions in various areas of American economic and social life, the legacies of which can still be seen today.
In terms of labour, the lasting feature of the New Deal was the increase in union membership; between 1930 and 1940, there was a trebling in union members. This was in no small way due to the government's National Industrial Recovery Act (NIRA, 1933), which legislated against unfair competition, laid down wage and hours standards, and affirmed the right of workers to bargain collectively. This resulted in large rises in wages, which was not matched by similar rises in productivity; as a result the rise in firms' costs may have prevented any attempts at an increase in total employment, and thus lengthened the Depression.
Agriculture was one of the most severely affected areas of the economy. At this time, the population was still mainly rural, with farmers accounting for 30% of the workforce. They had already been suffering from low prices before the Depression, and the collapse of the Dow burdened many with massive debts. Added to this was the series of droughts suffered by most states throughout the decade. Roosevelt was swift to attempt to alleviate their plight; the legislation passed in this area stemmed over-production (which was a mistake as the economy was suffering from under-consumption), helped farmers with their debts, and set in place a process of soil conservation as well as encouraging improved methods of cultivation.
The most radical and lasting feature of the new Deal was the introduction of welfare payments to the elderly, the sick, and the unemployed. Before the 1935 Social Security Act, there had been no unemployment benefit or old-age pensions; nor was there any assistance to the sick or those with long-term disabilities such as blindness. For the first time ever, the US government was making direct benefit payments to individuals, as opposed to allocating an amount to the state to distribute.
Finally, the New Deal lead to a change in the political landscape, and not just through the passing of the 22nd Amendment limiting a President to two terms in the White House. The two-party system became thoroughly established as a result of Roosevelt's leadership; although his attempts to create a wholly liberal Democratic party failed, leaving the party in a state of schizophrenia, he had set the tone for a Democratic domination of the Presidency that lasted until the assassination of Kennedy in 1963. Before 1932, the Republicans had been the party of Presidency from before the turn of the century.
Roosevelt broke with tradition in providing the legislation programme for Congress to act on. He strengthened the modern presidency, and was responsible for its absorption of powers that no-one had ever considered the President having. Each executive since has benefited from the time Roosevelt spent securing a wider range of powers for the President.
Overall, the New Deal vastly extended the reach and size of the Federal Government. Although it went about attempting to right the economic situation of the 1930s, it has had an influence that Roosevelt himself could not have envisaged.

What were the long-term implications of the New Deal for welfare policy?

The Depression of the 1930s was so severe that for the first time a system of welfare payments was introduced in the US to help the unemployed. At first, this came in the form of the government providing the states with funds to distribute; when this proved ineffective, the government launched its own work schemes. These measures, however, did not provide the economic stability that was needed to secure long-term recovery, and Roosevelt therefore passed the 1935 Social Security Act, which would provide relief for the old, the unemployed, and the needy. This was the beginning of a Social Security system in the USA.
Indeed, the very term "social security" marks the US out as being different from the rest of the world, given that it offers this as opposed to a "welfare system." The difference is that social security is seen in America as taking care of the elderly and the sick, who have paid their taxes to the government throughout their working lives, and deserve to be supported in their time of need. Contrast this with the welfare system, which is seen as government giving handouts to those undeserving of them as they are trying to avoid honest employment. Americans do not see everyone as having a right to government assistance in times of need.
Whereas its predecessors had been short-term measures, the Social Security Act was designed as a long-term instrument, which would ensure the long-term economic security of those most at risk and affected by economic downturn. It would also provide an income for those too old to continue in employment.
However, the bill has been criticised for not going far enough; it resulted in large variations between states in the amount of aid paid to those eligible. Different states required different levels of insurance contributions from industry, and as a result paid out less in aid. Limits were placed on the amount to be given to the elderly, the blind, and dependent children by the federal government. Those in most need - farm workers, employees in small firms, and domestic servants - were excluded from unemployment compensation and/or old age insurance. As a result, women and blacks were disproportionately excluded from social security coverage. It was only with civil rights legislation in the 1960s that these were removed; yet the gradual process of social and economic inclusion has meant that, as long as there is inequality between race and sex in the employment sector, the exclusionary legacy of the New Deal remains. The failure of government to contribute to old-age pensions from tax revenues missed an opportunity for a radical redistribution of income through the social security system. Finally, there was no provision for health insurance. Many commentators believe that these shortcomings are reflected in the complex and ramshackle nature of the modern US welfare system.
