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The New Deal launched the most dramatic peacetime expansion of the federal government in U.S. history. The Roosevelt administration launched a myriad of new federal programs, including regulations and federal mandates, social insurance programs, and an unprecedented amount of new federal spending. Annual federal outlays outside of the traditional categories of national security and international affairs were four to six times higher in the 1930s than in 1929. In response to the Great Depression, the Roosevelt administration funded a variety of different programs on an unprecedented scale in an attempt to revive economic activity. The Public Works Administration (PWA) handed out grants to build civil infrastructure, while the Federal Emergency Relief Administration (FERA), the Civil Works Administration (CWA), and the Works Progress Administration (WPA) granted state and local governments funds to provide work relief and direct relief and to build and maintain infrastructure. The New Deal launched the farm programs that paid farmers to alter their land usage. New Deal agencies loaned funds to state and local governments, banks, homeowners, farmers, and to industry in order to provide needed liquidity. Through the Federal Housing Administration (FHA) the federal government sought to prop up the housing sector by insuring home improvement and mortgage loans.
Popular histories often portray the New Deal as a successful antidote to the Great Depression. The New Deal, however, was an amalgam of numerous multifaceted programs that sometimes worked at cross purposes. Studies of New Deal macroeconomic policy suggest that New Deal spending had a limited role in the recovery. Harold Cole and Lee Ohanian argue that the policies of the National Industrial Recovery Act, designed to raise prices and wages and to weaken antitrust enforcement, likely contributed to higher unemployment and slowed the economy's ability to achieve its long-term growth rate. Furthermore, Robert Higgs emphasizes that the rapid introduction of New Deal policies and the continuous changes that followed created uncertainty that slowed private investment. Various studies of the impact of work relief programs have painted a mixed picture of their success in reducing unemployment. Finally, a growing literature on the political economy of New Deal spending suggests that political, as well as economic, concerns determined how New Deal funds were distributed across the United States.
Because the New Deal involved...