View Full Version : Obama's New Deal
bailaviborita
11-28-2008, 12:53
Anyone catch his pick for Economic Council Chair- UC Berkley econ prof who is an "expert" on FDR's New Deal? http://online.wsj.com/article/SB122783239069463007.html?mod=googlenews_wsj (Christina Romer)? What scares me is that I think both she and he think that FDR got the country out of the Great Depression by spending his way out of it.
Am not enough of an historian or economist to understand the Great Depression, but thought these myths of the Depression were interesting:
http://online.wsj.com/article/SB122576077569495545.html?mod=googlenews_wsj
Excerpt:
- Enlightened government pulled the nation out of the worst downturn in its history and came to the rescue of capitalism through rigorous regulation and government oversight. To the contrary, the Hoover and Roosevelt administrations -- in disregarding market signals at every turn -- were jointly responsible for turning a panic into the worst depression of modern times. As late as 1938, after almost a decade of governmental "pump priming," almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth.
Very interesting point, Sir.
What really pulled us out of the depression was WWII.
On the one hand, I expect to see a period of war over the next decade or so. I hasten to add that I do not desire such an outcome. It will be over resources - although exactly who will be involved is an open question.
Wars give government extensive opportunities to control the population, the economy - in fact, every part of society. B0 appears to be avid in his pursuit of power.
I wonder just how far he will tread on FDR's path.
bailaviborita
11-28-2008, 16:36
Not sure I agree that WWII got us out of the depression. The way I understand it, most government programs (even war) take money away from the most productive parts of our society and allocate it to the least productive (in terms of building wealth)- unless you would use that war to further one's imperial holdings. As we are not in to milking places for their resources once we've defeated them- that isn't applicable to our situation. So- in essence, as I understand it, the Supreme Court eventually ruled many of FDR's programs were unconstitutional, people adjusted their lives to the reality of tight living and worked their asses off both at work and education. Time and hard work got us out, not government spending on war or spending on programs. Now, I would think you could make the case that after WWII we seemed to grow the worldwide free market system to many of our allies and enemies- that that helped too. But, I would argue that WWII was the enabler- and not the direct cause- that it was our post-war plan and policy that got us out.
You make some good points, Sir.
One view seems to be that WWII combined massive deficit spending, mass conscription, and a war economy. Whether through increased job opportunities (building war material) or conscription, the U.S. entered a period of full employment. In addition, acquisition of consumer goods was deferred due to the priority of war production, which increased savings.
And, too, weapons weren't as expensive - a WWII jeep, as I understand it, was much less expensive than a modern HUMVEE. One could employ more people per dollar of hardware than presently, and the skills needed were (perhaps) simpler.
In support of your position, I notice that down markets tend to last 1/4 to 1/3 as long as the associated up markets - which is time enough to instill new habits and correct old problems. If that's true, we may face at least 5 years of difficult times to correct the present excesses.
You're probably right. In which case, there will be a lot of distress...
IMO, WW2 did stimulate the US economy and allow us to overcome the Great Depression by-
placing a large part of the healthiest of the work force out of the production arena and into the military, thus allowing a resurgence of jobs and technical training for everyone else
massive investing in the means of production for the war effort which carried through into the post-war period
destroying the major means of production of most of the world's economic powers and allowing the US to readily dominate the post-WW2 market because it was virtually new and untouched by war
bringing the servicemen back and giving them the GI Bill and housing loans, setting up a situation which further kept many from immediately competing for spaces in the job market while allowing them to receive a college education and various levels of technical training to support the new economy and growth of our industrial base
FWIW, I don't see that happening now or in the near future. Different day, some similarities but different circumstances.
Richard's $.02 :munchin
ZonieDiver
12-03-2008, 07:21
IMO, WW2 did stimulate the US economy and allow us to overcome the Great Depression by-
placing a large part of the healthiest of the work force out of the production arena and into the military, thus allowing a resurgence of jobs and technical training for everyone else
massive investing in the means of production for the war effort which carried through into the post-war period
destroying the major means of production of most of the world's economic powers and allowing the US to readily dominate the post-WW2 market because it was virtually new and untouched by war
bringing the servicemen back and giving them the GI Bill and housing loans, setting up a situation which further kept many from immediately competing for spaces in the job market while allowing them to receive a college education and various levels of technical training to support the new economy and growth of our industrial base
FWIW, I don't see that happening now or in the near future. Different day, some similarities but different circumstances.
