The first place the Obama administration can triumph or mess up is the $825-billion proposed economic stimulus package�the new administration�s centerpiece plan. At question is whether a spending plan such as what the House of Representatives is now considering is a vital Keynesian solution to what ails the U.S. economy or a hindrance to a vibrant business rebound that won�t depend on massive government spending. The answer to that may be hidden in the fog of historical controversy about what really happened during the Great Depression.
Of special interest is the year 1937. Up until then, Franklin Delano Roosevelt�s New Deal had a couple of successes. Bank deposits were safely insured and economic activity had returned to the level of 1929, the year of the big stock market crash. Unemployment had fallen from its 1934 high of 23.2% to 15%. But then the economy started sinking again in what has been described as the Roosevelt Recession. What happened?