We have heard for the past 6 months that the country is facing Great Depression level challenges. Democrats say it’s the Governments job to help Americans find jobs. Obama repeated that last night on 60 minutes.
Republicans say Government spending actually hinders Americans from finding jobs. Let’s look back to the Great Depression to see how we handled it, and what we should have learned from it.
The great Depression in most people’s mind started Oct 29, 1929 with the stock market crash. The 28th was actually a bigger crash losing 13 percent of the markets value in a day, the 29th followed with another 12 percent drop. However the market rallied several times over the next year and while prices dropped, wages and unemployment stayed the same. Most economists agree that if the Federal Reserve had opened up some cash flow somewhere in that 12-18 month time frame, confidence would have returned to the markets, and normalcy to the economy. However regulations passed earlier prohibited the Federal Reserve from doing this, so the Fed sat back and people began to horde their money. And we slid in to a decade of hell.
Herbert Hoover (A Republican who acted like a Democrat) started things like The Mexican Repatriation, where people were "voluntarily repatriated" to Mexico. 2 million people of Mexican decent including 1.2 million who were born in the U.S. were moved to Mexico. The jist was taxpayers would pay to move you to Mexico in order to open up more jobs here. Then came the tremendously anti-business Smoot-Hawley Tariff Act of 1930 to raise tariffs on imports. Unfortunately 2 can play that game so the rest of the world jacked their tariffs as well. That effectively killed our export business and raised significantly the prices of things we needed to import. Hoover fell under the spell that the Government could provide jobs by getting rid of people, and make more money for the country by raising tariffs. Both of those ideas proved to be huge failures, and with that he was replaced by the man who promised America change!
Roosevelt won 57% of the popular vote in 1932. At his inauguration FDR announced; "Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth… I pledge you, I pledge myself to a new deal for the American people…The general idea behind FDR's New Deal was too many Americans were unemployed. We need to get them back to work, so they will have money, to shop with, which will spur more jobs etc. On March 9th 1933, 5 days after taking office, FDR called a special session of Congress. He passed the Emergency Banking Relief Act From there he created the Works Progress Administration, (tax payers spent over 11 billion on this program which became known as the We Putter Along due to the laziness of it's workers), not to be confused with the PWA Public Works Administration (which spent 6 billion tax payers dollars. They were just as inefficent and in their attempt to build low income housing were only able to build 25,000 units in 4 years. Private construction companies had promised to deliver 30,000 units per year at the same cost). Everyone's favorite example of quality government investment is FDR's Agricultural Adjustment Act (taxpayers paying farmers to not farm). Then he created welfare (taxpayers paying for other Americans who aren't working). Shockingly we had to wait 60 years for Bill Clinton to reform this disaster in 1996.
Republicans say Government spending actually hinders Americans from finding jobs. Let’s look back to the Great Depression to see how we handled it, and what we should have learned from it.
The great Depression in most people’s mind started Oct 29, 1929 with the stock market crash. The 28th was actually a bigger crash losing 13 percent of the markets value in a day, the 29th followed with another 12 percent drop. However the market rallied several times over the next year and while prices dropped, wages and unemployment stayed the same. Most economists agree that if the Federal Reserve had opened up some cash flow somewhere in that 12-18 month time frame, confidence would have returned to the markets, and normalcy to the economy. However regulations passed earlier prohibited the Federal Reserve from doing this, so the Fed sat back and people began to horde their money. And we slid in to a decade of hell.
Herbert Hoover (A Republican who acted like a Democrat) started things like The Mexican Repatriation, where people were "voluntarily repatriated" to Mexico. 2 million people of Mexican decent including 1.2 million who were born in the U.S. were moved to Mexico. The jist was taxpayers would pay to move you to Mexico in order to open up more jobs here. Then came the tremendously anti-business Smoot-Hawley Tariff Act of 1930 to raise tariffs on imports. Unfortunately 2 can play that game so the rest of the world jacked their tariffs as well. That effectively killed our export business and raised significantly the prices of things we needed to import. Hoover fell under the spell that the Government could provide jobs by getting rid of people, and make more money for the country by raising tariffs. Both of those ideas proved to be huge failures, and with that he was replaced by the man who promised America change!
Roosevelt won 57% of the popular vote in 1932. At his inauguration FDR announced; "Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth… I pledge you, I pledge myself to a new deal for the American people…The general idea behind FDR's New Deal was too many Americans were unemployed. We need to get them back to work, so they will have money, to shop with, which will spur more jobs etc. On March 9th 1933, 5 days after taking office, FDR called a special session of Congress. He passed the Emergency Banking Relief Act From there he created the Works Progress Administration, (tax payers spent over 11 billion on this program which became known as the We Putter Along due to the laziness of it's workers), not to be confused with the PWA Public Works Administration (which spent 6 billion tax payers dollars. They were just as inefficent and in their attempt to build low income housing were only able to build 25,000 units in 4 years. Private construction companies had promised to deliver 30,000 units per year at the same cost). Everyone's favorite example of quality government investment is FDR's Agricultural Adjustment Act (taxpayers paying farmers to not farm). Then he created welfare (taxpayers paying for other Americans who aren't working). Shockingly we had to wait 60 years for Bill Clinton to reform this disaster in 1996.