Richard's $.02 :munchin
I always get resistance when I mention this, but the situation stated above also helped sow the seeds of our eventual loss of manufacturing power. As we helped rebuild and re-tool Germany and Japan in the post WW2 era, we failed to do the same in the USA. (Here's the part that gets me flak.) Members of the so-called "Greatest Generation" (so-named by "Blinky" Brokaw) who had survived the Great Depression and won WW2 became busy "feathering their own nests." Labor and management of our major industries, especially the steel industry, failed to engage in capital deepening, Instead, they gave themselves great pensions, high wages and salaries, outstanding benefits, large bonuses and changes to the social security program that would boost their retirement incomes. By the 1960's this helped cause us to be less able to compete on the global economic playing field.
Watching the CEOs of the auto industry beg before Congress, while refusing to accept the fact that what is needed is the ability to restructure their bloated, out-dated industry that bankruptcy would provide, demonstrates how the attitude that began after WW2 has become ingrained in our old-time business psyche. They cling to the past and the things that got them into the trouble they are in at this time, instead of looking ahead to how they can make themselves competitive in the future.
About a nickel's worth...
I've been doing a lot of thinking about Bailaviborita's point - that WWII didn't bring us out of the depression. Elsewhere, I've read that stimulus and other efforts by government cannot end or shorten a bear market. The two positions seem to mesh well.
As a thought experiment, suppose we are in a depression. We decide we don't like it, so we wish to end it. If we suppose that wars end depressions, we could start a major war. The other side might even agree that it was a good idea, if war helps the economy. So, for example, our government could contact China, and we could have a war. Perhaps we would arrange for it to last 5 years, with an option to go another five. If wars improve the economy, then the concept above should have both the U.S. and China in great shape a decade hence. Is that valid? I have to question it.
So, let's modify the experiment. Instead of a real war, let's recreate the conditions without actually engaging in conflict. First, let's draft everyone between 18 and 35. We'll then march them from the East coast to the West coast and back again. We'll also have the factories produce large quantities of WWII-era equipment - other factories will dispose of the equipment. Would this create a strong economy? Again, I would doubt it.
But if the above concepts are fatally flawed, what is it about a war that ends depressions?
If a bear market must play out to its end, perhaps economies do exactly the same thing.
Let's suppose (again) that we see some thunderclouds. We go outside, and we proceed to run in circles, scream, and shout. Rain begins. So, have we caused rain? Of course not! But the two events give the appearance of a connection - there is a correlation.
Perhaps we are confusing correlation with causality. Maybe WWII just happened to start about the same time the 1929 depression had worked out the previous excesses. And if that's true...then all the stimulus efforts by the Treasury will do no good whatsoever.
I always get resistance when I mention this, but the situation stated above also helped sow the seeds of our eventual loss of manufacturing power. As we helped rebuild and re-tool Germany and Japan in the post WW2 era, we failed to do the same in the USA. (Here's the part that gets me flak.) Members of the so-called "Greatest Generation" (so-named by "Blinky" Brokaw) who had survived the Great Depression and won WW2 became busy "feathering their own nests." Labor and management of our major industries, especially the steel industry, failed to engage in capital deepening, Instead, they gave themselves great pensions, high wages and salaries, outstanding benefits, large bonuses and changes to the social security program that would boost their retirement incomes. By the 1960's this helped cause us to be less able to compete on the global economic playing field.
Watching the CEOs of the auto industry beg before Congress, while refusing to accept the fact that what is needed is the ability to restructure their bloated, out-dated industry that bankruptcy would provide, demonstrates how the attitude that began after WW2 has become ingrained in our old-time business psyche. They cling to the past and the things that got them into the trouble they are in at this time, instead of looking ahead to how they can make themselves competitive in the future.
About a nickel's worth...
I totally agree that the "greatest generation" and would add their "baby boomer" offspring lived in excess and are responsible for the credit crunch and deficit in investment / savings. They failed to continued to innovate as a whole. We continue to enjoy entrepenurial innovation in pockets of our economy, but the vast majority Americans sit back and just put in their time. This puts our country at a competitive disadvantage. The culture of our society has had the pendulum of motivation swung by circumstance. We have failed to rapidly adapt and apply, the carrot and stick in government policy (regulations and tax code) to the ever changing situation. Our companies and corporations have on the whole become complacent in their markets until competition either killed them or forced them to innovate (produce better products).
