Bruce Bartlett has a very nice column on the real lessons of the New Deal:
One reason why Republicans strenuously oppose the Obama administration’s fiscal stimulus plan is because it repeats the errors of Franklin D. Roosevelt. To them, the New Deal was mainly about vastly expanding government spending and deficits, which Republicans believe made the Great Depression worse rather than better. Therefore, doing so again in the present downturn will also lead to failure.
The true New Deal legacy, however, is more complicated. Serious mistakes were indeed made. In particular, the National Industrial Recovery Act was fundamentally ill-conceived and retarded economic recovery. But in terms of fiscal policy, Roosevelt’s error wasn’t that he spent too much, but that he didn’t spend nearly enough.
Right. I think the right-wing’s view that the New Deal was, on net, a bad thing is mistaken. But it’s certainly true that the New Deal featured some bad ideas. And the day Barack Obama proposes organizing the economy into cartels that will be able to exercise enough market power to force retail prices up, I hope John Boehner will go on Fox News and ring the alarm bells. But in fiscal policy terms, the best evidence from the 1930s and 40s suggests that fiscal expansion can work — but that when faced with really big problems it needs to be really big in order to work.