Did New Deal Policies help?

There is a debate going on this week about whether the New Deal policies played a significant role in turning the corner on the depression. This subject is important because the next big senate debate will be over the size of the stimulus package. Obama has already weighted in by saying that over the next few years we cannot worry about deficits. So the usual suspects are weighing in on their respective and predictable sides.

Tyler Cohen - Says Monetary Policy is the Bigger Issue

In short, expansionary monetary policy and wartime orders from Europe, not the well-known policies of the New Deal, did the most to make the American economy climb out of the Depression. Our current downturn will end as well someday, and, as in the ’30s, the recovery will probably come for reasons that have little to do with most policy initiatives.

Think Progress of Course calls George Will out as well. and Krugman has been saying for a while that a new new deal is needed. (Update: TPM Weighs in)

My opinions is pretty clear. The problem is demand. So, of course, the government cannot do enough to stimulate demand, but we need to do as much as possible. And, in the long term, we need to win the war for green energy innovation just like the cold war led to our leadership role in the technology revolution.

But Last weeks Krugman vs George Will smackdown still takes the cake for political entertainment.