Impact of the New Deal

Spiral of Depression Demand drops Fewer goods are sold Companies cut wages and/or workers Consumers loose confidence and start saving Spiral of Depression

Spiral of Prosperity Government Spending Relief Programs More jobs More spending Demand for more goods More production More workers and wages More taxes Spiral of Prosperity

Opposition New Deal programs had been in effect for 2 years and the economy was still sluggish, showing only slight improvement. 2 million jobs had been created but 10 million Americans were still unemployed. “nobody seems to think any more that the thing [the New Deal] is going to work.”

Opposition Too many regulations on business Federal government is too powerful – decrease in states rights Too much deficit spending New Deal programs had not gone far enough Needed more government intervention in the economy to even out the gap between rich and poor Called for heavy taxes on the rich

Opposition Many New Deal bills did not pass congress and the Supreme Court struck down several laws/programs as unconstitutional. (example AAA) Roosevelt feared the courts would strike down all the New Deal programs FDR suggested all justices over 70 must retire allowing the president to appoint new judges who supported the New Deal. Called the Court Packing plan Political mistake – saw the president as trying to interfere with the checks and balances

Lasting Results Despite government spending and relief programs the New Deal was only a limited success. Unemployment remained high and recovery was not complete until WWII Brought a change in the American public’s attitude toward government’s role. safety net – a safeguard to protect them against economic disaster Required a larger and more expensive federal government