Democrats & Liberals Archives

Obama's New Deal

Everybody compares Obama to FDR. Democrats say that like FDR, Obama inherited from his Republican predecessor an economic meltdown, and like FDR, Obama is solving the situation through Keynesian means, that is, by making the government the spender of last resort. Republicans say FDR’s New Deal did not work and Obama’s New Deal will not work either.

Republicans are rewriting history. FDR, who won 4 terms, has been in wild acclaim for decades. And now Republicans insist FDR was a failure. George Will says:

Before we go into a New Deal can we just acknowledge that the first New Deal did not work?

Similar statements were made by Newt Gingrich, Rudolph Jiuliani, Mark Sanford, Jon Kyl, Mike Pence and other Republican luminaries. These Republicans get their ideas that the New Deal was ineffective in solving the Great Depression from a book by Amity Shlaes called The Forgotten Man: A New History of the Great Depression. As the title suggests, it is a rewrite of history. It presents an extremely biased view. One example: according to Jonathan Chait in the New Republic, Shlaes played around with unemployment figures:

Meanwhile, as the historian Eric Rauchway has pointed out, her unemployment figures exclude those employed by the Works Progress Administration and other workrelief agencies. Shlaes has explained in an op-ed piece that she did this because "to count a short-term, make-work project as a real job was to mask the anxiety of one who really didn't have regular work with long-term prospects." So, if you worked twelve hours per day in a coal mine hoping not to contract black lung or suffer an injury that would render you useless, you were employed. But if you constructed the Lincoln Tunnel, you had an anxiety-inducing make-work job.

When I read this it hit a nerve. My family lived through the Great Depression in a dilapidated tenement house with no heat. We just barely had enough to eat. My father could not find work. We were wondering how we would get along. Then Roosevelt established the Public Works Administration (PWA) and my father got a job. It wasn't a wonderful job and he did not like it very much - he was part of an army shoveling snow. But it kept our family of 7 - 2 parents, 4 kids and a grandma - a step away from starvation.

Some time later I pounded the pavements daily in search of a job. I found nothing because there was nothing available. So I applied to the National Youth Administration (NYA), another part of FDR's stimulus program, and I landed a job researching ship manifests in Ellis Island to determine whether people arrived in the U.S. illegally. Surprisingly, I enjoyed this job. It built my confidence to the point where I decided I could go to college (CCNY) at night and work in the daytime.

Don't tell me and the many other poor people who were helped by FDR's programs that FDR's stimulus program did not work. It lifted many out of poverty and got the economy going again. The number of unemployed decreased. True, the unemployment figures did not decrease fast enough because, in 1936, FDR weakened and introduced tax cuts, which halted the economic improvement.

Republicans insist that we did not completely get out of the Great Depression until after we entered World War II. Why did the economy improve so much then? Because of war spending.

Spending, not tax cuts, are the way to extricate ourselves from the economic misery we are in. FDR proved it and Obama is correct in following his example.

Roosevelt's New Deal changed not only our economy, but the nation. President Barack Obama is going abroad and asking other nations to spend as well. Obama is delivering an International New Deal that will resound to America's benefit for decades to come.

Posted by Paul Siegel at March 13, 2009 7:44 PM
Comments
Comment #277614

Paul:

This kind if thinking is what caused the depression:

President Hoover radically changed course from the low-tax policies of the 1920s with the Revenue Act of 1932. That law sharply increased individual tax rates at all income levels, with the top rate rising from 25 percent to 63 percent. Following Hoover, President Roosevelt signed into law a series of large tax increases for taxpayers at all income levels. At the bottom end, personal exemptions were reduced, and an earned income credit was eliminated. At the top end, the highest marginal rate was increased to 79 percent in 1936. Between 1930 and 1940, the corporate income tax rate was doubled from 12 percent to 24 percent, and an “excess profits” tax was added on top. In addition, Roosevelt imposed an excise tax on dividends, a capital stock tax, and liquor taxes, and he increased estate taxes. Finally, the Social Security payroll tax was imposed with a 2 percent rate beginning in 1937. The scale and scope of the 1930s tax increases were extraordinary. Hoover and Roosevelt argued that large tax increases were necessary to balance the federal budget. Hoover proclaimed repeatedly, that “nothing is more necessary at this time than balancing the budget.” Although Hoover believed in restraining spending, he also believed in large “temporary” tax hikes. Roosevelt argued that “we should plan to have a definitely balanced Budget…and seek a continuing reduction of the national debt,” and blamed Hoover for not increasing taxes enough. Whereas the federal budget was balanced throughout the low-tax 1920s, the huge tax increases of the 1930s coincided with large deficits. /blockquote>
Posted by: Craig Holmes at March 13, 2009 10:32 PM
Comment #277623

