Tuesday, February 17, 2009

Obama's ARRA and FDR's New Deal

The Economist - Jun 24th 1933


Obama's strategy in ARRA (American Recovery and Reinvestment Act) is almost identical to what FDR did in the New Deal: gather legislative powers as board as possible to provide discretionary powers and flexibility when executing and implementing the various programs. The proof is in the pudding, and Obama's pragmatic approach will determine which programs will be continued while those that don't measure up will be eliminated


[...]the first year of the Roosevelt administration will divide into three phases. The first phase—now virtually completed—has been legislative. This legislation has not so much represented governmental action as an outline of suggestions for governmental action. The Farm Act, the currency measures, the public works programme, and the Industrial Recovery Bill all grant to the Executive wide discretionary powers. The Executive is not to be the administrator of specific laws, but the formulator of policies, decrees and rulings which will have the force of law. The next phase will consist of the selection of the powers to be used, the formulation of rules of administrative action under those powers and the organisation of the bureaucratic machinery necessary to translate policy into action. The third phase will discover the economic consequences of the New Deal.

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