Reference no: EM133420846

Case Study: It is essential that there should be an understanding of the character of the draft bill made public yesterday in the House of Representatives...to expend about $900,000,000 for federal public works. I believe the American people will grasp the economic fact that such action would require appropriations to be made to the Federal Departments, thus creating a deficit in the budget that could only be met with more taxes and more Federal bond issues. That makes balancing of the budget hopeless. The country also understands that an unbalanced budget means the loss of confidence of our own people and of other nations in the credit and stability of the government, and that the consequences are national demoralization and the loss of ten times as many jobs as would be created by this program, even if it could be physically put into action...

To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. Humanity came first. No one lightly lays a burden on the income of a nation. But this vicious tightening circle of our declining national income simply had to be broken. The bankers and the industrialists of the nation cried aloud that private business was powerless to break it. They turned, as they had a right to turn, to the government. We accepted the final responsibility of government, after all else had failed, to spend money when no one else had money left to spend.

Questions:

Use the quotations by Herbert Hoover (May 28, 1932) and FDR (September 23, 1936) to respond to a), b), and c).
a. Explain how Hoover viewed the role of the federal government in the economy.
b. Explain how FDR viewed the role of the federal government in the economy.
c. Account for the difference between a) and b).