Paul first of all. When anyone says the First New Deal didn’t work, one must respond by asking: by what measuring stick did it fail?

In terms of eliminating the Depression, FDR’s spending and borrowing stimulus was too little over too long a period ( 1934 through WWII beginning ). We know this is true, because the massive government borrowing and spending to put the nation into a war capable state DID, IN FACT, end the Great Depression. So, by this measuring stick, FDR’s programs were a failure, but not as conservatives wrongly stipulate, as borrow and spend didn’t work, but, instead because the borrowing and spending was not massive enough and in a very short period of a couple years, which the WWII economy demonstrated.

Second, it is wrong to measure FDR’s 1930’s efforts ONLY by the whether they ended the Depression or not, since, there is the human factor to considered. FDR’s programs meant salvation from starvation and homelessness for 10’s of millions of Americans throughout the the 1930’s via government sponsored work projects, soup kitchen outlays, and other poverty rescuing programs. In human dignity terms, as his popularity attests, his programs in the 1930’s can be measured as fairly successful.

But, this is a very different time, with a very much more complex economy interwoven into a global economy, and with demographics vastly different from the 1930’s. All of which make the prospect of failure today, vastly more costly in human terms than was ever potentially the case in the 1930’s even with the Dust Bowl thrown in for bad measure.

If our economy is permitted to grind to a near halt by frozen and defaulting financial institutions and dominoing failures in consumerism and employment, the number of human lives affected will be in the billions, not millions. Our exports and imports will also diminish greatly, and financial institution failures here will create financial institution failures in a host of other nations, exacerbating the global recession toward global depression, and the subsequent political instabilities that would sure follow.

I can understand why many of the Republicans in our Congress and the GOP leadership want to retain their core base of corporate American freedom to screw the nation and economy in the fashion they have these last 10 years or so, but, why middle class working Americans would support Republicans prescriptions for national economic failure is frankly, beyond my comprehension save for the possibility that they are just unaware and uneducated regarding the path Republican ideology and governance has led us to.

Posted by: David R. Remer at March 14, 2009 12:31 AM
Comment #277624

Craig, 1932? That’s like trying to rescue the Titanic after it has already sunk. Stock Market crash was 1929, and the variables underwriting the Depression and Dust Bowl already in place.

Craig, you seem to be leaving out the rise in national debt during the FDR terms. He balanced the budget only briefly during his presidency. He was not the deficit hawk that Hoover was. Of course, he oversaw many more years of financial crisis than Hoover.

Posted by: David R. Remer at March 14, 2009 12:42 AM
Comment #277629

The New Deal may have been a failure to some, but my father managed to feed his family for a time by working for the CCC program…the New Deal worked for US…

Posted by: Marysdude at March 14, 2009 8:50 AM
Comment #277630

Much Of the infrastructure we enjoy today are a result of FDR, He put Millions back to work and kept them from starving and away from Civil Strife. He should always be right near the Top

Posted by: Rodney Brown at March 14, 2009 10:33 AM
Comment #277631

David, Craig, and Paul,
Thanks for given me the motivation that I needed to past the Fools at the Gate. For having posted a lengthy rebutal (about 3 pages worth) on my website IndependentPundit.com about why all three of you are technically right and still wrong I hope that you all take a moment to read it.

