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7.10 The New Deal

8 min read • december 27, 2022

Caleb Lagerwey

Introduction

Franklin Delano Roosevelt (FDR), the 32nd president of the United States, sought to fight the worst parts of the Great Depression through his legislative agenda, nicknamed the New Deal . This changed the role of the federal government in new ways (mostly by expanding it) and changed the alignment of political parties (this is one of two major time periods when the Democrats and Republicans began to morph into the parties we recognize today).

FDR, the Three R’s, & Alphabet Soup

FDR’s first priority was supporting the failing bank systems. He quickly declared a Banking Holiday backed by the Emergency Banking Relief Act , where the banks would close and then the federal government would allow those it had inspected and found to be safe to reopen. This helped to restore public confidence in the banks and reversed the runs on the bank once they reopened.

Second, in order to increase tax revenue and increase public morale, the country passed the 21st Amendment , which repealed the 18th Amendment and its prohibition against alcohol.

Image Courtesy of Wikimedia

Third, in order to personally communicate with citizens and to help restore their faith in banking (and government), FDR began a series of Fireside Chats (🔥+📻=👍🏦), or presidential radio addresses. 

Finally, FDR and Congress started a legislative spree where they passed law after law creating new programs and agencies in effect to address the Great Depression , altogether known as the New Deal . There are two ways to characterize the New Deal : the first way is the “3 Rs” of Relief (stop people from starving right now), Recovery (help the economy get back on track and people employed again), and Reform (change the economic system to ensure this never happens again).

The second is to talk about the First New Deal (1933-1935) and the Second New Deal (1935+). Let’s look at some notable examples of the 3Rs in action:

Key New Deal “Alphabet Soup” Programs

(Remember, you don’t have to memorize all of these; just be able to recognize them if they came on in a document on the exam and to be able to use a few of them to describe how the US changed because of the New Deal ) 

A few other important programs worth knowing that don’t have fun, alphabet soup acronyms are the National Labor Relations (Wagner) Act and the Glass-Steagall Act .

The Glass-Steagall Act regulated banks and put dividers between the savings and investment parts of banks. 

Reform primarily occured as part of the Second New Deal . The First New Deal focused primarily on establishing the "alphabet agencies" that covered all three R's, whereas the Second New Deal was reform focused. Two major reforms also came about as a part of the Second New Deal .

National Labor Relations (Wagner) Act

The Act created the National Labor Relations Board to preside over labor-management relations and enable unions to engage in collective bargaining with federal support. 

It outlawed a variety of union busting tactics. 

It said that whenever a majority of the company’s workers voted for a union to represent them, management would be compelled to negotiate with the union on all matters of wages, hours, and working conditions. 

Now, labor unions could recruit large numbers of workers. The act led to a revitalization of the labor union movement. 

Social Security Act

The legislation had three major points:

It provided for old-age pensions financed equally by tax on employers and worker, without government contributions. It gave states federal matching funds to provide modest pensions for destitute elderly. The Social Security trust fund would then be used to make monthly payments to retired persons over the age of 65

It set up a system of unemployment compensation on a federal-state basis, with employers paying a payroll tax and with each state setting benefit levels and administering the program locally.

It provided direct federal grants to the state on a matching basis for welfare payments to the blind, handicapped, needy elderly and dependent. 

Critics of the New Deal 

Not everyone agreed with FDR’s proposals, and he received opposition and criticism from people on his left (more progressive and liberal) and on his right (more conservative and traditional).

For some liberals, the New Deal didn’t go far enough or addressed the problems of the rich businessmen more than poor people, minorities, or women. They had a point: the New Deal was only possible with the support of conservative Southern Democrats who were deeply racist and oversaw the Jim Crow-fixation of the New Deal . People like Huey Long and his Share Our Wealth Society called for a 100% tax rate for all incomes over a million dollars and the redistribution of those funds to poor people. Huey Long was a left wing populist who's primary focus was ending the Depression for the people, as opposed to businesses. He felt that the New Deal primarily bailed out failing businesses and was insufficiently radical.

Father Charles Coughlin

In a nationwide radio show, Father Coughlin appealed to the discontent. He called the New Deal the Pagan Deal, appealing to Christian conservative Americans who were already against the New Deal . When his show became increasingly Fascist and anti-Semitic, his superiors in the Catholic Church ordered him to stop his broadcasts. Coughlin is primarily known for his racist and anti-Semitic viewpoints, although he had over 30 million listeners during the 1930s, amounting to roughly a quarter of the country at the time. As World War II began to rear its head, Coughlin supported policies of Fascist Italy and Nazi Germany.

