Obama’s 21st Century New Deal: An Economic Stimulus

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Between 1933 and 1936, President Franklin D. Roosevelt initiated a series of economic programs and policies that would be termed the New Deal. It was intended to give relief to the unemployed, reform business and financial practices, and help the struggling economy fight through the woes of the Great Depression. While many of the programs and regulations were unwound in subsequent years, many of its programs are still in place today such as the Federal Deposit Insurance Corporation, the Federal Housing Administration, the Tennessee Valley Authority, the Social Security System, and the SEcurities and Exchange Commission.

On December 6th, 2008, President-elect Barack Obama unveiled, in his weekly address, his version of the 21st Century New Deal, designed to achieve similar goals, most notably to bring the United States out of the recession it currently faces. He seeks to achieve this aim by investing billions of dollars into improving the transportation infrastructure in this nation, roads and bridges, that has been severely underfunded (as evidenced by the studies following the tragic collapse of I-35W in Minnesota, killing 13 and injuring 145). Today, President-elect Obama outlined the principles of his plan (5 minutes) to create 2.5 million jobs.

Here were the major points of his program:

  • Improve energy efficiency of public buildings, by upgrading those buildings with new HVAC systems and energy efficient lightbulbs.
  • Extend funding to improve the infrastructure of the federal highway system (“single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s”), with a deadline for allocation so that states move quickly to use what is allocated. This is intended to create a great many jobs.
  • Modernize and upgrade school buildings from both an energy efficiency perspective, like public buildings, as well as outfit them with new computers.
  • Extend the reach of broadband internet access, improve the United States’ rank of 15th in the world in broadband adoption.
  • Interconnect hospital medical records through the internet by modernizing the health care system.

The address lacks details and numbers because it’s impossible to give details and numbers until January 20th. What you will hear is him explaining the major points of his plan, none of which include a stimulus check to families. I’d argue though that the stimulus checks did nothing to improve our situation and a family facing job loss would much rather have the option of working on an infrastructure plan than cashing a $300 check.

Breaking: Obama unveils 21st Century New Deal [Politico]

{ 13 comments, please add your thoughts now! }

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13 Responses to “Obama’s 21st Century New Deal: An Economic Stimulus”

  1. Walt says:

    So basically there will be MASSIVE construction delays pretty much everywhere over the next few years. Great.

  2. Chris says:

    I think this is kind of antithetical to America. I mean, it sounds like he’s trying to make the government prosperous, instead of us. If that’s the case, I don’t buy it. I don’t want to share in the government’s prosperity. I want my own. I don’t hear anything about helping me out; just government.

  3. jim says:

    @Walt: That’s a possibility… but if the upgrades and maintenance are needed, better now than later after a serious problem.

    @Chris: The idea behind the spending is that it creates more jobs. Are you arguing that another check to individuals would be more useful?

  4. Ryan says:

    I’m afraid that he’ll just pump money into the problem. We definitely need some type of “New Deal” initiative, but if we’re just going to throw money at private firms and expect them to come back with results, I don’t trust it. We’ve all seen what happens when you trust big business, they’ll come back crawling on their bellies begging Mr. and Mrs. Taxpayer to borrow more money. Not something that I want to condone or promote. If we’re worried about energy and infrastructure, have the government create a new program and workforce to create nuclear/solar/oceanic energy facilities themselves. I mean seriously, improve energy efficiency for public buildings, no shit, that should be something as part of each building’s efficiency budget today, not something that Mr. Obama has to mention. But if it comes out of his mouth it can’t be shit, it’s historic.

  5. Fred says:

    If administered properly, investment in infrastructure can be a very good thing… Infrastructure supports business expansion, which in turn creates lasting jobs.

    That said, Obama also needs to address how he’s going to pay for everything. During the campaign, he promised a balanced budget in 4 years. Achieving that, at a modest inflation rate, will no doubt be a very tall challenge. Fortuantely, the Iraq war is finally looking like there’s an end in sight. Without that major draw on our bank account, Obama’s got a fighting chance of achieving his goal.

  6. Miss M says:

    Progress has its price, America is discovering the cost of deferred maintenance on its infrastructure. You will have to pay to fix the roads and bridges at some point, they don’t last forever. Why not do it at a time when people are out of work and give them something to do. And yes that may mean some construction delays, we could build it much faster if you’re willing to pay for it! Can you tell I work on infrastructure, designing roads, bridges etc. I’ve learned everyone wants something for nothing, expects the roads and transit to be perfect but doesn’t want to pay for it. It’s better to build something for our money than hand it out as a bailout or stimulus check. The improvements would then provide benefits like cost savings, reduced greenhouse emissions and less traffic. Yes I would benefit from this type of program, but honestly I’d rather we had a strong economy right now and this type of stimulus were not necessary.

  7. gina says:

    And while we’re fixing the roads, why not also use the rubberized asphalt concrete?

  8. dmacioce says:

    The New Deal policies of the 1930’s alone were not enough to alleviate the large unemployment rates and tough economic conditions of the Great Depression. Fortunately, World War II came along, and united Americans (and the free world) behind a common cause. Industry thrived as production plants were converted to producing goods for the military. Men, women, and children were engaged in the war effort.