For why solving the problems of the Great Depression of the 20th Century was easy compared to today seeing that most Americans did not have electricity or other modern things like cars. Paul is right to point out that President Obama is working not only on a National New Deal, but one that includes the Global Economy (i.e. The World). However, all three of you forget that given Limited Funds the Establishments are doing the best that they can to Protect and Serve the Taxpayer.

So have any ideas on how to help the American Consumer and Small Business Owner as the same time.

Posted by: Henry Schlatman at March 14, 2009 11:18 AM
Comment #277637

Paul, this kind of FDR bashing has been going on for a long time. Remember Archie Bunker thought the same about FDR and the new deal.

David’s right, it depends on what kind of measuring stick you use. There are some fat cats living in luxury suites in the Bahamas who think the sub-prime fiasco was the best thing that ever happened.

Just follow the money. How many super rich people came out of the new deal? Was it successful? When WWII came along, there was a chance for corporations to make lots of money.

Craig, most of those taxes were still in effect in the late 40’s and the 50’s when we had some of the best economic time in our history. Remember the top tax rate under Eisenhower was 91%. That was back when employers were in such a need of labor, they were offering health benefits for the rest of your life if you come work for them.

Posted by: Mike the Cynic at March 14, 2009 12:01 PM
Comment #277639

David:

My point is that with that type of thinking it is no wonder the depression lasted until WWII. In 1932 the economy was in free fall as was the stock market. 1932 was the worst year in history for the stock market, followed by 1937 and 2008. Look at what was happening at the time!! Look at where the debate was on taxes!! Raising income tax rates to 63% and later far higher was a cause for the continued Depression. No I am not blaming Roosevelt for the depression. I do however think he kept the depression going with his tax policy.

One cannot imagine how many millions of jobs were cut to pay for those tax increases.

Obama’s plan is far more modest in two regards. Number one he is not raising taxes today but rather later. Second his plan is for far lower taxes than Roosevelts. I do however believe added taxes will slow our economy. No I don’t think it will cause a return to the great depression, but it will slow the economy and reduce the number of jobs the private sector will create going forward.

I am actually more hopeful regarding Obama that I have been of recent. He can only accomplish what he can finance, and he has recently been told no by two important groups. First of all our Bank the Chinese are expressing concern in public about our spending. Second Condrad came out and said they did not have the votes to pass Obama’s budget.

I think Obama is about to moderate which will be a very good thing. It might be the tipping point that turns the markets!!

Obama is a very smart man, and can pivot. The question that I have is how the left will view him when he says that many of the items he ran on will need to be delayed or watered down because of lack of budget or broader support.

Posted by: Craig Holmes at March 14, 2009 12:22 PM
Comment #277642

Debate about what is best for the country right now is the right thing for us to be doing. I participate on this site and others attempting to do my part.

One of the problems we are having is separating out ideology - a difficult thing at any point in time. We have been conditioned by the media, political campaigners, some educators,and others to view things along these lines. And also encouraged to listen to our emotions first, which, of course, is our basic nature anyway. The basic model of these folks is that “ideas rule”.

But stop for a minute and leave the name Obama, Will and others out of it. Resynch to what is being proposed at the macro and micro levels. Macro refers in this case to progress in the overall economy, e.g. is bank lending occuring.

By micro I am referring to whether we can afford to eat and cloth ourselves and live inside shelter in safety - Maslow level.

Now ask yourself, from what that is being proposed as solutions, which, if any, do I (my own personal opinion) feel will directly result in the most immediate and postive economic effect while doing the least harm to the future of our economy.

Do not focus on the micro at the expense of the macro. Try to separate out disinformation and people pushing our emotive buttons (not easy)and try hardest to think not as others may have conditioned you.

It is an interesting exercise.

Please do not take this as my being patronizing. That is not at all the intention. I, too, have some strongly held opinions. But being for or against Obama, Bush or anyone else is something I manage to filter out. That allows, me at least, to see things differently. It may not work for you.