The new deal, WWII, Cold War, Space Race, etc... were just motivating opportunites that set the tone or woke leadership up to spend our countries (a companies) resouces to innovate rapidly and outpace the competion (either by intent or accident).
Investment in innovation is the key to outpacing our global competitors and maintaining our lifestyle; the richest people and the richest "poor" in the world.
I also agree that resources, natural and human, will be the cause of many expeditions (little or big wars) by those countries that want the "American dream" in the near future.
If we as a people want to invest, then I say instead of bailouts for failed businesses, we should invest in innovative sustainable energy and reprocessing / recycling to feed the supply chain.
We also need to stop spending (or set a limit) on what we spend on health care to prolong life. No government or business should pay the full burden (or even a substantial portion) of prolonging life. We should fund public health and prevention, but if someone wants to get a new heart, let them pay!
Just my quick thoughts!:)
I think the extent of WW2 did help the US get out of the depression; reason being, the extent of the war. We have not since, had a war the size and scope of WW1 and WW2. During WW2, a majority of the male population of the US was serving in the armed forces. People at home were recycling, put on rations, and experienced the hardship of the war itself. When you have people raiding trash dumps for rubber, copper, and whatever else... things are bad. The people as a whole were put to work, for the war effort. Women were taken into industry, in jobs they had never been "permitted" to do before. When a Nation has that great a war effort, it has a big impact on the economy. Spending is increased, but productivity is through the roof, and unemployment is nill. You don't have millions on welfare, not paying taxes, and adding to the societies problems.
All wars we have been involved in since, did not require such sacrifices of the masses... Never have so many, owed so much, to so few.
Personally... and my .02... I heard about the CCC camps in Obama's proposals, and I, for one, think it's a fantastic idea (one of his first), as long as it's done to the extent it was in WW2. Take the unemployed and give them work, instead of giving them handouts. Take the WELFARE people, and give them work too, instead of welfare. We taxpayers make out, because now we have all those people employed, making our parks better, and cleaning our roadways... and paying taxes too, instead of living off Uncle Sugar.
What will bring us out of this, is letting those companies that have multi-million a year CEOs and top heavy management fail. Let those multi-millionaires be without a job, or the prospect of one. New companies will form, and prosper, and the dollar will be worth more. We need to stop looking to the taxpayer to bail out companies that should fail and go under. (DeLorian anyone?) CEOs that make stupid decisions, and think of their own well being over that of their companies, and workers, should be allowed to fail. The only thing bailing them out will do is prolong the inevitable and cost US taxpayers a LOT of money. Same with the banks and credit mortgage lenders. The bailout was the dumbest thing our "elected officials" have done in the history of government. All the stimulus checks... Another financial blunder that will go a long way in devaluing the dollar. Take the bailout money, add the stimulus checks to it and USE that money to develop new technologies to free us from foreign oil, or use them to fund CCC programs, EMPLOYING people.
A good example of how screwed up our economy is can e found in old Joe Biden's hometown, Scranton PA. For those that don't know, Scranton is filled with shopping malls, retail stores, coffee shops, ski slopes, and many other places to SPEND money. Those places employ a minimum of people. They do NOTHING but drain the economy. When you have a thousand places to spend money, and very few places to work and EARN money, it is a recipe for disaster. Add to that, credit card companies that issue credit cards to people like they are in a candy jar outside the mall... I mean, are people THAT stupid? Yup. They are.
The only answer to get us out of the place we are in, is to make more places to EARN money, and fewer places to SPEND money and to put the unemployed and welfare people to work. We have the technology to produce a car that would last forever. Same with a light bulb. Do we do it? Nope. It's bad business to make a product that does not require replacing every few years (ask any computer maker...) but, apparently good business to make a piece of crap that breaks or wears out easily. The only flaw in this logic is that, other Nations are making the same thing, making it better, and the American people don't like buying cheaply made pieces of crap. So... the CEOs can sit back and ask why, but they KNOW why. They produce crap. Used to be, American made meant something else. It meant quality, and the pieces of crap had made in Japan on the bottom. Not anymore. The Japanese are the ones producing products people are buying. We CAN make cars that run like their Japanese counterparts, we just choose not to. Why? Ask the same people that are in Washington begging for money. They make a piss poor product, overprice everything about it, and make it crappier than anything available from other Nations, then sit back and wonder in amazement when their business goes tits up???? ...and they want OUR tax money to help them? I say hell no. Fail, go bankrupt, and a better company will form and do it better. The Japanese are building better cars, here, charging less for them, have happy workers, and how are they doing it? I'd be interested in seeing what Nissan's upper management and CEOs make per year, and how much work they do.