He called the Great Depression a "cash famine" and called for the nationalization of the Federal Reserve, also calling for free silver.

Dr. Francis Townsend

Dr. Francis Townsend was a physician who came forward with a plan to assist the elderly, who were suffering greatly during the depression. The Townsend Plan proposed giving everyone over the age of 60 a monthly pension of $200 with a provison that it must be spent in 30 days. Townsend was less of a critic of the New Deal and more of a believer that it needed to go broader with direct payments towards the public as opposed to financing federal projects.

Court Packing Plan

Conservatives were shocked at the new levels of government intrusion and spending and the New Deal ’s pro-union stances. They too had a point: the New Deal was a radical increase in government spending and oversight. The Supreme Court of the United States (SCOTUS) invalidated several New Deal programs, such as the AAA.

FDR planned to add more justices to the Supreme Court to get his agenda through, but received outraged opposition, even from within his own party. Ultimately the Supreme Court upheld most of the New Deal and FDR backed down from the court-packing plan . 

After that failure and when the economy started to slow in 1937, FDR’s legislative agenda began to slow.

The Effects of the New Deal

The effects of the New Deal were controversial and remain so to this day. 

That being said, most historians—and the College Board—state that while the New Deal did not entirely end the Great Depression (that would be WWII), it did leave a lasting impact on the United States.

First, its programs fundamentally and (so-far) permanently changed the relationship between citizens and their government. The US federal government had grown under the New Deal , and many programs (e.g., Social Security, FDIC, etc.) are still very much a part of the US today.

Second, FDR’s policies created the so-called New Deal Coalition , a group of people who usually vote for Democrats and which, with some changes, remains the core of the Democratic Party to this day. This group includes African Americans, Jewish people, working-class families, and those on the lower end of the economic spectrum.

While the New Deal did little to hurt the economy of the United States on paper, it did not do significant good either. In fact, in 1937 when Roosevelt scaled back the programs he had created, the economy suffered another, more mild, recession. This was called the Roosevelt Recession . This has also been blamed on contractionary monetary policy by the Federal Reserve (interested? Take AP Macro!).

The Great Depression continued through the entirety of the 1930s, only being fully dissolved during World War II , when large amounts of government spending for the war effort stimulated the economy.

In this graph, we see the two recessions - the Great Depression and Roosevelt Recession , followed by significant GDP growth into World War II .

🎥 Watch: AP US History - the Great Depression and the New Deal

Key Terms to Review ( 30 )

18th Amendment

21st Amendment

Agricultural Adjustment Administration (AAA)

Banking Holiday

Civilian Conservation Corps (CCC)

Dr. Francis Townsend's Townsend Plan

Emergency Banking Relief Act

Federal Deposit Insurance Corporation (FDIC)

Federal Emergency Relief Administration (FERA)

Federal Housing Administration (FHA)

Fireside Chats

First New Deal

Franklin Delano Roosevelt

Glass-Steagall Act

Great Depression

Huey Long's Share Our Wealth Society

National Labor Relations Act/Wagner Act

National Recovery Administration (NRA)

Public Works Administration (PWA)

Roosevelt Recession

Second New Deal

Securities & Exchange Commission (SEC)

Social Security Act (SSA)

Supreme Court of the United States (SCOTUS)

Tennessee Valley Authority (TVA)

Works Progress Administration(WPA)

World War II

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History Resources

The Great Depression and The New Deal

By wendy thowdis, essential questions.

• What should be the role of government in solving a national crisis?
• How effective were the responses of Franklin D. Roosevelt’s administration to the problems of the Great Depression?

Objectives 

• Write a Document Based Essay that demonstrates proper writing skills.
• Critically analyze primary source documents to explore the role of government during a national crisis.
• Develop a thorough understanding of how FDR politically and economically approached the vast problems of the Great Depression.
• Develop an understanding of the New Deal and be able to discuss both positive aspects and criticisms of this plan.
• Writing a Document Based Essay: A 10 Step Approach  (PDF)
• Historical Context, Directions and Task  (PDF)
• Document Packet  (PDF)
• Creating a Document Based Essay  (PDF)

Teach the students how you expect them to write the DBQ essay. Use the attached list of guidelines. (Writing a Document Based Essay: A 10 Step Approach) and hand out the Document Based Essay: A 10 Step Approach

Teach through the Historical Context, Directions and Task (attached) for the DBQ and model how students should get started with this task. Break down each of the ten steps so they see what is expected.