Posted by: Indiana Oracle at March 14, 2009 12:49 PM
Comment #277643

It is more important for us to reward those corporations that create jobs for Americans, and raise more taxes on those who outsource or relocate parts of the company to foreign soil.

Taxes are not the cause of these activities, profit is. Wal-Mart proved how much more important profit is than taxation in business decision making. I don’t believe you can point out a single corporation that moved major operations out of country because of our taxes, nor can you point to one that outsourced call centers to India because of taxation here.

Someone is blowing smoke…and, it ain’t me…

Posted by: Marysdude at March 14, 2009 12:50 PM
Comment #277646

Marysdude, that adds one to the list.

Posted by: Indiana Oracle at March 14, 2009 1:16 PM
Comment #277662

It just occurred to me that I have never thanked all those involved in running Watchblog and all the many contributors. What a wonderful vehicle for those who wish to post their thinking about issues without fear of ridicule or reprisal.

A hearty thank you for all you have done for us.

Posted by: Jim M at March 14, 2009 2:56 PM
Comment #277667
Now ask yourself, from what that is being proposed as solutions, which, if any, do I (my own personal opinion) feel will directly result in the most immediate and postive economic effect while doing the least harm to the future of our economy.

I’m not sure I agree with this statement. What I would be concerned with is what decisions provide for the best long term future of our country. It’s obvious that the immediate choice is to borrow and spend lots of money. That however is not what is best for our long term future as per the CBO report.

Here would be my list:

1. Spend whatever we must with borrowed money to prevent the collapse of our financial system. However, make sure that all these expenses are short term.

2. Review and well understand what caused the current crisis and re regulate over time. It is so important not to have unintended negative consequences. (throwing the baby out with the bath).

3. Reduce the long term costs of health care by reducing health care inflation.

4. Instead of giving tax credits to the working poor, give them tuition credits at community colleges. As hard as it appears on the surface the only true way to help the working poor long term is through improving their job skills. This also helps the affluent in that they have more productive workers for a work force.

5. Review the formula for Social Security. It is well documented that the affluent live longer than the working poor. This means in the end that for ever dollar taxed the working poor get less benefit. (because their benefits are not paid as long). Keep their SS the same but water down the formula so that no matter what income level you are, your income category gets the same benefit dollar/tax dollar spent. This idea would be one step into solving our long term fiscal problems.

6. For those under 55 vote to delay SS by at least a year. We are healthier than the previous generation and will live longer. Some how we need to encourage Americans to work longer. Of course the market is already doing this for us, possibly realizing that our current course is to financial ruin.

So I reject your question because what is the answer for the short term can have serious long term negative consequences. Drastically increasing the size of government permanently is not in our countries long term interest.

Posted by: Craig Holmes at March 14, 2009 3:18 PM
Comment #277671

ok.
What about these?
> All public companies cease lay-offs until (pick your time or economic performance threshold}
> A person who has been layed off and because of that cannot continue to pay his mortgage would have that picked up by the government until (pick your threshold)
> Public company outsourcing when that is at the expense of a US job is prohibited until (pick your threshold)

There are many such ideas.

William Galston of Brookings sees Obama’s approach as being misdirected, outlines his logic in a recent post and illustrates how different FDR’s approach actually was from this plan. Stuart Taylor puts it succinctly, “when your house is on fire, you don’t water the lawn”.

No trying to throw gas on a fire, but under the circumstances, the issue is whether or not practical, right-now economy boosting measures are being proposed and then whether this is the time to be doing anything but that.

Posted by: Indiana Oracle at March 14, 2009 4:00 PM
Comment #277673

And on the financial side:
> Greatly modify or eliminate mark-to-market asset accounting
> Re-institute the short-selling up-tick rule (believe this is already under consideration)
> Ban naked short option sales

Again, there are more.

Posted by: Indiana Oracle at March 14, 2009 4:14 PM
Comment #277685

Craig Holmes-
Here’s the beginning of the depression: 1929. Near the beginning of Hoover’s first term. Where do the tax hikes fall? 1932. Between two and three years after the onset of the Great Depression. So what was he doing before then?

