Fiscal and Monetary Policy: An Assessment of the New Deal (Essay Sample)

FISCAL AND MONETARY POLICY: AN ASSESSMENT OF THE NEW DEAL Student’s Name Course Professor’s Name Institution City Date Fiscal and Monetary Policy: An Assessement of the New Deal Introduction When Franklin D. Roosevelt became the president of the United States, he operated a domestic program designed to provide economic relief to Americans. The program, which ran from 1933 to 1939 brought policy action in the housing, agriculture, waterpower, industry, labor, and finance sectors (Means 2013, 15). The idea of a New Deal was adopted from Roosevelt’s presidential nomination speech on 2nd July 1932. In particular, President Roosevelt reacted to his predecessor’s ineffectiveness. Therefore, Americans voted for Franklin Roosevelt following his promise of a better life for the forgotten citizens (Purcell 2013, 44). This new deal was based on the idea that the government regulates the economy to manage conflicting interests in the economy. In that way, Roosevelt overlooked laissez-faire – America’s traditional political philosophy (Sheppard 2014, 10). His objective was to prioritize the interests of the citizens by developing the economy, provide more job opportunities and offer economic relief to suffering citizens. Roosevelt’s quest to end the depression in the American economy started in the first one hundred days of his term. He started by prompting Congress to end Prohibition, which was one of the ways used to create divisiveness in the 20s (Purcell 2013, 45). Thus, Americans could once again buy beer. Similarly, in May 1933, President Roosevelt approved the Tennessee Valley Authority Act, which allowed the federal government to develop dams and produce affordable hydroelectric power along River Tennessee (Purcell 2014, 12). In the same month, a bill was passed by Congress, which paid farmers in the country to fallow their land as a measure to prevent losses through surpluses and promote the price of their commodities. The National Industrial Recovery Act allowed workers to unionize for purposes of collective bargaining to better work conditions and wages (Sheppard 2014, 21). This decision some of the antitrust laws established by the Public Works Administration. In 1935, the New Deal took a new trajectory; it focused on assisting urban and labor groups in the country (Powell & William 2013, 10). For instance, the Wagner Act increased the federal government’s authority in industrial actions and fortified the organization of labor unions through the establishment of the National Labor Relations Board. Also, to help the oppressed homeowners, Congress passed legislation to allow access to bank loans and improve shaky mortgages by modernizing payments (Sheppard 2014, 25). However, the most significant step of the New Deal was the decision to enact Social Security interventions from 1935 to 1939. As a result, the federal government provided for disability insurance and compensation for unemployment (Stanger 2009, 21). Similarly, it specified minimum wage and working hours to employees to develop standard criteria for industries, in 1938. Effects of Decisions by Key Government Leaders When Roosevelt became the President of the United States, he accomplished a lot within the first one hundred days than any of his predecessors. He formed his brain trust comprised of Adolph A. Berle, Raymond Moley, and Rexford Guy Tugwell (Purcell 2013, 44). On 9th March 1933, he signed the Emergency Banking Act. This law allowed the federal government to close all banks considered as weak, and reopen stable ones. The objective was to create a more stable banking system in the United States (Purcell 2013, 44). As a result, this decision helped to bolster the economy by allowing citizens to invest in financial assets. Also, to stir economic development, stable banks would provide loans to citizens to grow their businesses and thus generate income to the country through taxes (Melchers 2016, 20). More so, the regulation of the banking sector meant the government more control over credit cards, mortgages, and insurance. Congress, in 1933, created the Agricultural Adjustment Act, which was meant to curtail farm production, increase the prices of agricultural products and minimize exports. This bill established the Agricultural Adjustment Administration headed by Henry Wallace – the Secretary of Agriculture (Purcell 2014, 13). Therefore, Henry’s work was to ensure the implementation of the domestic allotment plan. His agenda under the Agricultural Adjustment Act was to subsidize production in farms and raise the prices of agricultural commodities to increase the purchasing power of farmers in the country (Powell & William 2013, 11). As a result, from 1909 – 1914, the nation’s farmers experienced comparative stability. The commitment of Henry Wallace to oversee the implementation of the Agricultural Adjustment Act established food security in the United States (Powell & William 2013, 12). More so, farmers could finance their operations owing to the economic value of their activities. During Roosevelt’s second term, Congress passed the National Labor Relations Act (NLRA), which aimed to protect employees from their employers, curtain the management practices used by the private sector and promote collective bargaining (Melchers 2016, 14). This law was significant in improving the general welfare of the country in the course of realizing economic prosperity (Sheppard 2014, 23). Therefore, it became unlawful for employers to discriminate against their employees or threaten them in any way for engaging in union activities. This development meant that employee rights were guaranteed under NLRA and violation would lead to legal interventions (Melchers 2016, 14). More so, it helped to reduce inequality and therefore allow individuals to get fair benefits from their employment. Since then, the commitment of the United States government to protect employee rights helped offer leave, healthcare, and workplace safety. On April 5th 1933, President Franklin Roosevelt made an executive order as part of the New Deal legislation – Civilian Conservation Corps (CCC). He intended to allow his government to battle the high unemployment rates following the Great Depression (Melchers 2016, 13). At the time, many youths were laid off, but the executive order saw them reinstated to work in projects designed for environmental conservation. Thus, the CCC integrated Roosevelt’s agendas with environmental conservation efforts by engaging youths. Previously, where he served as New York’s governor, he operated a similar project and therefore understood how to steer it into completion (Melchers 2016, 14). In that case, Roosevelt engaged the Army to transport youths from Eastern U.S to enrolment camps in different parts of the country. This countrywide initiative saw the president work with youths to rebuild the country, which had been subjected to years of administrative negligence (Melchers 2016, 14). Although it was a tall order, President Roosevelt managed to engage over 300,000 men to work in environmental conservation projects. In 1935, Congress enacted the Social Security Act, which introduced a welfare system aimed at offering financial support to the disabled, elderly, and minors. In the previous administration, the government offered no such benefits (Powell & William 2013, 16). Therefore, under this law endorsed by President Roosevelt, all employees were charged the Social Security tax from 1940. This legislation paved the way for labor laws in the United States (Powell & William 2013, 17). In particular, the Social Security tax covers survivor, retirement, and disability benefits given to Americans annually under the disability, old-age and survivor programs. As a result, since Roosevelt’s endorsement, the Social Security system in the United States has become a significant part of the country’s federal budget (Newell 2012, 15). For instance, in 2021, it is estimated that the federal government’s budget for the Social Security system will reach $1.2 trillion. In living under the New Deal, President Roosevelt signed the Housing Act on September 1st 1937. His agenda was to increase the access to financial aid to the federal and state governments to eradicate unsanitary and unsafe residences to establish safe, sanitary, and decent housing projects for low-income families (Sheppard 2014, 10). Similarly, Roosevelt aimed to stimulate businesses and alleviate poverty under this law by establishing a Housing Authority in the United States (Purcell 2014, 16). As a result, this law allowed policymakers to deal with the housing challenges in America at a time when many families needed suitable accommodations. Thus, the Housing Authority took the mandate of constructing houses and offering loans to limited-dividend companies (Purcell 2014, 16). This decision saw the construction of more than 170,000 houses from September 1937 to June 1941 using $800 million. The federal and state governments covered half the rent while paid the rest. Congress enacted the Fair Labor Standards Act (FLSA) in 1938 to insure employees against unfair compensation practices by their employers. The law specified labor rules concerning employment, which comprised minimum wage, restrictions on child labor, and overtime requirements (Melchers 2016, 15). Specifically, the law indicates when employees should be paid and when they should not. It also provides for exemption and non-exemption requirements for employees. Importantly, employers should offer overtime payments for their staff as 1.5 times the normal hourly rate (Melchers 2016, 15). However, the law does not apply to volunteers and independent contractors. Similarly, the law indicates that employees who earn over $550,000 annually in gross income are subject to the FLSA requirements. In that way, Roosevelt’s administration established an employment standard not seen ...