Have them write their thesis paragraph in class in groups of three and swap papers to look for the three guiding principles:

• Did you take a position?
• Did you offer an interpretation of the question?
• Did you offer organizing or controlling ideas which will form the paragraphs of the body?
• Have them complete the rest of the work on the essay at home

Additional Activity

Have the students create Document Based Essay. Use the attached list of directions (Creating a Document Based Essay) as a guideline to develop their own DBQ.

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History Grade 11 - Topic 2 Essay Questions

Essay Question:

To what extent did Roosevelt’s New Deal succeed in mitigating the negative effects of the Great Depression in USA in the 1930’s?  Present an argument in support of your answer using relevant historical evidence. [1]

Introduction:

On 29 October 1929 (also known as “Black Tuesday”), the United States (US) stock market crashed which initiated the Great Depression. [2]   After winning the US elections and taking office in 1933, President Franklin D. Roosevelt sought to bring economic relief to the US during the 1930’s by implementing a series of reforms and restructures in what he called the ‘New Deal’. [3]   Although the ‘New Deal’ succeeded somewhat in relieving economic situations on a macro-level, the “New Deal”, in the long run, is considered a failure as it did not ultimately succeed in what it was set out to do, which was to recover the economy from its “depressed state”. [4]   This statement will be discussed by analyzing the two phases of the “New Deal”, as well as discussing the effects of some of the relief, recovery and reform programs implemented.

The First Hundred Days

When analyzing the legacy of the “New Deal”, it is important to understand that there were two phases of the deal, namely the “First New Deal” and the “Second New Deal”.  The First New Deal consisted mainly of the first three months of Roosevelt’s presidency and is referred to as the “hundred days”. [5]   Within the first hundred days, various relief programs such as the “Federal Emergency Relief Administration” (FRA), the “Civilian Conservation Corps” and the “Agricultural Adjustment Act” were implemented in order to create employment opportunities for Americans as well as providing some extent of economic relief for struggling citizens. [6]

Another significant program that was implemented during the hundred days, was the “National Industrial Recovery Act” (NIRA).  This recovery act allowed working Americans to unionize and in a sense bargain for better working conditions, as well as wages. [7]   Roosevelt felt that a significant part of the recovery process will come from decreasing competition through using set prices, wages and commodities. [8]   Mixed reviews came from the implementation of these recovery acts, as many felt that corporate heads were being disadvantaged by the state, and in some instance some corporations felt as though their competition became the US government itself. [9]   However, on the larger part, many felt that the hundred days and the “First New Deal” was relatively successful as it was marked by a decrease in unemployment and the stabilization of US banks.

The Second New Deal

In 1935, Roosevelt decided that the New Deal should take a more aggressive approach in the attempt to diminish the Great Depression. [10]   This phase is known as the Second New Deal.  One of the more prominent acts implemented was the “Social Security” Act which provided the elderly and widowed people with some financial support, allowed some unemployment and disability compensation and set a framework or minimum wages and maximum work hours. [11]   Furthermore, the “Works Progress Administration” (WPA) was implemented to provide the unemployed with opportunities in the public sector.  These opportunities included building bridges, schools and roads. [12]   To some extent, the Great Deal built a platform for more financial security and opportunity for the American citizens during the onslaught of the Great Depression with its housing, employment and financial interventions. [13]

Criticism of the New Deal

When analyzing some of the programs and acts implemented by the Great Deal, one also has to mention points of criticism.  One of the more popular points of criticism stems from the “interventionalist” and anti-competitive nature of the New Deal. [14]   Larger companies and the Supreme Court also felt that some of the reform initiatives were unconstitutional and did not go through the right channels to implement reform acts. [15]   However, with this criticism in mind, the main reason why the New Deal was deemed unsuccessful, is simply because it did not achieve what it set out to do.  The American economy and employment rates did not recover enough for the New Deal to have remedied the effects of the Great Depression.  Rather, American entrance into the Second World War stimulated more economic growth than the New Deal. [16]

Therefore, one could say that the New Deal mitigated the effects of the Great Depression to an extent where it improved the employment rate from 25% of 1933 to 17% in 1939. [17]   One could also say that some of the relief and reform acts were deemed successful as some of them, such as the Social Security Act, still remains today. [18]   The New Deal also led to a, albeit short-lived, coalition between “white working people, African Americans and left-wing intellectuals”. [19]   Many also argue that the New Deal built a surface for the future economy of America post-World War Two. [20]   However, with regards to the mitigation of the Great Depression itself, the New Deal ultimately did not succeed in ending the Great Depression and its effects.