He cut taxes.

You’re forgetting something critical here. Tax cuts are only good if you have a surplus, and the government’s essentially accumulating money it’s not using. It’s a corrective.

When you cut taxes into a deficit, and you’re not in a deflationary stage, you’re increasing debt, and that leads inexorably to an increase either in inflation or interest rates. The first is bad in excess, of course, because it eats up economic growth by reducing the currency’s buying power. The second can be bad in excess because it removes money from circulation: money sits in banks more at high interest rates.

But in a deflationary period? Some tax cutting is a good idea, but it will never work by itself. Why, you might ask? It’s simple: income taxes revenues don’t really increase when the economy is not growing and you cut taxes. The arithmetic is plain: less money per person adds up to fewer dollars over all.

And if fewer people have incomes, and those people earn less? You’re pushing at a string, and you’ll have deficits rising anyways because you cut revenues. That’s what happened under Hoover. He tried raising taxes near the end of his administration, and where the tax cuts were ineffective, his tax increases just made things worse. They were not targeted, but instead hit the economy across the board.

The trick is, the government is an employer and a part of the economy, too, paying into it. So when the government cuts spending in a deflationary period, especially in situations where the big banks are out of whack, it only makes the situation worse.

The stimulus to get out of this kind of situation needs to be explosive in its speed and strong in its size. You can pay back things later on, when you’ve got growth to soak it up.

The Republicans are looking to refight the fights of the Great Depression here, and I cannot think of anything more ill-advised to do. They already lost the first round of that battle with deregulating Wall Street. Wall Street returned the favor by crashing in a clever and interesting way, showing you really couldn’t keep your eyes off them.

Now you folks want to argue the Great Depression all over? Will you be happy when we’ve replicated Hoover’s results?

The problem here is that the current Republican party stakes its very existence on the idea that the Democrats were wrong on virtually every policy front, and Republican policies needed to be vindicated whether people liked that or not, so the illusions could be dispelled.

Have you seen your track record so far? It’s not pretty. The Republicans can no longer afford to be Bizzaro World Democrats, Doing, thinking, and saying the opposite of the Democrats just for the sake of doing so. If you guys want to go back to principles, please do. But let those be practical principles, not the burning need to contradict and stymie the Democrats at every turn.

Posted by: Stephen Daugherty at March 14, 2009 7:15 PM
Comment #277686

Stephen:

Here’s the beginning of the depression: 1929. Near the beginning of Hoover’s first term. Where do the tax hikes fall? 1932. Between two and three years after the onset of the Great Depression. So what was he doing before then?

He was doing whatever he could to make sure we went into a depression.

Like I said Hoover brought on (or didn’t prevent) the depression, Roosevelt kept us there and Hitler got us out.

You’re forgetting something critical here. Tax cuts are only good if you have a surplus, and the government’s essentially accumulating money it’s not using. It’s a corrective.

When you cut taxes into a deficit, and you’re not in a deflationary stage, you’re increasing debt, and that leads inexorably to an increase either in inflation or interest rates. The first is bad in excess, of course, because it eats up economic growth by reducing the currency’s buying power. The second can be bad in excess because it removes money from circulation: money sits in banks more at high interest rates.

No that’s not accurate Stephen. Remember Reagan? He increased the deficit to 6% of gdp and inflation came down. That is because inflation is not about fiscal policy but rather monetary policy. The Fed is the one where the buck stops on inflation.

As far as economic grow and tax cuts there is another part in the equation spending. Long term it is far better for an economy to have lower government spending, low taxes and a higher deficit, that it is to have high taxes, high government spending and low deficit. I would offer the difference between Old Europe and the United States as an example.

Now you folks want to argue the Great Depression all over? Will you be happy when we’ve replicated Hoover’s results?

Do you want Roosevelts? Take a look at the economy in 1940 after eight years. 14.6%. So if you want 14.6% unemployment at the end of Obama’s 8 years, let us know.

That’s socialism!!!