AngelsSix
12-04-2008, 20:28
I always get resistance when I mention this, but the situation stated above also helped sow the seeds of our eventual loss of manufacturing power. As we helped rebuild and re-tool Germany and Japan in the post WW2 era, we failed to do the same in the USA. (Here's the part that gets me flak.) Members of the so-called "Greatest Generation" (so-named by "Blinky" Brokaw) who had survived the Great Depression and won WW2 became busy "feathering their own nests." Labor and management of our major industries, especially the steel industry, failed to engage in capital deepening, Instead, they gave themselves great pensions, high wages and salaries, outstanding benefits, large bonuses and changes to the social security program that would boost their retirement incomes. By the 1960's this helped cause us to be less able to compete on the global economic playing field.
Watching the CEOs of the auto industry beg before Congress, while refusing to accept the fact that what is needed is the ability to restructure their bloated, out-dated industry that bankruptcy would provide, demonstrates how the attitude that began after WW2 has become ingrained in our old-time business psyche. They cling to the past and the things that got them into the trouble they are in at this time, instead of looking ahead to how they can make themselves competitive in the future.
About a nickel's worth...
And I agree 100%, I was just discussing this exact thing with the guy who pays the bills. It seems to me that we forgot the values of hard work, everyone wants to be on easy street these days but no one wants to work for it. Look at these day traders. I wonder where they are these days?? How about some of those dot com millionaires? I personally think all the folks getting those fat salaries that are in charge of companies should cut their pay in half and put that money back into the company. I also think that Congress and Senate need to include themselves, because essentially they are the CEO's of the government.
frostfire
12-05-2008, 02:24
We also need to stop spending (or set a limit) on what we spend on health care to prolong life. No government or business should pay the full burden (or even a substantial portion) of prolonging life. We should fund public health and prevention, but if someone wants to get a new heart, let them pay!
I've been contemplating this for so long. With all the medical advances, we are saving (prolonging) lives at both end of the spectrum now more than ever: The newborn and the oldest old. Newborns with all kinds of congenital conditions can now be saved. However, at $$$/day in the NICU with potentially a life requiring total care, is it really wise to do? CF patients life expectancy has gone up tremendously. What used to be cases only seen in peds are now also treated at adult medsurg. So that's an increase in adult patients. Similarly, when one requires total care at 80+ years old and there's no DNR, then what...It's an ethical dilemma of course. Life is precious (or so I'm told in the west), but at what cost and who's paying the bill?
...It's an ethical dilemma of course. Life is precious (or so I'm told in the west), but at what cost and who's paying the bill?
The big question to your thought is "Who draws the line and where is it?"
The big question to your thought is "Who draws the line and where is it?"
Well...here's how it used to go. ;)
Richard's $.02 :munchin
OK...:eek:...however, I wouldn't hold my breath if I was this caller. :rolleyes:
http://www.youtube.com/watch?v=dLsNOEt0EX8
Richard's $.02 :munchin
IMO, WW2 did stimulate the US economy and allow us to overcome the Great Depression by-
placing a large part of the healthiest of the work force out of the production arena and into the military, thus allowing a resurgence of jobs and technical training for everyone else
massive investing in the means of production for the war effort which carried through into the post-war period
destroying the major means of production of most of the world's economic powers and allowing the US to readily dominate the post-WW2 market because it was virtually new and untouched by war
bringing the servicemen back and giving them the GI Bill and housing loans, setting up a situation which further kept many from immediately competing for spaces in the job market while allowing them to receive a college education and various levels of technical training to support the new economy and growth of our industrial base
FWIW, I don't see that happening now or in the near future. Different day, some similarities but different circumstances.
Richard's $.02 :munchin
I'd add to Richard's points one more and an extension to the return of soldiers. Both deal with higher consumption demand.
1. After the war, we saw the the baby boomer generation started, resulting in increased consumer demand for goods and services.
2. Demand for goods and services increased as a result of rebuilding Europe/the world.
stu
ZonieDiver
12-17-2008, 11:49
OK...:eek:...however, I wouldn't hold my breath if I was this caller. :rolleyes:
http://www.youtube.com/watch?v=dLsNOEt0EX8
Richard's $.02 :munchin
Great find. It would be funny, if it weren't so tragic!