This content was originally produced for the SAHO classroom by Sebastian Moronell, Ayabulela Ntwakumba, Simone van der Colff & Thandile Xesi.

[1] National Senior Certificate.: “Grade 11 November 2017 History Paper 1 Exam,” National Senior Certificate, November 2017.

[2] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[3] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[4] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[5] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[6] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[7] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[8] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[9] J. Green.: “The New Deal:  crash Course US History #34,” Crash Course [YouTube Online].  Accessed on 23 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=380s ).

[10] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[11] Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online].  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).

[12] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[13] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, pp. 265-267.

[14] M, Johnston.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[15] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[16] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[17] Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online].  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).

[18] Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ).

[19] History.  Editors of History.: “New Deal,” History [online].  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).

[20] D.M. Kennedy.: “What the New Deal Did,” Political Science Quarterly, (124), (2), 2009, p. 267.

• Britannica, T. Editors of Encyclopaedia.: “New Deal,” Encyclopedia Britannica [online], January 2021.  Accessed on 20 March 2021 ( https://www.britannica.com/event/New-Deal ).
• Fiorillo, S.: “What were the New Deal Programs and what did they do?” The Street [online].  Accessed on 24 March 2021 ( https://www.thestreet.com/politics/new-deal-programs-14861940 ). 
• Green, J.: “The New Deal:  Crash Course US History #34,” Crash Course [online].  Accessed on 24 March 2021 ( https://www.youtube.com/watch?v=6bMq9Ek6jnA&t=391s ).
• History.  Editors of History.: “New Deal,” History [online], November 2021.  Accessed 20 March 2021 ( https://www.history.com/topics/great-depression/new-deal ).
• Johnston, M.: “The Economic Effects of the New Deal,” Investopedia [online], January 2021.  Accessed 20 March 2021 ( https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp ).
• Kennedy, D.M.: “What the New Deal Did,” Political Science Quarterly, (124),(2), 2009, pp. 251-268.

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By: History.com Editors

Updated: March 28, 2023 | Original: October 29, 2009

The New Deal was a series of programs and projects instituted during the Great Depression by President Franklin D. Roosevelt that aimed to restore prosperity to Americans. When Roosevelt took office in 1933, he acted swiftly to stabilize the economy and provide jobs and relief to those who were suffering. Over the next eight years, the government instituted a series of experimental New Deal projects and programs, such as the CCC , the WPA , the TVA, the SEC and others. Roosevelt’s New Deal fundamentally and permanently changed the U.S. federal government by expanding its size and scope—especially its role in the economy.

New Deal for the American People

On March 4, 1933, during the bleakest days of the Great Depression , newly elected President Franklin D. Roosevelt delivered his first inaugural address before 100,000 people on Washington’s Capitol Plaza.

“First of all,” he said, “let me assert my firm belief that the only thing we have to fear is fear itself.”

He promised that he would act swiftly to face the “dark realities of the moment” and assured Americans that he would “wage a war against the emergency” just as though “we were in fact invaded by a foreign foe.” His speech gave many people confidence that they’d elected a man who was not afraid to take bold steps to solve the nation’s problems.

Did you know? Unemployment levels in some cities reached staggering levels during the Great Depression: By 1933, Toledo, Ohio's had reached 80 percent, and nearly 90 percent of Lowell, Massachusetts, was unemployed.

The next day, Roosevelt declared a four-day bank holiday to stop people from withdrawing their money from shaky banks. On March 9, Congress passed Roosevelt’s Emergency Banking Act, which reorganized the banks and closed the ones that were insolvent.

In his first “ fireside chat ” three days later, the president urged Americans to put their savings back in the banks, and by the end of the month almost three quarters of them had reopened.

The First Hundred Days

Roosevelt’s quest to end the Great Depression was just beginning, and would ramp up in what came to be known as “ The First 100 Days .” Roosevelt kicked things off by asking Congress to take the first step toward ending Prohibition —one of the more divisive issues of the 1920s—by making it legal once again for Americans to buy beer. (At the end of the year, Congress ratified the 21st Amendment and ended Prohibition for good.)

In May, he signed the Tennessee Valley Authority Act into law, creating the TVA and enabling the federal government to build dams along the Tennessee River that controlled flooding and generated inexpensive hydroelectric power for the people in the region.

