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As we face increasing governmental size, spending and spending deficits that have brought the economy to a standstill over the past several years, let us not forget the merry gentleman that started the notion that the government could fix all evils – FDR. Now that we have come full circle and the government has backed itself into a spending corner from which it will be very diffiicult to extract itself, let’s look at the “New Deal” that launched unsustainable government spending.
FDR came into power much as Obama at a time when all he had to do to win was not to be the party in power. Banks were a mess, unregulated Wall Street abuses (marging accounts and the like) and unprecedented levels of unemployment. Sound familiar? FDR’s brilliant scheme was for the government to spend America’s way out of the depression. Sound familiar again? Created the first serious income tax to pay for the jaunty ride, FDR’s “New Deal” stood for the proposition that only something as big and powerful as Federal Government could bring us out of the depths of depression. Unfortunately it didn’t work (still sounding eerily familiar, isn’t it?)
In his book, FDR’s Folly, How Roosevelt and His New Deal Prolonged the Great Depression, author Jim Powell details how the excesses of the Roosevelt spending program actually slowed economic recovery and only World War II acted to snap the American Economy out of the doldroms.
In his book, Mr. Powell details the economic devastation incurred by President Roosevelt’s actions:
Contrary to Black’s claim that FDR helped “banish the Depression,” FDR’s New Deal failed to resolve the most important problem of the era, namely unemployment that averaged 17%. FDR came to power in March 1933, the worst point of the Great Depression, with a quarter of workers unemployed, and during the next three months there were heartening signs of a rebound. Nondurable goods manufacturing jumped 35%, durable goods manufacturing jumped 83%, and the stock market started to rise. At this rate, unemployment would have been down to about 5% by the fall of 1934.
However, investors and businessmen soon realized how FDR’s fabled “Hundred Days” of madcap legislation would throttle business. For example, the Securities Act, passed on May 27, 1933, made it more difficult for employers to raise capital. On June 16, 1933, FDR signed the National Industrial Recovery Act, authorizing some 700 industrial cartel codes (1) to force wages above market levels, which discouraged employers from hiring, and (2) to force prices above market levels, which discouraged consumers from buying. To maintain high prices, production was cut back – the opposite of what was needed for recovery. The economy had a relapse as manufacturing declined, and the unemployment situation failed to improve.
We should have learned our lesson 70 years ago that you cannot spend and regulate your way out of a recession. It is only through reduced government that we will return to economic prosperity.
Sure, pal.
This post has gotten 13 hits already today, so I feel compelled to tell readers not to take it seriously.
Lemme guess – hooverville.craigslist?
Nope, but we’re getting a lot from someone’s Facebook feed, and I don’t think it’s mine!
Not arguing that Hoover was a terrible bust that got things economically rolling the wrong way through terrible leadership, just holding FDR accountable for prolonging the depression through implementation of his version of socialism.
Hoover was just Roosevelt lite. The Progressives found their apotheosis in FDR. Hoover was minor league.
“It is only through reduced government that we will return to economic prosperity.”
Right. Deregulation and looking at every policy through the lens of how it benefits business 1992-2008-style brought us to the land of milk and honey.
Seems to me if the Republican mantra of smaller government was really what they wanted, we would have a pretty small government by now: eight years of Reagan, 4 years of Bush, 8 years of Bush II. 8 years of Clinton and 2 of Obama really can’t counter 20 years of Republicans shrinking government. So what do they really want?
I do agree that the spending, i.e., bailing out CitiCorp and AIG et.al, didn’t help a bit. They’re all just sitting on mountains of cash now. But that was Bush’s idea. Obama’s biggest problem is his lack of courage. He talks a good game, but has no courage to stand up and implement. It’s sad what the democratic party has actually become.
The right-wing power-brokers know that most Americans don’t know jack about anything other than Hollywood gossip and sports and that the people who remember what FDR did for this country are dead or nearly so.
Enter the re-write of history, their narrative “FDR was a terrible president and RWR was a great one”, it’s all pure bullshit.