Posted by: Craig Holmes at March 14, 2009 8:06 PM
Comment #277689

Stephen:

Here is the results of high government expenses:

http://www.indexmundi.com/g/g.aspx?v=74&c=ee&l=en

Notice the same thing happened under Roosevelt in that the Unemployment rate was still high after 8 years of Democratic rule.

Posted by: Craig Holmes at March 14, 2009 10:20 PM
Comment #277693

FDRs policies kept the US from decending into revolution. Thats the good part. The bad part is FDRs policies kept the US from decending into revolution. Todays oiligarchs should be praising FDR. Instead they are spreading lies and revisionist history. Oh,well. Its not too late. We can still hang them from lamp post.

Posted by: bills at March 14, 2009 10:38 PM
Comment #277695

Craig Holmes-
Look, if you want to deal in this revisionist history, be my guest, but I’m going to keep on pointing out the holes in the story.

How do you think WWII got us out of the Depression? Well, there were strict economic controls, not to mention what could be called the largest government jobs program in our nation’s history, infusing hundreds of billions of dollars into the economy, with little to spend it on.

Let me address your second post here before I move on. You try and liken the jobless rate in America in the 1930’s to the jobless rate in Europe today. Except, the jobless rate in Europe is a somewhat chronic thing, in some part due to the fact that some people simply don’t work.

What Americans in the 1930’s were dealing with was recovery from a situation in which unemployment not only went double digits, but raised that unemployment to a full quarter of the working population. The operative question is what FDR had to work with when he began. The irony is, what you’r not appreciating, is that circumstances essentially had to force FDR to give up on his hesitance to push the deficit spending stimulus hard and fast to the country in order to get us out of the depression.

Let me be clear on this: hardly anybody wants these kinds of stimulative expenditures to become a matter of course. That’s Japan’s problem at the moment. Being stingy at this point just guarantees a quagmire of continued, necessary aid, something like you see in their policy, and in FDR’s.

On the subject of inflation, what happens is, in order to avoid raising interest rates, the government pays off the debt by printing more money. That, though, increases the money supply, and as anybody knows, that makes the dollar worth less. Thus, inflation.

As far as economic grow and tax cuts there is another part in the equation spending. Long term it is far better for an economy to have lower government spending, low taxes and a higher deficit, that it is to have high taxes, high government spending and low deficit. I would offer the difference between Old Europe and the United States as an example.

Let me blunt: the Republicans never had the guts to push the American people on how much government spending they could cut. Or put another way, they knew that fiscal battle plan was too conservative, you could say, for the American people. So they never risked their politic hides by implementing such cuts.

What’s more conservative, giving the American people money from deficit spending, not telling them that some day their tax dollars will have to pay the loan back, so it’s a net loss, or keeping the tax levels where they are, and not introducing spending that’s not affordable?

Better question: which path did they take and are they still taking? You do realize that your party was going with a proposal that was essentially all tax cuts? Yeah, that’s real conservative.

Let me blunt: it’s still deficit spending, one way or another. You can’t get up on the high horse, swing your cowboy hat around your head and say “we’re fiscal conservatives, yeeha!” I mean, I know you guys said you recovered your conservatism when the two lost elections got you kicked out of power altogether, but that’s not what the votes on that particular bill added up to.

Both parties are willing to spend into a deficit in order to stimulate the economy. The difference is, the Democrats are looking to do something else than just throw money in the air, and just hope it lands in the right pockets. We’re funnelling the money to projects that have significant future economic value, to programs which will employ people, to states, who will distribute aid directly to people, and also keep state employees off the unemployment lines. It’s going to keep cops on the street, firefighters responding, and state and city workers on the job taking care of their citizens.

I think what most people want is moderate taxes, moderate government spending, and moderate deficits, if any at all.

Unfortunately, moderation was not an option with this catastrophe we’ve blundered into. You don’t use moderate ammunition with a charging. You shoot the ****er with fricking artillery rounds, or prepare to be flattened.

The trick with this economy will be dealing with the consequences of the excesses of your party’s economy. The sooner we break away from your bad habits, the better.

