New Deal a Good Example, But Not Perfect

With the economy on the rocks, the New Deal is a hot topic. But FDR’s master plan almost failed, Paul Krugman writes in the New York Times, because "his economic policies were too cautious." In the end, "what saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs."

Roosevelt’s plan balanced spending with high taxes and state and local spending cuts. “My advice to the Obama people is to figure out how much help they think the economy needs, then add 50%,” Krugman argues. “It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.”
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