Remember about 10 years ago they wanted to replace FDR with RWR on the dime, and even Nancy Reagan didn’t go along with it because FDR was a hero to RWR, his family was saved by Roosevelt’s jobs program.
From Salon;
” “I do not support this proposal, and I’m certain Ronnie would not,” was her(Nancy Reagan) no-nonsense reply.
Of course her husband would agree. His father had a job in Roosevelt’s New Deal, the program that saved his family and millions of others from starvation during the Great Depression. That’s why Ronald Reagan voted for Roosevelt and became an active Democrat. Even after his conservative transformation, Reagan often insisted that he never left the party of Roosevelt, but rather that the Democratic Party changed over the years and left him.”
Why do right-wingers embrace fantasy over reality? This childish refusal to see things as they are or were is dangerous. This BS made the Iraq war possible, makes regulating our banks impossible and makes a Sarah Palin presidency, plausible.
Anonster, I am lost, what did the post have to do about Reagan. I will admit that while I admire most things about Reagan, he shared FDR’s zeal for big government at times. Stick to the point instead of deflecting when you are losing.
GW,
I think what Anonster is pointing out, at least in part, is how ideologically rigid the Republican party, and therefore most conservatives, has become. Yes, Reagan was for “smaller government”. But like Roosevelt (get the connection now?), he believed that there were times that the government needed to raise taxes, or provide economic stimulus. These were leaders who, despite their obvious differences, didn’t dig their heels in on every issue and lose a sense of balance and perspective. Reagan didn’t believe that you never, ever, ever, never raise taxes.
And yet Reagan is constantly being held up by the Palins and the Romneys and the Gingrichs of the Republican party as the Godfather of small government. If only these people knew how far they actually are from Reagan.
Disingenuous, Geoff. Anyone can see that this vilification of FDR and the deification of RWR are projects that go hand in hand with you lot. Just look at the last five posts on this blog.
Vern.
It’s not every day that we celebrate the 100th birthday of someone famous in our country. While Ronald Reagan has passed away are you saying that Art Laffer’s review of his service under RR and the monetary contribution of the top 1% of American taxpayers represents a form of deification ?
Maybe if corporations and the uber wealthy, who have most of the nation’s money anyway, were taxed appropriately then we’d have a much sunnier outlook. Just a thought as we circle the drain.
Funny but completely incorrect statement Rapscalion. Don’t know how you define things, but high income folks pay a far greater percentage of their income as taxes including the loveable alternative minimum tax that eliminates deductions and even eliminates your ability to take your kids and other dependents as deduction. Thought that if we were going to argue about “appropriate” taxes we should at least try and be truthful about what we argue.
I continually hear the old saw that “high income folks pay a greater percentage of their income ” etc. etc. when that’s just not true. First, their rates are lower than ever. Second, they have the advantages of all sorts of tax shelters written into the code for just the purpose of aiding the wealthy. Third, there are many off shore places to hide vast amounts of wealth.
And on and on.
Please note, again, that with the greatly widening income inequality int his country, fewer people than ever have most of the money. If the money to keep the country functioning with normal a infrastructure doesn’t come from those with most of the assets, then what’s the alternative? And why do you folks continually come to the defense of the poor downtrodden super wealthy? It’s not like you’re part of their circle, or ever will be.
The problem Rapscalion is that you never define what you mean by “super wealthy.” A lot of “normal” Americans are eaten alive by the Alternative Minimum Tax and cannot take advantage of the “tax shelters” (which are largely gone) or “off shore places to hide vast amounts of wealth (which is generally illegal). I think paying more than 50% of your income in taxes is a government abuse that should be stopped.
Ok Rap, just tell us how much you want people to pay? Over $50k, do you want 80% of what is left over, 60%, what? Right now the top 5% of wage earner pay over 50%+ percent of income taxes. Over HALF of all Americans pay NO income taxes. You intellectual ZEROS just say you want more, but never quite seem to know how much. As Sam Kinneson said, “Just tell us”.
Funny thing is those elites who already HAVE wealth would scream like pigs if we taxed Wealth and not Income. So all I want to know is how much is enough for you?
