William_T._Bianco,_David_T._Canon]_American_Polit

576 Chapter 16Chapter 16 || Social PolicySocial Policy

The New Deal

The stock market crash in 1929 and the ensuing Great Depression created a desperate

economic situation for millions of Americans. The value of the stock market shrank

by 80 percent, the gross national product decreased by 25 percent, and unemployment

climbed to at least 25 percent in the depth of the depression in 1933. Yet, during the

presidential campaign of 1932, the Republican incumbent, Herbert Hoover, upheld

the administration’s policy of limited government intervention in the economy and

in social welfare policies. In contrast, the Democratic candidate, Franklin Delano

Roosevelt, pledged “a new deal for the American people” in which the federal

government would actively confront the problems of the depression. FDR won a

sweeping victory. Democrats also gained control of both houses of Congress, which

paved the way for the enactment of FDR’s policies.

An immediate concern was to alleviate the suffering caused by unemployment. As

FDR argued, “No country, however rich, can afford the waste of its human resources.

Demoralization caused by vast unemployment is our greatest extravagance. Morally,

it is the greatest menace to our social order.”^10 FDR also wanted to implement a

broader “preventative social policy” as outlined by social scientists at the University

of Wisconsin, including John R. Commons, who was a significant force in the creation

of unemployment compensation policies, and Edwin Witte, the architect of Social

S ec u r it y.^11 The New Deal included a number of policies enacted between 1933 and 1935:

• The Agricultural Adjustment Administration provided farmers with much-needed
  assistance. Farmers were hit hard in the depression when plummeting commodity
  prices forced many family farms into bankruptcy.


• The National Recovery Administration and Public Works Administration
  reinvigorated the business sector.


• The Federal Emergency Relief Administration provided $500 million in emergency
  aid for the poor (about $7 billion in today’s dollars).


• Jobs programs such as the Civil Works Administration and Civilian Conservation
  Corps put more than 2 million people to work. Later the Works Progress

New Deal

The set of policies proposed by

President Franklin Roosevelt and

enacted by Congress between 1933

and 1935 to promote economic

recovery and social welfare during

the Great Depression.

NUTS

& B O LT S

16.1

Types of Social Policy

1. Contributory (or social insurance) programs include Social Security, Medicare, disability insurance, and unemployment
   compensation.
   
   
   • Programs are similar to insurance programs in that people pay a specified amount of money to cover some
     future benefit (either expected, as with the programs related to retirement, or unexpected, as with disability
     and unemployment).
   
   
   • Programs are not means-tested; that is, all people may participate in the program regardless of their income
   
   
   
   


2. Noncontributory (or public-assistance) programs include Medicaid, food stamps, housing assistance, welfare, and school
   lunches.
   
   
   • Recipients are not expected to pay for the programs, which are means-tested, meaning that they are aimed at helping
     poor people
   
   
   
   

The ACA (“Obamacare”) has elements of both contributory and noncontributory programs. People who are required to buy

health insurance are “contributing” to their own insurance. However, those who cannot afford to pay for their insurance receive

government subsidies (and thus are participating in a noncontributory program).

The test of our progress is not

whether we add more to the

abundance of those who have

much; it is whether we provide

enough for those who have too

little.

—President Franklin D. Roosevelt

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