Posted by: Stephen Daugherty at March 14, 2009 11:19 PM
Comment #277699

Why it is easy to blame government spending and tax cuts for our problems both in the past and present I do believe that the Left and Right are missing the real issue facing them in this New Deal. For hasn’t everyone lose wealth? Sure you can complain to what degree of wealth each side has lose over the last 30 years; however, the fact that a dollar today does not buy what a dollar of yesteryear has been a matter of policy has it not?

Yet, now we are faced with deflation because of some junk that I still cannot explain or find any Learned Citizen who can explain how dividing a piece of gold actually does give you more money. Nevertheless, knowing that Americas’ Propeerty Value has falling by 50% and that most Americans have seen their Personal Wealth decrease to 50% in the last year. I wonder if My Peers can explain to me what has to be done by “We the People” over the next 5-10 years to regain back our Wealth as Individuaks, States, and a Nation?

For say what you want about President Obama and Congress or even the American Barons of Society unless or until you can present a Better Plan that can fix both the Long (10 years) and Short (Now) term with and without unwanted consequences do “We the People” not owe it to Our Elders and Powers-that-Be to work within the System to effect a Peaceful Rtevolution?

So Craig if I could show you a way to keep and reduce in time your taxes as well as show Stephen and Paul how spending the Taxpayers Money would actually add to the Value of Americas’ Wealth within the Establishments’ Plan would you all be interested?

Posted by: Henry Schlatman at March 15, 2009 5:07 AM
Comment #277707

Daugherty writes; “the jobless rate in Europe is a somewhat chronic thing, in some part due to the fact that some people simply don’t work.”

I wonder if Daugherty knows why his statement contains some truth…”some people simply don’t work.”

Posted by: Jim M at March 15, 2009 11:06 AM
Comment #277714

“Like I said Hoover brought on (or didn’t prevent) the depression, Roosevelt kept us there and Hitler got us out.”

Craig what kept us their was the prevalent thought of the time that was hard to overcome by a president.

“America was no stranger to economic depression when Herbert Hoover took office. The prevailing economic theory on depression had been to weather the storm. Hoover did not subscribe to this theory, but he was in the minority. His Treasury secretary, Andrew Mellon, believed that the 1929 stock market crash and subsequent Depression was the economy naturally cleansing itself of weaker elements.”

The 1920’s caused the great depression with tax cuts and economic policy that many today still believe in.

“Laissez-Faire economic policy allowed for rapid industrialization to take place without government regulation, and marketplace competition suffered as a result. Competition was hindered further by previous periods of economic contraction, such as the depression of 1893.”

“Unemployment was high and remained high because of a shift from agrarian to industrialization nation.”

“it was during this time that an exodus of agricultural workers to urban areas took place. Along with increased immigration, there was a surplus of labor for American industry. The new concentrated nature of industry required fewer workers and allowed wages to remain relatively low despite large increases in productivity. Despite the perceptions inspired by the years of Coolidge prosperity in the 1920’s, unemployment was a pervasive issue. The persistence of these trends contributed to growing disparity of income in America.”

“One must also remember that for the decade prior to the great depression we had Conservative presidents that supported the policies that ran the nation into the ground. When the businessman puts justices on the high court we all pay eventually.”

“Even the courts prevented most attempts of policy makers to engage in regulation that may have prevented collapse, or at least kept the problem from becoming so pervasive. The depth of the economic collapse could not have been envisioned, nor did the tools exist to fix it had policy makers recognized it. The entrenched nature of laissez-faire economic policy prevented any such action.”

http://americanhistory.suite101.com/article.cfm/hoover_and_the_depression

Lets face it guys from the days of Reagan we have been reusing laissez-faire economic policy that caused the great depression and others before it, why did we think it would work this time around?

Posted by: j2t2 at March 15, 2009 12:13 PM
Comment #277723

Oops’

“One must also remember that for the decade prior to the great depression we had Conservative presidents that supported the policies that ran the nation into the ground. When the businessman puts justices on the high court we all pay eventually.”

should be

One must also remember that for the decade prior to the great depression we had Conservative presidents that supported the policies that ran the nation into the ground. When the businessman puts justices on the high court we all pay eventually.