How about we go to Hollywood and San Fran and just take ALL the wealth of people who have net worth over say $5M and give it to the Feds. Surely, they don’t need all that extra money (and stop calling me Shirley).
Well said Spock.
“Well said Spock.”
Way to set the bar high, Geoff, I guess it doesn’t matter that his comments are just a lot of nonsensical red herrings and gibberish, it’s all good as long as he agrees with you.
“high income folks pay a far greater percentage of their income as taxes”
Not true, the top 1% pay less as percentage of their income than the the folks in the next two tax brackets below them. Geoff also fails to mention that EVERYONE pays taxes, payroll taxes take a bigger percentage of lower income workers paychecks (thanks to ronnie raygun) than upper income taxpayers.
He also fails to mention how the top 1% get a large percentage of their incomes from capital gains, sitting on their collective asses, being taxed at 15% where people who are actually working are getting taxed at 30% (+ or-).
Remember the top 20% own 85% of the wealth in this country, that leaves 15% to be split up by the bottom 80% of Americans and really the bottom 60% have NOTHING.
The following website has a lot of great information but at the very end is an eye-popping graph showing the income disparity between all of us and the top 400 taxpayers.
http://rationalrevolution.net/articles/american_income_taxation.htm
And here it is…
Not sure what your graph is supposed to be except show that its big and green. Here is the analysis of the US Dept of Treasury on the tax burden falling on high income earners:
“Feeling overtaxed? Under the U.S. income tax system, most of the taxes collected are supposed to be paid by the people who make the most money. Thanks to President Bush’s tax cuts, that is exactly the way the system works, says the U.S. Treasury Department.
According to the Office of Tax Analysis, the U.S. individual income tax is “highly progressive,” with a small group of higher-income taxpayers paying most of the individual income taxes each year.
In 2002 the latest year of available data, the top 5 percent of taxpayers paid more than one-half (53.8 percent) of all individual income taxes, but reported roughly one-third (30.6 percent) of income.
The top 1 percent of taxpayers paid 33.7 percent of all individual income taxes in 2002. This group of taxpayers has paid more than 30 percent of individual income taxes since 1995. Moreover, since 1990 this group’s tax share has grown faster than their income share.
Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all years since 1990, taxpayers in this group have paid over 94 percent of all individual income taxes. In 2000, 2001, and 2002, this group paid over 96 percent of the total.
Treasury Department analysts credit President Bush’s tax cuts with shifting a larger share of the individual income taxes paid to higher income taxpayers. In 2005, says the Treasury, when most of the tax cut provisions are fully in effect (e.g., lower tax rates, the $1,000 child credit, marriage penalty relief), the projected tax share for lower-income taxpayers will fall, while the tax share for higher-income taxpayers will rise.
The share of taxes paid by the bottom 50 percent of taxpayers will fall from 4.1 percent to 3.6 percent.
The share of taxes paid by the top 1 percent of taxpayers will rise from 32.3 percent to 33.7 percent.
The average tax rate for the bottom 50 percent of taxpayers falls by 27 percent as compared to a 13 percent decline for taxpayers in the top 1 percent.
The White House has announced it will lobby Congress to pass legislation making most of President Bush’s tax cutting measures permanent.”
Source: U.S. Treasury, Office of Tax Analysis
If deficit spending “lengthened the depression,” then why did massive deficit spending during WW2 clearly end the depression?
You are a tool of the rich, what Stalin called a “useful idiot.”
Tonight I call the roll, said FDR in a famous speech in 1936,–the roll of honor of those who stood with us in 1932 and still stand with us today.
Written on it are the names of millions who never had a chance –men at starvation wages, women in sweatshops, children at looms.
Written on it are the names of those who despaired, young men and young women for whom opportunity had become a will-o’-the-wisp.
Written on it are the names of farmers whose acres yielded only bitterness, business men whose books were portents of disaster, home owners who were faced with eviction, frugal citizens whose savings were insecure.
. . . .
We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me–and I welcome their hatred.