That same month, Congress passed a bill that paid commodity farmers (farmers who produced things like wheat, dairy products, tobacco and corn) to leave their fields fallow in order to end agricultural surpluses and boost prices.

June’s National Industrial Recovery Act guaranteed that workers would have the right to unionize and bargain collectively for higher wages and better working conditions; it also suspended some antitrust laws and established a federally funded Public Works Administration.

In addition to the Agricultural Adjustment Act, the Tennessee Valley Authority Act and the National Industrial Recovery Act, Roosevelt had won passage of 12 other major laws, including the Glass-Steagall Act (an important banking bill) and the Home Owners’ Loan Act, in his first 100 days in office.

Almost every American found something to be pleased about and something to complain about in this motley collection of bills, but it was clear to all that FDR was taking the “direct, vigorous” action that he’d promised in his inaugural address.

Second New Deal

Despite the best efforts of President Roosevelt and his cabinet, however, the Great Depression continued. Unemployment persisted, the economy remained unstable, farmers continued to struggle in the Dust Bowl and people grew angrier and more desperate.

So, in the spring of 1935, Roosevelt launched a second, more aggressive series of federal programs, sometimes called the Second New Deal.

In April, he created the Works Progress Administration (WPA) to provide jobs for unemployed people. WPA projects weren’t allowed to compete with private industry, so they focused on building things like post offices, bridges, schools, highways and parks. The WPA also gave work to artists, writers, theater directors and musicians.

In July 1935, the National Labor Relations Act , also known as the Wagner Act, created the National Labor Relations Board to supervise union elections and prevent businesses from treating their workers unfairly. In August, FDR signed the Social Security Act of 1935, which guaranteed pensions to millions of Americans, set up a system of unemployment insurance and stipulated that the federal government would help care for dependent children and the disabled.

In 1936, while campaigning for a second term, FDR told a roaring crowd at Madison Square Garden that “The forces of ‘organized money’ are unanimous in their hate for me—and I welcome their hatred.”

He went on: “I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match, [and] I should like to have it said of my second Administration that in it these forces have met their master.”

This FDR had come a long way from his earlier repudiation of class-based politics and was promising a much more aggressive fight against the people who were profiting from the Depression-era troubles of ordinary Americans. He won the election by a landslide.

Still, the Great Depression dragged on. Workers grew more militant: In December 1936, for example, the United Auto Workers strike at a GM plant in Flint, Michigan lasted for 44 days and spread to some 150,000 autoworkers in 35 cities.

By 1937, to the dismay of most corporate leaders, some 8 million workers had joined unions and were loudly demanding their rights.

The End of the New Deal?

Meanwhile, the New Deal itself confronted one political setback after another. Arguing that they represented an unconstitutional extension of federal authority, the conservative majority on the Supreme Court had already invalidated reform initiatives like the National Recovery Administration and the Agricultural Adjustment Administration.

In order to protect his programs from further meddling, in 1937 President Roosevelt announced a plan to add enough liberal justices to the Court to neutralize the “obstructionist” conservatives.

This “ Court-packing ” turned out to be unnecessary—soon after they caught wind of the plan, the conservative justices started voting to uphold New Deal projects—but the episode did a good deal of public-relations damage to the administration and gave ammunition to many of the president’s Congressional opponents.

That same year, the economy slipped back into a recession when the government reduced its stimulus spending. Despite this seeming vindication of New Deal policies, increasing anti-Roosevelt sentiment made it difficult for him to enact any new programs.

On December 7, 1941, the Japanese bombed Pearl Harbor and the United States entered World War II . The war effort stimulated American industry and, as a result, effectively ended the Great Depression .

The New Deal and American Politics

From 1933 until 1941, President Roosevelt’s New Deal programs and policies did more than just adjust interest rates, tinker with farm subsidies and create short-term make-work programs.

They created a brand-new, if tenuous, political coalition that included white working people, African Americans and left-wing intellectuals. More women entered the workforce as Roosevelt expanded the number of secretarial roles in government. These groups rarely shared the same interests—at least, they rarely thought they did— but they did share a powerful belief that an interventionist government was good for their families, the economy and the nation.

Their coalition has splintered over time, but many of the New Deal programs that bound them together—Social Security, unemployment insurance and federal agricultural subsidies, for instance—are still with us today.

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AP®︎/College US History

Course: ap®︎/college us history   >   unit 7.