Sorry for the extra set of quotation marks.

Posted by: j2t2 at March 15, 2009 1:08 PM
Comment #277734

Jim M, many of those in government statistics which indicate they don’t work, do work. They work in the underground economy which does not report to the government. Like the Mexican Drug Cartel employees who now occupy 237 American city’s operations in drug trafficking. They surely are included in the government’s statistics as unemployed. But, I assure you, they are very lucratively employed.

Not just illegals, either. Landscaping companies owned and operated by Americans by birth on a cash only basis, are included as unemployed. But, they aren’t unemployed. Not at all. They are employed, extra-legally. Another, some try to argue unintended, consequence of Republican rule is the growth of the black market and underground economy which thrives during administrations refusing to look too closely over the shoulders of entrepreneurs, even to collect taxes illegally withheld.

It is not a big step for a person who dislikes taxes to acknowledge a government run by politicians opposed to increasing taxes and promoting the cutting of taxes, to encouraging citizens to engage in careers that avoid taxes altogether. If higher taxes is evil, current taxes are bad, lowering taxes is good policy, then avoiding taxes altogether is tantamount to patriotic public duty, in the minds of many Republican supporters, immigrants with family businesses, and illegal aliens as well.

After all, we see these commercials all the time of people who owed the IRS $100,000 or more, and called a private firm who negotiated a settlement for “pennies on the dollar”. The rise of these commercials and private organizations can be traced directly to the first years of GW Bush’s first term in office and the legislative changes brought on by a Republican Congress to relieve the IRS of collection functions and contract to the private sector that responsibility.

So far, no can yet estimate how many billions of dollars of federal revenues were lost to these policies during the Bush administration as the practice of evading taxes under these policies spread like wildfire amongst small business and owner/operator businesses and cash only family businesses. Was it 10’s of billions, or 100’s of billions. No way to get a handle on such wide spread participation in opportunity to avoid taxes, and settle for pennies on the dollar after the fact.

Posted by: David R. Remer at March 15, 2009 2:58 PM
Comment #277758

DRR,

And caused the government to have to borrow more (sell more bonds), in order to make up for the lost revenues. Conservative really doesn’t mean ‘conservative’ in real time.

Posted by: Marysdude at March 16, 2009 8:16 AM
Comment #277816

Stephen:

I appreciate your thoughts that Republicanism created all of this mess. That low taxes and low government spending are the cause of what ails us today, and the the cure is more government spending.

I do appreciate you agreeing that the Bush tax cuts did not cut revenue below historical norms, and that tax revenues were well within historical norms before the recession.

I would also like to make a further point that if left to expire without any action from congress or the president tax revenue was scheduled to grow to a rate higher than at any time in history.

This is entirely logical because of the two causes I mentioned earlier, cpi causes rate creep, and because higher income households have prospered more than lower income households thus making our corporate tax rate higher.

I do agree with the need for more regulation. I watched Bernanke last night on 60 minutes. He awas angry because of AIG. Basically the country is in a situation where we were “forced” to bail out the company because it was too big to fail.

One lesson I hope we learn is that we cannot afford companies that are too big to fail. Companies need to go bankrupt. My basic rule is that if my tax dollars are used for the cleanup, then that gives me (read government) the right/responsibility to regulate.

As for Obama’s budget and plans, I am optimistic. It gives me comfort that he doesn’t have the votes in Congress to pass his budget and that the Chinese are speaking in public about our debt issue. That is the checks and balances in action.

I also see that since Obama’s election long term interest rates are rising and inflation expectations are also rising. The bond market is a huge market that is closely watched.

With Obama hearing no for his huge spending plans I think we will be fine.

Watch him turn to the middle. He will be forced to the middle like Clinton.

I actually think he will be fine. It’s sort of like moving from the primary into the general. Only now it’s the G20, the bond and stock market and shareholders he must build confidence in.

This teleprompter thing is kind of funny.

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