They were shocked that with all of these billions being "pumped in to the economy" from 1933 till 1936 minimal recovery was shown. In fact from 1930-1932 unemployment went from 8.7% (2 percent higher than today) to 23.6%! Then in 1937 the economy collapsed again. Unemployment stayed in the teens. We remained in a Depression for another 4 years till the start of WW11 in 1942.
In 1995 Doctor Robert Whaples of Princeton took a survey of economists who split 51/49 in regards to if the New Deal was good for America. I would argue you don't need a Ph.D in Economics to look at the results. If economic stability didn’t return till 9 years after you implemented your programs, and a World War had to break out, they failed. Not only did they fail, I’ll go further and say we returned to stability in spite of the programs.
In 1995 Doctor Robert Whaples of Princeton took a survey of economists who split 51/49 in regards to if the New Deal was good for America. I would argue you don't need a Ph.D in Economics to look at the results. If economic stability didn’t return till 9 years after you implemented your programs, and a World War had to break out, they failed. Not only did they fail, I’ll go further and say we returned to stability in spite of the programs.
As Roosevelt began running for a 2nd term he promised more relief for low and middle class taxpayers by raising the taxes of the wealthiest Americans (people making over 75,000 a year at the time), and tax cuts for the rest of us. "Taxation according to ability to pay” became his battle cry. And with that he passed the 1935 Wealth Tax Act and won himself the Presidency in 36. Not surprisingly to Conservatives unemployment jumped 5%, and manufacturing dropped 40% in 1937.
Where are we today. Barack Obama has won 52% of the popular vote. The 48% of Americans who didn't vote for Obama wanted change, the same as the 43% who didn’t vote for FDR wanted change in 1932. However those Americans want a change that will work. Taxing business and the wealthiest Americans at a far higher rate has always failed. It failed with the New Deal in the 30's, It failed the decade of the 70’s! We had double digit inflation and unemployment and the Democrats kept begging for "more help" for the low and middle class. Reagan took office and cut taxes for everyone, most especially for the rich and it spurred jobs for all of us. Tax cuts worked for the 60's and the 80's. The 90's didn't have any major tax changes and thanks to the dot com boom we had a great decade. This decade has been tough with a war on 2 fronts raging for 7 years. The economy has to correct itself due to the housing, banking and auto challanges. This could take a couple of years. Or it could take a decade or more.
Where are we today. Barack Obama has won 52% of the popular vote. The 48% of Americans who didn't vote for Obama wanted change, the same as the 43% who didn’t vote for FDR wanted change in 1932. However those Americans want a change that will work. Taxing business and the wealthiest Americans at a far higher rate has always failed. It failed with the New Deal in the 30's, It failed the decade of the 70’s! We had double digit inflation and unemployment and the Democrats kept begging for "more help" for the low and middle class. Reagan took office and cut taxes for everyone, most especially for the rich and it spurred jobs for all of us. Tax cuts worked for the 60's and the 80's. The 90's didn't have any major tax changes and thanks to the dot com boom we had a great decade. This decade has been tough with a war on 2 fronts raging for 7 years. The economy has to correct itself due to the housing, banking and auto challanges. This could take a couple of years. Or it could take a decade or more.
We can argue fairness. Although it's hard to convince rational people that someone paying 35% of their income in taxes has an unfair advantage in tax breaks over the person paying 15%. Liberals love to start class warfare battles with their cries of trickle down economics. This despite one their great hero's JFK attempting to educate them on how national economy's work with his Rising Tide Lifts All Boats response after he was criticized for cutting taxes for the rich. History has shown that the richest Americans drive the economy. They employ the most people, and they spend the most money. Whenever the government tries to stick it to rich people, they hide their money, and spend it in other countries. The winning plan has always been do what you can to entice all people, and business's to spend money. Help new business’s launch ventures. There's way too much bureaucracy in any national government to actually create jobs, without going out and just hiring people directly. But as government grows, the economy slows. (I believe I'm the first person to have uttered that rhyme!)
One final look back to our history book. By 1939 Americans had finally learned their lesson and some Roosevelt appointees as well. When the Gallup poll in 1939 asked, 'Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?' the American people responded 'yes' by a margin of more than two-to-one. The business community felt even more strongly so, with 90% responding that The New Deal policies were hurting business. Treasury Secretary, Henry Morgenthau, confided to his diary May 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."
The lessons are obvious. Let’s pray that our Republican House members will encourage their Democrat colleagues to study history and then act accordingly.
One final look back to our history book. By 1939 Americans had finally learned their lesson and some Roosevelt appointees as well. When the Gallup poll in 1939 asked, 'Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?' the American people responded 'yes' by a margin of more than two-to-one. The business community felt even more strongly so, with 90% responding that The New Deal policies were hurting business. Treasury Secretary, Henry Morgenthau, confided to his diary May 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."
The lessons are obvious. Let’s pray that our Republican House members will encourage their Democrat colleagues to study history and then act accordingly.
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