WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH), Chairman of the U.S. Senate Banking Subcommittee on Economic Policy, led a subcommittee hearing today, entitled: “Lessons from the New Deal.” The hearing explored how lessons derived from the New Deal era can be applied to today’s economy.
Brown’s opening statement from the “Lessons from the New Deal” hearing today follows:
The hearing will come to order.
Today we are facing an economic challenge few among us have witnessed. Unemployment in Ohio is 9.4 percent, the highest in 25 years, and several counties have rates of more than 15 percent. In my colleague Senator DeMint’s state of South Carolina, the unemployment figure is 11 percent.
With all respect to the economists in the room, these numbers don’t tell the full story. Millions of men and women are struggling to make ends meet, trying to shield their families as best they can, and wrestling with all the emotional problems added by job loss.
We are unfortunately becoming accustomed to the refrain ‘worst since the Great Depression.’ Unemployment reached one in every four workers 75 years ago, and economic output fell by a quarter from 1929 to 1933.While not so severe, the policy challenges faced by President Obama and the Congress parallel some of those Franklin D. Roosevelt assumed when he took office in March 1933.
Financial institutions are wounded and hesitant to lend. Demand has fallen as consumers lose their jobs or increase their savings. Businesses are cutting workers while scrambling for credit.
We are learning to fear fear itself. Fear of the unknown – whether it be job security or health security or asset backed securities – is pervasive.
We cannot draw lessons from every aspect of the Great Depression or FDR’s response. But one lesson we should draw is that the United States recovered from the Great Depression and we will recover from today’s recession.
What lessons can Congress learn from the New Deal that can help drive our recovery today? That is the purpose of today’s hearing.
The New Deal era remains historic for its ambition, its aid to the neediest, and for its lasting policies that helped strengthen the economy and improve the lives of generations of Americans.
While not all perfect, the New Deal kept millions out of poverty. By 1940, unemployment was down to 10 percent and real GDP by one estimate had grown 65 percent from 1933.
Much of the New Deal’s legacy remains with us today. Investments in infrastructure paved the way for the most dynamic economy the world has ever seen. The Fair Labor Standards Act has guaranteed decent wages and working conditions for millions of Americans. And Social Security has provided a secure retirement for generations of senior citizens.
And think where we would be today without the SEC and the FDIC and the Banking Act. Americans know that despite the troubles on Wall Street, their savings at the bank on Main Street are secure.
Until recently, there was not much debate on whether the New Deal helped or hurt efforts to recover. But recently some of my colleagues have suggested that the New Deal failed. They argue that is was World War II spending that pulled us out of the Great Depression.
But this is a false choice in my opinion. Nothing I have seen or heard disputes the economic impact of our becoming the Arsenal of Democracy. But this is not the same as saying the New Deal was harmful or did no good.
Discussion of the New Deal over the past several months has served as a proxy debate for current recovery planning. It’s a topic worthy of our examination today.
Thomas Paine wrote, “By comparing what is past with what is present, we frequently hit on the true character of both, and become wise with very little trouble.” Let’s see if we should be so lucky today.
We’re honored to have a distinguished group of witnesses with us today, and I look forward to their testimony.
We’ll now hear from my colleague, Senator DeMint.
Christina Romer, Chair of the Council of Economic Advisers and New-Deal era economics expert, testified on the New Deal’s historic legacy. Dr. James K. Galbraith, professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin; Dr. Brad DeLong, economics professor at the University of California at Berkeley; Dr. Allan Winkler, history professor at Miami University in Ohio; and Dr. Lee Ohanian, a professor at the University of California in Los Angeles, also testified at the hearing.