• FDR and the Great Depression

The New Deal

“Some historians have pictured the New Deal as the latest round in . . . the ‘ceaseless conflict between man and the dollar.’ But the distinctive feature of the political revolution which Franklin D. Roosevelt began and Truman inherited lies not in its resemblance to the political wars of Andrew Jackson or Thomas Jefferson, but in its abrupt break with the continuity of the past. If, as Charles A. Beard contended, the Civil War was the ‘Second American Revolution,’ the toppling of the dominance held by the Republicans for nearly three-fourths of a century can be considered as the Third American Revolution.”

-Source: Samuel Lubell, journalist, The Future of American Politics, 1952

• (Choice A)   expansion of the Supreme Court A expansion of the Supreme Court
• (Choice B)   realignment of the Democratic Party B realignment of the Democratic Party
• (Choice C)   entrance into World War II C entrance into World War II
• (Choice D)   establishment of regulatory financial agencies D establishment of regulatory financial agencies

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SEC climate rule prompts lawuits. Experts say companies are likely to prepare to comply anyway

WASHINGTON (AP) — The U.S. Securities and Exchange Commission’s new rule requiring companies to disclose some emissions and climate-related information was barely passed before the agency was being hauled to court.

WATCH: Climate researcher on what’s causing the record rise in ocean temperatures

The rule adopted in early March was watered down from what the nation’s top financial regulator had proposed two years ago, thanks to intense lobbying and talk of litigation from business and trade groups and some conservative lawmakers.

But weakening the rule didn’t stave off lawsuits, and what’s expected to be a lengthy legal battle is now underway. Here are some things to know about the rule and what’s ahead:

Exactly what is the SEC requiring?

The rule requires that U.S.-listed companies publicly report their greenhouse gas emissions, climate-related risks and information about their plans to transition to a low-carbon economy.

The agency dropped a requirement that would have had companies report some indirect emissions known as Scope 3. Those don’t come from a company or its operations, but happen along its supply chain — for example, in the production of the fabrics that make a retailer’s clothing — or that result when a consumer uses a product, such as gasoline.

The rule was also softened to allow companies to decide whether some direct and indirect emissions are “material” to their business before reporting them, giving them some discretion in whether to report.

Some smaller companies don’t have to report their emissions at all.

Who is challenging the rule?

Just hours after the SEC adopted the rule March 6, a coalition of 10 states including West Virginia, Alaska and Georgia announced they were filing a challenge with the U.S. Court of Appeals for the 11th Circuit.

The U.S. Chamber of Commerce, a strong opponent of the regulation from the start, filed its own expected lawsuit the following week.

WATCH: The plastic industry knowingly pushed recycling myth for decades, new report finds

Sierra Club, the environmental group, and the Sierra Club Foundation also filed suit last week, arguing that the final rule will tell investors much less about the risks companies face from climate change compared to what was originally proposed. Climate risks are already having a profound impact on the U.S. financial system, they argued.

Last Friday, a federal appellate judge in Louisiana agreed to temporarily pause the rule pending a challenge from two oilfield services companies. Liberty Energy Inc. and Nomad Proppant Services LLC argue that the SEC rule went beyond the agency’s authority, would be overly burdensome because of compliance costs and sought to harm the oil and gas sector.

Why are they challenging it?

Many Republicans, some industry groups and companies accused the SEC of overreach when they first proposed the more robust rule in 2022. Criticism largely centered on whether the SEC went beyond its mandate to protect the financial integrity of security exchanges and investors from fraud.

Despite the weakened final version of the regulation, that argument hasn’t gone away.

What are companies doing while this plays out?

Ropes & Gray attorney Michael Littenberg said companies will prepare for compliance while the lawsuits move forward. Whatever the outcome, many companies will have to comply with similar rules in California and the European Union, which recently moved ahead with requirements for companies to disclose their emissions and other climate-risk information.

“What does the stay mean for companies subject to the rules? At this point, likely not much,” Littenberg said.

“The climate risk reporting architecture takes time to build,” said Suzanne Ashley, a former special counsel and senior advisor to the SEC’s enforcement director and founder of Materiality Strategies, which advises companies on issues including regulation. “It’s not prudent for companies to delay or fail to prepare betting on the outcome of the legal challenge.”

Kristina Wyatt, chief sustainability officer at Persefoni, a carbon accounting software firm, said there’s “a sense of inevitability that companies will need to have a sense of their carbon emissions. The SEC isn’t the only game in town.”