The video that accompanied the call took me back to when I first got off active duty. For a time I worked with my younger brother, who was a "repo man"! Stealth and SA came in very handy in that line of work. I think there may be openings in that field soon, if not already.
This is an excellent article on the Great Depression and the government policies that, while promising to 'ease the pain', actually prolonged the problem. I was also struck by how similar many of the issues parallel our current situation. Especially the government interventionist policies and the unremitting attacks on capitalism and the 'wealthy.'
Barack Obama may well be Herbert Hoover and FDR reincarnated.
Great Myths of the Great Depression
Introduction
Many volumes have been written about the Great Depression of 1929-1941 and its impact on the lives of millions of Americans. Historians, economists and politicians have all combed the wreckage searching for the “black box” that will reveal the cause of the calamity. Sadly, all too many of them decide to abandon their search, finding it easier perhaps to circulate a host of false and harmful conclusions about the events of seven decades ago. Consequently, many people today continue to accept critiques of free-market capitalism that are unjustified and support government policies that are economically destructive.
How bad was the Great Depression? Over the four years from 1929 to 1933, production at the nation’s factories, mines and utilities fell by more than half. People’s real disposable incomes dropped 28 percent. Stock prices collapsed to one-tenth of their pre-crash height. The number of unemployed Americans rose from 1.6 million in 1929 to 12.8 million in 1933. One of every four workers was out of a job at the Depression’s nadir, and ugly rumors of revolt simmered for the first time since the Civil War.
“The terror of the Great Crash has been the failure to explain it,” writes economist Alan Reynolds. “People were left with the feeling that massive economic contractions could occur at any moment, without warning, without cause. That fear has been exploited ever since as the major justification for virtually unlimited federal intervention in economic affairs.”[1]
Old myths never die; they just keep showing up in economics and political science textbooks. With only an occasional exception, it is there you will find what may be the 20th century’s greatest myth: Capitalism and the free-market economy were responsible for the Great Depression, and only government intervention brought about America’s economic recovery.
A Modern Fairy Tale
According to this simplistic perspective, an important pillar of capitalism, the stock market, crashed and dragged America into depression. President Herbert Hoover, an advocate of “hands-off,” or laissez-faire, economic policy, refused to use the power of government and conditions worsened as a result. It was up to Hoover’s successor, Franklin Delano Roosevelt, to ride in on the white horse of government intervention and steer the nation toward recovery. The apparent lesson to be drawn is that capitalism cannot be trusted; government needs to take an active role in the economy to save us from inevitable decline.
But those who propagate this version of history might just as well top off their remarks by saying, “And Goldilocks found her way out of the forest, Dorothy made it from Oz back to Kansas, and Little Red Riding Hood won the New York State Lottery.” The popular account of the Depression as outlined above belongs in a book of fairy tales and not in a serious discussion of economic history...
http://fee.org/library/books/great-myths-of-the-great-depression/
The .pdf can be downloaded here:
http://fee.org/wp-content/uploads/2008/12/greatmythsdepression2008feemcppfinalweb.pdf
The following quote is from the above referenced article. Although it was published in 1935, it is appropriate today.
Will we choose to subject ourselves — this great country — to the despotism of bureaucracy, controlling our every act, destroying what equality we have attained, reducing us eventually to the condition of impoverished slaves of the state? Or will we cling to the liberties for which man has struggled for more than a thousand years? It is important to understand the magnitude of the issue before us. … If we do not elect to have a tyrannical, oppressive bureaucracy controlling our lives, destroying progress, depressing the standard of living … then should it not be the function of the Federal government under a democracy to limit its activities to those which a democracy may adequately deal, such for example as national defense, maintaining law and order, protecting life and property, preventing dishonesty, and … guarding the public against … vested special interests? - Lewis W. Douglas; resigned after one year as Roosevelt's Director of the Bureau
I'm beginning to see it all in the History books now - Lyndon Baines Obama and The Great Community. ;)
Richard's $.02 :munchin
bailaviborita
03-11-2009, 11:43
I am really struggling with the logic behind the idea that government spending, especially on war (or any social project for that matter), and it having the "natural" conclusion of an expanded economy (more jobs, added productivity, wealth creation, etc.).
