Public Assistance and Social Welfare

The New Deal
By the time Franklin D. Roosevelt took office in 1933, voluntary agencies, and state and city governments had exhausted all of their human and financial resources. Having done what they could to combat the massive unemployment and economic upheaval levied by the Great Depression, they turned to the federal government for help. FDR never intended to alter the structure of American capitalism. Rather, he sought to rescue it, responding to the crisis with a flurry of legislation during his famous first hundred days.1

Between 1933-1935, federal legislation addressed the immediate issues of stabilizing the economy and getting unemployed Americans back to work. The massive amount of legislation proposed by President Roosevelt and enacted by Congress during the first hundred days of the new administration was unprecedented in U.S History. The Agricultural Adjustment Act (AAA) endeavored to help American farmers by stabilizing crop prices. The Civilian Conservation Corps (CCC) promoted environmental conservation by recruiting young men to plant trees, clear beaches, and build wild life shelters. The Tennessee Valley Authority (TVA) sought to modernize that region by building dams and power plants along the Tennessee River in order to bring electric power to rural areas in seven states. The National Industrial Recovery Act (NIRA) sought to stimulate production and competition by encouraging American industries to create a set of codes designed to regulate prices, output, and general trade.2

Unable to offer a quick, permanent solution, FDR tapped his experience as Governor of New York State to create the nation's first federal relief system. The Federal Emergency Relief Administration (FERA), one of the first and most expensive creations of the New Deal, regularized the national government's role in relief by matching relief monies spent in individual states. While it is true that FERA was designed as a shared undertaking between the federal government and the states, relief was shaped and underwritten at the national level. Even though state and local authorities administered federal funds on programs such as Home Relief, decision making power really lay in Washington.

Shortly after, warned of horrible suffering and rioting to come in the winter of 1934, President Roosevelt instituted a temporary but massive program of public works. Collectively known as the Second New Deal, the measures of 1935 included those that have most defined the legacy of the Roosevelt years: Social Security, the Works Progress Administration (WPA), and the National Labor Relations Act (Wagner Act). The Works Progress Administration replaced an earlier New Deal work relief program, the Pubic Works Administration (PWA), and put unemployed Americans to all kinds of work, from repairing highways to cataloguing archives and recording the stories of ex-slaves. Within a year, it employed 3 million people and, by the end of its seven year existence, a total of 8.5 million.3

The Wagner Act proved to have a lasting impact on the relationship between business and labor. Guaranteeing the right to unionize and the right to bargain collectively with management and administration, the act for the first time institutionalized government recognition of labor unions. Indeed, the Wagner Act made possible the Congress of Industrial Organizations (CIO).

The Social Security Act, signed by President Roosevelt in 1935, established a permanent system of unemployment compensation, old age insurance, and aid for disabled and dependent children. Despite all of the act's limitations-the exclusion of many types of workers, the regressive pay roll tax method of funding it, the small benefits-it is important not to lose sight of the strong impression it made on workers who had never before been offered any security by the government. However, the administration knew that a reserve fund for old-age could not remain solvent throughout the late twentieth century. Indeed, the system's architects foresaw that demand would outstrip resources by the 1990s. Nevertheless, they helped preserve the fiction that social security was a perpetual insurance fund built on contributions which it returned with interest. By pointedly distinguishing social security from relief, they froze the distinction between social insurance and relief into federal policy, where it has been stuck ever since, and built a regressive system that reinforced economic inequalities.4

Despite his mounting political strength and the variety of options from which he could have chosen, FDR, worried about the reactions of both business and agriculture, withdrew from the possibilities of the moment and built a semiwelfare state that used the power of the federal government to reinforce the distinction between social insurance and public assistance and preserve income inequality. The administration as a whole was politically cautious, more geared toward addressing emergencies than solving long-term problems and, most importantly, ambivalent about the enlargement of federal power. With the major public employment program, the WPA, sharply curtailed by the late 1930s, the new semiwelfare state offered little immediate help to the poor. In the end, the global violence brought on by World War II, not the New Deal, lifted America out of the Great Depression.5

Still, it would be wrong to dismiss the significance of New Deal social legislation. The American welfare state born during the depression turned out to be weaker than that of other western industrial nations such as England, France, and Germany. But a new direction nonetheless had been set. Emergency programs prevented mass starvation and, very possibly, massive social disorder. Social security did introduce the idea of entitlement into national policy and establish federal responsibility for a wide range of human problems. Even more, the new legislation vastly augmented the size and scope of the national government, altered the nature of federalism, and reorganized relations between the national state and its citizens.6

See also: Economic Depressions/Great Depression/Fiorello La Guardia and New York's New Deal; Economic Depressions/Great Depression/Public Housing and Slum Clearance; Housing/Public Housing.