Several plaintiffs have made similar arguments against the SEC’s climate rule. Wyatt said those cases will eventually be consolidated and a lottery process will decide which U.S. appeals court will hear that case. A different appeals court might revoke or modify the stay, she said.

California’s measure passed last year. It will require both public and private companies operating in the state with more than $1 billion in revenue to report their direct and indirect emissions starting in 2026.

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Lawsuit Over New York City’s Property Tax System Can Proceed, Court Says

The lawsuit seeks to overturn a system that has been under fire because it favors wealthier homeowners. The housing groups that sued hope to distribute the tax burden more equitably.

By Mihir Zaveri

A lawsuit that could upend New York City’s property tax system was cleared to move forward by the state’s highest court on Tuesday. The decision is a victory for housing groups that complain that the system favors owners of wealthy Brooklyn brownstones and high-end Manhattan condos over renters and owners in lower-income neighborhoods.

The 4-to-3 decision by the State Court of Appeals strikes at one of the most intractable elements of New York’s housing crisis: Nearly everyone agrees that the property tax system is inequitable and opaque and puts a burden on lower-income people. But while many politicians have proposed overhauls over the years, none have succeeded at making changes through legislative routes.

The lawsuit takes aim at both the city and the state, with the goal of forcing change through the courts instead. It was filed in 2017 by a group of property owners, renters and other advocacy groups called Tax Equity Now New York, or TENNY.

TENNY’s lawsuit says that homes with equivalent values are currently assessed and taxed at different rates depending on where they are, and one of its claims is that the system disproportionately affects racial minorities and may even perpetuate segregation.

The group’s complaint shows that a property in Canarsie, Brooklyn, for example, is assessed at “triple the rate of the same properties in Park Slope,” also in Brooklyn, according to the court’s Tuesday decision. The lawsuit also points out that the city taxes owners of rental buildings at higher rates than owners of higher-end condominiums and co-ops, one of the reasons tenants are charged high rents.

A lower court dismissed TENNY ’s complaint in 2020, saying the disparities did not violate the law and that the Legislature had the power to make changes. Even many of the case’s supporters had viewed it as a long shot. But the decision on Tuesday allowed some of the original claims against the city to move forward and appeared to back up several of the group’s claims.

Martha E. Stark, TENNY’s policy director and a former finance commissioner under Mayor Michael R. Bloomberg, said there was no timetable for the case yet. It can now return to State Supreme Court in Manhattan. There will not be any immediate impact on New Yorkers’ property taxes, though the decision may put pressure on the city to make changes.

A City Hall spokesman told the Gotham Gazette last year that the “property tax system is in need of long-overdue reform,” saying “low-income and middle-income homeowners need relief.”

Speaking to reporters on Tuesday, Gov. Kathy Hochul called the decision a “rather dramatic shift,” adding that she still needed to work out its implications and decide with Mayor Eric Adams what the right solution would be.

Ms. Stark said the court’s decision made it clear that the city could and should act to make the tax system more equitable. It could mean that some people will eventually have to pay higher taxes while others’ tax bills could decline.

“The city has an opportunity here to fix its notoriously broken property tax system,” she said. “It has some of those tools within its own toolbox."

On Tuesday, a spokeswoman for the city referred questions about the lawsuit to comments made by Sylvia O. Hinds-Radix, the city’s corporation counsel, during a news conference. Ms. Hinds-Radix said that the court did not say the lawsuit was over, and that the case would go back to a lower court where “determinations are going to be made.”

The four most liberal members of the court were in the majority on Tuesday. In a dissenting opinion, Judge Michael J. Garcia said that it was the Legislature’s prerogative to make major changes to tax policy.

Property taxes supply the city with around $35 billion every year and are the city’s largest source of revenue.

The bills for individual owners are generally determined by first judging the market value of a property. Then the city decides something called an assessed value — a share of the market value, which is about 6 percent of that value for one-to three-family homes. A tax rate is then applied to this assessed value to arrive at a property tax bill.

But a few peculiarities in this scheme create inequities within similar classes of properties.

For one, the city assesses condos and co-ops by comparing them with rent-stabilized properties — even though those properties typically have much lower market value. TENNY said in its lawsuit that “the city assesses some condominiums and cooperatives at values less than the selling price of a single unit in the same building.”

The court said on Tuesday that the city should be comparing condos and co-ops with similar market-rate rentals, not rent-stabilized properties. That could ultimately mean higher property taxes for condo and co-op owners.