Trying to think about it critically, if the government takes money through taxes, and spends it on tanks and goes to war with those tanks- how does that lead to sustained growth in production? Unless we are able to keep producing more tanks and selling them overseas, or whoever we conquered starts buying more of our stuff- I just don't see where that leads to future growth in production (sustainable into the future). Without productivity growth- I fail to see a growth in standards of living, wealth, jobs, etc.
In the case of WWII, I would argue that we were able to expand production after the war through the increase in Globalization (result of our "win") and the expansion of markets, etc. But, we paid the piper too- since we went heavily into debt. That resulted in a loss of wealth in the future- as later generations paid the interest on that debt in the form of taxes and inflation.
In the case of work programs- again, I fail to see the connection between sustainable productivity growth and "job creation" by the government. If the government borrows money or taxes me and takes that money and gives it to my neighbor to rake leaves in my backyard, that is not something that adds value to the economy in the form of an increase in productivity. It should be the same for almost any governmental jobs program (excepting education, some infrastructure, R&D, and a few others- which can add to productivity gains IF they are competently managed and lead to outcomes that industry requires to increase THEIR productivity).
So, in conclusion, usually ANY governmental spending is bad for the economy in the long run, as it will be paid back by increased inflation and taxes. Only that spending which can effectively lead to an increase in private industry productivity in the long-term can be realistically tied to being "good" for the economy. When people talk about "priming the pump"- what I hear is that we are borrowing against our future for a gain in the short-term using unsustainable growth in the hopes that sustainable growth will spontaneously happen. I hope our die roll turns up all 6's.
From: http://jim.com/econ/chap01p1.html: "...In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences. ..."
Some good articles I've found:
http://jim.com/econ/contents.html
http://faculty.chicagobooth.edu/john.cochrane/research/Papers/fiscal2.htm
http://www.washingtonpolicy.org/Centers/government/legislativememo/GovtStimulus2009.pdf
Obama Defeats FDR (in Spending Other People’s Money)
Wednesday, February 17, 2010
By Terence P. Jeffrey
After he signed a law last week authorizing the U.S. Treasury to borrow an additional $1.9 trillion, President Barack Obama delivered a characteristically sanctimonious speech. It was about his deep commitment to frugality.
“After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility,” he said. “It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do. Like families across the country, we have to take responsibility for every dollar we spend.”
To put Obama’s Olympian hypocrisy in perspective, one need only examine the federal budget tables posted on the White House website by Obama’s own Office of Management and Budget.
They reveal these startling facts: When calculated by the average annual percentage of the Gross Domestic Product that he will spend during his presidency, Obama is on track to become the biggest-spending president since 1930, the earliest year reported on the OMB’s historical chart of spending as a percentage of GDP. When calculated by the average annual percentage of GDP he will borrow during his presidency, Obama is on track to become the greatest debter president since Franklin Roosevelt.
Obama will outspend and out-borrow the admittedly profligate George W. Bush, a man Obama and his lieutenants routinely malign for fiscal recklessness and who, when in office, was often hailed even by his allies as a Big Government Republican. Obama will even outspend—but not quite out-borrow—his fellow welfare-state liberal FDR, who had to contend with both the Depression and World War II.
In determining this was the case, I credited the presidents prior to Obama with the federal spending and borrowing that occurred during the fiscal years that started when they were in office. I credited Obama with the spending and borrowing that his own OMB estimates will occur during the fiscal years from 2010 to 2013, which are the four fiscal years starting during Obama’s four-year term. (Before fiscal 1977, fiscal years ran from July 1 to June 30. Since then, they have run from Oct. 1 to Sept. 30.)
FDR was inaugurated in March 1933 and died in April 1945. He is thus responsible for the 12 fiscal years from 1934 to 1945. During those years of depression and world war, according to OMB, federal spending averaged 19.35 percent of GDP. During Obama’s four fiscal years, OMB estimates spending will average 24.13 percent of GDP. That is about 25 percent more than under FDR.
In the first eight fiscal years of FDR’s presidency, before Japan attacked Pearl Harbor, federal spending as a percentage of GDP never exceeded 12 (despite the Depression). During those years, it averaged only 9.85 percent. Under Obama, annual spending as a percentage of GDP will average almost two-and-a-half times that much.
In fiscal 1942, when the U.S. started dramatically ramping up expenditures to fight World War II, federal spending equaled 24.3 percent of GDP. In 2010, the first full fiscal year of the Obama era, spending will reach 25.4 percent of GDP.
