Remember when then VP candidate Joe Biden after the market crash of 2008 in one of his many gaffes said that Franklin D. Roosevelt (FDR) “got on the television and didn’t just talk about the, you know, the princes of greed. He [FDR that is] said, “Look, here’s what happened.”
Well, that didn’t happen. FDR never said any of what Biden quoted. FDR wasn’t president in 1929, and television being a novelty wasn’t generally available. While Biden’s memory can be termed faulty at best, there’s no doubt that Biden and Obama revere a man who not only presided over the Great Depression, but did much to make it worse.
Biden has called this season the “Summer of Recovery.” But, the economy isn’t cooperating. Lately, he’s reverted to his Bush’s recession rhetoric. But, it’s totally laughable to hear Democrats criticize Bush while at the same time laud FDR. Unfortunately, what many were taught about the period from 1929 to 1941 was wrong. First was that Herbert Hoover, Republican president in 1929, practiced laissez-faire economics.
Nothing could be further from the truth. Hoover rejected the Coolidge-Mellon dictum that kept government from active participation in the economy. Ignoring the protests of more than 1,000 economists, Hoover signed the Hawley-Smoot Tariff Act in June 1930 the highest protective tariff measure in U.S. history. Widespread reciprocation followed as other nations retaliated against American protectionism.
However, Hoover did adhere to the tradition of not providing direct assistance to individuals in providing many early relief efforts. In 1932 he created the Reconstruction Finance Corporation to maintain the economic health of major banks and industries. It was eerily similar to the bailout bills of today.
There was also the Federal Home Loan Bank Act an effort to slow foreclosures and increase homeownership. It and many other puny governmental measures did little to stop the depression. Obama’s plan to stop foreclosures also isn’t working because they are up 75%.
Still, one act by Hoover turned what would have been a short recession into the calamity remembered today. Specifically, Hoover raised taxes. The Revenue Act of 1932 raised income tax rates across the board, with the top rate rising from 25 to 63%.
The 1929 stock market crash began an economic contraction that caused tax revenues to fall. Hoover reasoned that deficits would create uncertainty in the business community, so he necessitated a balanced budget to maintain business confidence. What a difference to the politicians of today!
But, Hoover’s tax hike failed because revenue continued to drop. The $462 million deficit of 1931 became the $2.7 billion of 1932 largely because revenue fell from $1.15 billion in 1930 to $834 million in 1931, $427 million in 1932, and just $353 million in 1933. With already a large deficit of $1.4 trillion and major tax increases from ObamaCare and Bush tax cuts expiring in 2011, it would be nice if this administration would take note of these statistics. But, they won’t.
Like Obama’s, FDR’s campaign was short on specifics, but long on optimism. He didn’t need the “Yes we can” slogan. His campaign just played “Happy Days Are Here Again” over and over at each rally. And Like 2008, voters in 1932 voted overwhelmingly for change.
While FDR criticized Hoover’s tax increase, once in office he did nothing to repeal it. Instead he pushed for even higher taxes on the rich. In 1935, he raised the upper rate to 79%. Interestingly, only $250 million was collected from that tax hike and only one person, John D. Rockefeller, ever paid the top rate.
FDR was too enamored with his “New Deal” and believed government could spend the nation into prosperity just as Obama is doing now. FDR call it “priming the pump” creating various ABC programs that did create million of jobs, but by 1938 unemployment was over 20% indicating that many more jobs were lost. The economic pump wasn’t being primed, instead it was being purged.
Likewise, Obama and his minions continue making counter factual claims about the billions of jobs being saved and created while actual unemployment increases. Oh, the official rate drops, but it’s a joke because workers who stopped looking aren’t counted.
Recently, Obama celebrated 300 new jobs created by his “Stick It to Us” stimulus plan at a battery plant in Michigan. Spending $150 million to build and staff its production that comes to only $500000 per job. The private sector would have done better. However, government planning always does worse than just letting the free market work, but that’s blasphemous to pro-regressives who can’t help themselves into believing they can manipulate the economy to cure all ills. There’s no doubt that Obama like FDR is creating millions of jobs. He’s just eliminating many more millions to do it.
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