Mary Ann Rothman, the executive director of the Council of New York Cooperatives and Condominiums, said her group is “watching with interest and hoping that this prompts progress towards a fair and equitable property tax system in New York City that is easy to understand.”

Another wrinkle in the property tax system is that there is a state-mandated cap on how much the assessed value of one-to-three-family homes can go up every year. That limits the amount of tax that can be collected in neighborhoods where home values grow rapidly, and leaves neighborhoods in the Bronx and Staten Island where values grow more slowly to carry more of the burden.

Overall, that means owners of smaller homes pay disproportionately less than bigger rental buildings.

A 2018 analysis from the Regional Plan Association, a nonprofit research group, found that these smaller homes made up 15 percent of the property tax revenue despite being about 47 percent of the market value of real estate in New York City. The result are large racial disparities among taxpayers, according to TENNY’s complaint. The lawsuit says neighborhoods where people of color are the majority are “overassessed annually by $1.9 billion.”

Vicki Been, a former deputy mayor for housing in the administration of Bill de Blasio, said the city will have to decide how long it wants to fight the lawsuit. Responding faster, she said, might mean raising taxes on some to even out the burden, which could be a politically risky proposition.

“I’ve worked on this issue for more than a decade,” she said. “It is not easy to understand; it is not easy to message; it’s not easy to deal with just the political fallout.”

Nicholas Fandos contributed reporting.

An earlier version of this article misstated the vote totals in the Court of Appeals decision. It was 4-3, not 5-4.

How we handle corrections

Mihir Zaveri covers housing in the New York City region for The Times. More about Mihir Zaveri

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Apple may hire google to power new iphone ai features using gemini—report, with apple's own ai tech lagging behind, the firm looks for a fallback solution..

Benj Edwards - Mar 18, 2024 7:56 pm UTC

On Monday, Bloomberg reported that Apple is in talks to license Google's Gemini model to power AI features like Siri in a future iPhone software update coming later in 2024, according to people familiar with the situation. Apple has also reportedly conducted similar talks with ChatGPT maker OpenAI.

Further Reading

The potential integration of Google Gemini into iOS 18 could bring a range of new cloud-based (off-device) AI-powered features to Apple's smartphone, including image creation or essay writing based on simple prompts. However, the terms and branding of the agreement have not yet been finalized, and the implementation details remain unclear. The companies are unlikely to announce any deal until Apple's annual Worldwide Developers Conference in June.

Gemini could also bring new capabilities to Apple's widely criticized voice assistant, Siri, which trails newer AI assistants powered by large language models (LLMs) in understanding and responding to complex questions. Rumors of Apple's own internal frustration with Siri—and potential remedies—have been kicking around for some time. In January, 9to5Mac revealed that Apple had been conducting tests with a beta version of iOS 17.4 that used OpenAI's ChatGPT API to power Siri.

As we have previously reported , Apple has also been developing its own AI models, including a large language model codenamed Ajax and a basic chatbot called Apple GPT. However, the company's LLM technology is said to lag behind that of its competitors, making a partnership with Google or another AI provider a more attractive option. (Per the report, Apple is still planning to use in-house solutions for AI features that run locally on the iPhone device itself.)

Google launched Gemini, a language-based AI assistant similar to ChatGPT, in December and has updated it several times since. Many industry experts consider the larger Gemini models to be roughly as capable as OpenAI's GPT-4 Turbo , which powers the subscription versions of ChatGPT. Until just recently, with the emergence of Gemini Ultra and Claude 3 , OpenAI's top model held a fairly wide lead in perceived LLM capability.

The potential partnership between Apple and Google could significantly impact the AI industry, as Apple's platform represents more than 2 billion active devices worldwide. If the agreement gets finalized, it would build upon the existing search partnership between the two companies, which has seen Google pay Apple billions of dollars annually to make its search engine the default option on iPhones and other Apple devices.

However, Bloomberg reports that the potential partnership between Apple and Google is likely to draw scrutiny from regulators, as the companies' current search deal is already the subject of a lawsuit by the US Department of Justice . The European Union is also pressuring Apple to make it easier for consumers to change their default search engine away from Google.

With so much potential money on the line, selecting Google for Apple's cloud AI job could potentially be a major loss for OpenAI in terms of bringing its technology widely into the mainstream—with a market representing billions of users. Even so, any deal with Google or OpenAI may be a temporary fix until Apple can get its own LLM-based AI technology up to speed.

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