Under current estimates, Obama will not beat FDR’s overall record for borrowing, although he will nearly double FDR’s pre-World War II rate of borrowing. From 1934-41, FDR ran annual deficits that averaged 3.56 percent of GDP. Obama, according to OMB, will run average annual deficits of 7.05 percent GDP. When you include the war years of 1942-45, FDR ran average annual deficits of 9.76 percent of GDP. Even without a world war, Obama’s overall prospective borrowing is at least competitive with FDR’s.
And Obama and FDR share one historic debt-accumulating distinction. By OMB’s calculation, they are the only two presidents since 1930 to run up annual deficits that reached double figures as a percentage of GDP. Obama will run up a deficit this year of 10.6 percent of GDP. The last time the deficit hit double digits as a percentage of GDP was 1945 -- when Germany and Japan surrendered.
The U.S. won the Cold War without ever running a double-digit deficit. President Reagan’s highest deficit was 6 percent of GDP in 1983 -- and he bankrupted the Soviet Union not the United States.
So how does Obama compare with the much-maligned George W. Bush? In Bush’s eight fiscal years, annual federal spending averaged 20.43 percent of GDP, significantly less than Obama’s estimated 24.13 percent of GDP.
Bush ran annual deficits that averaged 3.4 percent of GDP—and that includes fiscal 2009, when the deficit soared to 9.9 percent of GDP and Obama signed a $787 billion stimulus bill (some of which was spent in fiscal 2009) after Bush left office. Obama, according to OMB, will run deficits that average 7.5 percent of GDP—or more than twice the average deficits under Bush.
The bottom line on Obama: He puts our money where his mouth is.
http://cnsnews.com/commentary/article/61454
Surf n Turf
02-17-2010, 12:37
I'm beginning to see it all in the History books now - Lyndon Baines Obama and The Great Community. ;)
Richard's $.02 :munchin
And the history will be written with the critical eye of Billy Don Moyers :rolleyes:
SnT
Surf n Turf
02-17-2010, 12:39
I heard about the CCC camps in Obama's proposals, and I, for one, think it's a fantastic idea (one of his first), as long as it's done to the extent it was in WW2. Take the unemployed and give them work, instead of giving them handouts. Take the WELFARE people, and give them work too, instead of welfare.
The only answer to get us out of the place we are in, is to make more places to EARN money, and fewer places to SPEND money and to put the unemployed and welfare people to work.
grog18b,
To your first point – Would those in the “camps” be subjected to Federal Law, assigned a work number, and paid a minimum wage, or might they receive “military type” training, assist in law enforcement and crime prevention, and answer to a Federal Official.
To your second point –Why would a business hire more workers (Earners), if there were fewer places to sell their products (Spenders). Wouldn’t the business “Go Broke”
SnT
“After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility,” he said. “It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do. Like families across the country, we have to take responsibility for every dollar we spend.”
The irony is simply astounding. :rolleyes:
Wednesday, July 14, 2010
A MINORITY VIEW
Obama's failed hero
Walter E. Williams sees BHO making same spending mistakes as FDR
Posted: July 14, 2010
1:00 am Eastern
By Walter Williams
Let's think about President Obama's failed economic stimulus program. Before getting to the nitty-gritty of why stimulus packages fail, let's look at the failed stimulus program of Obama's hero, Franklin Delano Roosevelt. FDR's treasury secretary, Henry Morgenthau, wrote in his diary: "We have tried spending money. We are spending more than we have ever spent before and it does not work. ... 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 an enormous debt to boot!"
Morgenthau was being a bit gracious. The unemployment figures for FDR's first eight years were: 18 percent in 1935; 14 percent in 1936; by 1938, unemployment was back to 20 percent. The stock market fell nearly 50 percent between August 1937 and March 1938. Columnist Walter Lippmann wrote, "With almost no important exception every measure he (Roosevelt) has been interested in for the past five months has been to reduce or discourage the production of wealth." The last year of the Herbert Hoover administration, the top marginal income tax rate was raised from 24 to 63 percent. During the Roosevelt administration, the top rate was raised at first to 79 percent and then later to 90 percent. Hillsdale College economic historian professor Burton Folsom notes that, in 1941, Roosevelt even proposed a whopping 99.5 percent marginal rate on all incomes over $100,000. Much more of the Hoover/FDR fiasco can be found in "Great Myths of the Great Depression."