Yet many of these criticisms can be said to be unfair to the original New Dealers, who intended the Social Security Act to be merely the first step towards the implementation of a comprehensive welfare system. The fact that this has not occurred reflects on Congress' innate ability to kill legislation far more easily than pass it. Conservative Republicans also thwarted many attempts to introduce further welfare reforms, objecting time and again to the notion of federal interference in citizens' lives, claiming it would mar the American dream of self-sufficiency and private enterprise and industry. Indeed, it was Republican opposition to healthcare insurance that resulted in Roosevelt dropping this provision from the Act. It was not until Lyndon Johnson's Great Society of the 1960's that a more comprehensive system of payments was introduced. Even then these came in the form of amendments to and modifications of the original Social Security Act, which can still be seen as the basis for today's system. Thus perhaps it would be fairer to lay the blame for the shortcomings of the act at those who did everything in their power to block its progress through the legislative process.
As proof that the Act was intended as a starting point was the work carried out by the National Resources Planning Board throughout the Second World War. This agency was ordered by Roosevelt in 1940 to continue what the New Deal had started by planning socially and economically for the post-war years. Among the policies advanced by the NRPB was the attainment of full employment, the right of every citizen to economic aid in times of need; the board also advocated a form of health insurance. However, few of their recommendations were ever introduced into the legislative process, and by the end of the War, many areas of social security provision had yet to be changed from the now ten-year-old act. However, whereas the act had concentrated on providing relief for the unemployed, the main thrust of social policy in the US was now aimed at providing aid to the elderly and veterans.
Why, then, has there been a seeming reluctance to drastically overhaul the social security system and try to modernise, extend, and simplify it? Glazer believes that the answer also provides insight into why there is no socialist party in the US. He points to the ideological mindset of Americans, which in many ways still incorporates many elements of the founding father's belief in the ideals of self-sufficiency and hard work (and reward). Americans, whilst obviously aware of a nationalistic streak in their self-awareness, are still loyal to state as much as federal identity. Secondly, much power still rests in the hands of the states, including many of the decisions on social security payments. This has resulted in the continuation of diversities between levels of benefits in different states.
Furthermore, the issue of race has had an impact on the system in two ways. Firstly, the existence of enclaves and ghettos in many of the large cities meant that provision for social security was made at the local level; this has meant that payments differed between areas within cities, and these discontinuities continue today. Secondly, the large immigrant population, especially in Southern States, combined with the racial prejudice that still exists in certain areas, has resulted in lower benefit payments in lower states (where the majority of recipients are black). Moves to nationalise welfare payments have been resisted by those states who would risk having their welfare bill raised dramatically in order to achieve parity with the northern states.
Finally, there exists a strong belief in the ideals of the "American Dream" that I have referred to above. In a society that was largely made up of immigrants, they expected to work hard and make their fortune, and not rely on the government for assistance. American workers today, even blue collar workers, are very conservative by international standards. Thus the idea of a parental state is resisted by many, even those who would ordinarily expect to gain most from it. They like to see government assistance as an addition to their own efforts, a kind of "insurance", as opposed to something that can be relied on as a form of income in itself. Thus, because of these ideological viewpoints, there is no inherent desire to have a paternalistic federal system of welfare among many Americans today.
From this, then, we can deduce that the legacy of the New Deal in the area of welfare policy has not been what the implementors of the 1935 Social Security Act intended it to be. At that time, there was undoubtedly a massive need for some form of government action to aid the masses of people who were suffering tremendously during the Depression. However, once the economy had recovered, and people's lives began to improve again, it was impossible to finish what the New Deal had started, and thus America was left with a half-way house system of social security. However, with the mindset of modern-day America, it is difficult to see any fundamental change in the system, given that there does not appear to be a public consensus in favour of doing so. However, with an ageing population and a rapid increase in welfare expenditures, which may result in an increase in federal taxes, it is not inconceivable that this opinion may change in the future.