    If the recent crises are any indication, I doubt Americans have the stomach or the fortitude to do what is necessary to pull themselves out of this any time soon, particularly now that most production and manufacturing jobs are outsourced to developing nations, and fewer people in this country really know how to work hard, let alone want to.

    We should be prepared for runaway inflation that will follow on the heals of all of this big spending. Unfortunately most of this spending is going to be gobbled up by the huge beaurocracies of the federal, state, and local governments, and it will be suprising if it creates more than 65% of the jobs that are intended to be created.

    I believe that one of the main reasons these newfangled economic stimulus packages will have little impact in the economy is that they assume that it will encourage people to spend more, and this will create a boost. I suspect that most people would be using it to pay down their debt on high interest credit cards — something that is not likely to give a very big bang for the bucks.

    Runaway consumer credit debt is one factor that was not present in during the Great Depression. The Gold Standard is another: We now have no Gold Standard to move away from in order to get out of this mess.

    How wise we would have been (as a nation) to have listened to our grandparents’ advice that in good times, we need to prepare for bad times.

  9. Chris says:

    No, Jim. I don’t want a check that I’ll have to pay for later, either. What I want is private enterprise stimulus, not public enterprise stimulus. I want a payroll tax holiday. I certainly don’t want a rebate check. I want to opt out of Social Security. I certainly don’t want my Social Security to start again at a higher level.

    People think that infrastructure rebuild is the ticket. Really? Is infrastructure really that bad? If so, then the free market moves away from it until it gets better. It gets better when opportunity is there, not when mandate is there.

    I appreciate public transportation. I like freeways. I’m a fan of cops and firefighters. What I’d love to see, though, is government to stop borrowing, start spending modestly, and get the heck out of my economy so that it can take care of itself. This business cycle has to happen to flush the dead weight out. No government can do it for itself.

    You can’t just tell the market to do something. They’ve tried that, and it failed. See Soviet Union.

  10. dmacioce says:

    Had an interesting conversation with my wife about this. This is exactly the kind of thing that the Chinese government has been doing for years, and it’s a big scam.

    Chris hit the nail on the head.

    The scary thing is how far this country has moved toward socialism in the past decade (the move started much earlier than that, but the past decade is particularly bad). I don’t even know if a free market really exists any more.

    Oh well… if it looks like they’re going to start taking away my guns and my gold… I’m on the first boat out of here.

  11. Derus says:

    I think throwing money at a problem sounds like a very American thing to do. At least a very 21st century American thing.

    I think we need to start saving and spending money wisely. That’s the solution to this problem. But that is not what will happen.

    A little history lesson for ya. The New Deal was based off of a state run program in New York put in place by Al Smith. It worked for awhile. Personally I think WW2 helped get us out of the depression more than anything else. But New York state kept it’s new deal policies until the 70s when it ran them into the ground. They asked for a bail out from the fed but they didn’t give it to them.

    I don’t want a new deal. I don’t want a government job. I don’t want to sacrifice freedom for financial safety. I don’t want the government to run the banking industry, the auto industry, and whatever else might go under. Business go under. A good business man keeps that from happening.

    But I’m not opinionated or anythin.

  12. wow says:

    Are you people all delusional?

    HELLO – ever heard of contracting out?

    The Gov. never “builds” or “runs” anything itself – it contracts out to private business – Duh people, get with it.

    You say WWII was better in helping the US out of the great Depression because industry was busy producing tanks and bombs? WHO DO YOU THINK PAID for those tanks and bombs? Who do you think awarded the contracts to make the war materials – YEP – the US GOVT. (is, the taxpayers)

    I much rather have the US pour money in to useful things like infrastructure, network connection – and energy grids – than war materials, don’t you? We are far behind Europe- learn economics and look up what “positive externalities” are – its a form of market failure, btw, in which private interest doesn’t price positive societal benefits in in to making a private investment decision, thus there is too little of the good – in OUR case, TOO LITTLE infrastructure investment, and TOO MUCH WAR.

    I don’t see you all ‘up in arms’ about the money we are/have been throwing away in the black hole called IRaq and shady no-bid Blackwater deals.

    Maybe, invesmtnet in education is not a bad idea, i see.

  13. wow says:

    “I don’t want a new deal. I don’t want a government job.”

    Please reference my above post regarding contracting-out. You think Obama is that dumb? He wants to grow PRIVATE sectors jobs, which depend on contracts and business from the govt. If you took even basic macro economics, you would know that the GOV is a huge buyer.spender in the private economy.

    “I don’t want to sacrifice freedom for financial safety. I don’t want the government to run the banking industry, the auto industry, and whatever else might go under. Business go under.”

    You are blinded by ideology -and this is always bad, as it stops people from understanding and fixing problems. WORRIED about “sacrificing freedom” for “security” why have you not taken to the streets protest wiretapping and other illicit power abuses and trampling on our civil liberties by the Bush Admin?
    YOU may be fine losing your job – but the Gov has problems on its hands when all business start failing — perhaps YOU want to have another great depression, but the majority does not. The O admin will use public money to create private jobs – upstart jobs, which upstart the economy, which increases wages and TAXES, which helps the govt. in the end, which further helps business, plus they get to use the subsidized infrastructure, workers use the infrastructural, easier to get to work, more efficiency, leads to more jobs, more worker and business efficiency, more taxes, prosperity for all. Get it? – or does ideology still blind you?

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