The Great Depression did not end until after World War II. Why it lasted so long went unanswered until Harold L. Cole, professor of economics at the University of Pennsylvania, and Lee E. Ohanian, professor of economics at UCLA, published their research project "How Government Prolonged the Depression" in the Journal of Political Economy (August 2004). Professor Cole explained, "The fact that the Depression dragged on for years convinced generations of economists and policymakers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes. Ironically, our work shows that the recovery would have been very rapid had the government not intervened." Professors Cole and Ohanian argue that FDR's economic policies added at least seven years to the Depression.
Where do the trillion-plus dollars come from that Congress and Obama are spending in an effort to stimulate the economy? How about Santa Claus, or maybe the Tooth Fairy? If you said, "Come on, Williams, you're being silly! The only way government can spend a dollar is to tax or borrow it," go to the head of the class. In the case of a tax, one should ask what would that taxpayer have done with the dollar had it not been taxed away. He would have spent it on something that would have created a job for someone. If the government hadn't borrowed the dollar, it might have been invested in some project that would have created a job. When government taxes, borrows and spends, it shifts unemployment from one sector to another. Of course, the sector that benefits tends to be a political favorite of the shifter.
Between 1787 and 1930, our nation has seen both mild and severe economic downturns, sometimes called panics, that have ranged from one to seven years. During that interval, no one considered it to be the business of the federal government to try to get the economy out of a depression because there was no constitutional authority to do so. It took Hoover, FDR and a frightened and derelict U.S. Supreme Court to turn what might have been a three- or four-year sharp downturn into a 15-year meltdown.
Link (http://www.wnd.com/index.php?fa=PAGE.view&pageId=178429)
When you implement some of the same failed policies of your predecessors, is it a surprise if they don't work? I suppose it would be if you were taught that the policies of Hoover and Roosevelt actually shortened the Great Depression, instead of prolonging the misery. Or, what if that was the goal (Cloward-Piven strategy)?
In a lame attempt to defend his pathetic economic record, President Obama argued that he inherited the worst economic crisis since the Great Depression, and that he's leading America to a better place. In reality, Obama implemented policies that ensured the worst economic "recovery" since that depression.
Let's take a look back. The president during that period of turmoil, Herbert Hoover, a Republican, is commonly portrayed as having opposed government intervention and, therefore, as having done nothing to prevent the depression. However, the opposite is true.
In his day, Hoover was called the "Great Engineer" because of his fondness for social engineering. Hoover strongly believed that government, business, and unions should work together to build a better life for everyone. Sound familiar? Former president, and current Democratic fundraiser, Bill Clinton argued in favor of that same approach on Wednesday night during his DNC speech.
This is extremely important, because the stock market crash of 1929, which is widely cited as the beginning of the Great Depression, was caused by government intervention. And the intervention was inspired by this belief. Hoover, as secretary of commerce during the 1920s, and then as president, supported artificially low interest rates (with the goal of increasing credit revenue while stimulating business) and high tariffs (with the goal of protecting domestic producers). Inevitably, the market crashed, producing a recession.
Nevertheless, despite the crash, the American economy was still relatively sound at the end of 1929. If the government had allowed the recession to self-adjust, the depression wouldn't have occurred.
Instead, the government intervened, again, increasing government spending in 1930 and 1931 to unprecedented levels. But the spending failed to stimulate the economy. And the high tariffs hurt the European economy, causing a decline of American exports to a Europe that could no longer afford to buy from American producers. Then in 1932, as part of his "we're all in this together" approach, Hoover proposed a tax increase, and the House, under Democratic control, was all too happy to oblige. And, just for good measure, the tax increase was made retroactive (you gotta love that government intervention!) and had to be paid by March of 1933. The result was that people started withdrawing money from the banks, causing a bank panic.
So, let's summarize things to this point. First, government intervention caused the stock market crash and the recession. Second, government intervention caused the bank panic and the Depression.
And, unfortunately, the government wasn't done yet. The next president, Franklin D. Roosevelt, a Democrat, increased government spending to a new high, while introducing major tax increases -- so major, in fact, that the top rate was a staggering 79%. But hey, it's only right that the wealthy pay their fair share.
By 1938, after repeated tax increases and massive government spending, the economy was still in dismal shape. In the end, government intervention prolonged the Depression by years.
Now, fast-forward to 2008. It was government intervention that caused the housing market crisis, and the subsequent financial market crisis, which sent the economy into a downward spiral...
Link (http://www.americanthinker.com/2012/09/barack_hoover_obama.html)