Skip to comments.Does Obama Have Any Idea Why New Deal Failed?
Posted on 08/23/2011 3:20:28 PM PDT by neverdem
The Great Depression dominated the 1930s, in large part because President Franklin D. Roosevelts New Deal programs failed to create jobs. In May 1939, shortly after learning that unemployment stood at 20.7%, Henry Morgenthau, the secretary of the Treasury, exploded: We have tried spending money. We are spending more than we have ever spent before and it does not work. Morgenthau concluded, I say after eight years of this administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!
Why did Roosevelts New Deal fail so miserably? The larger problem is that federal spending cant create jobs. It merely transfers wealth from taxpayers to central planners. But worse than that, most of FDRs New Deal was driven by politics. It was economically unsound.
Take the National Recovery Act (NRA), for example, which was FDRs program for industry. The NRA set the prices of thousands of products. Merchants who gave discounts to customers were subject to fines and imprisonment. For example, the fixed price to press a pair of pants was 40 cents. Jacob Maged of Jersey City, N.J., gave a 5-cent discount because his shop was far from the main shopping area. He needed to give discounts to attract customers and stay in business. You cant tell me how to run my business, Maged insisted. Yes, they could, Maged discovered when he went to jail for charging his customers a nickel less. Neither FDR nor any of his New Dealers, however, could clearly explain why jailing merchants for giving discounts created jobs or made American industry more competitive.
FDR also supported the Agricultural Adjustment Act (AAA) for farmers. Granted, farmers suffered from low prices, but the AAA solution was preposterouspay farmers not to produce on up to one-fourth of their land. Farmers would get instant cash, and also, because less land was being cultivated, prices for crops would go up. But of course those rising prices would make it harder for city dwellers to put food on the table. The farmers gain was the city dwellers loss, and the AAA may have destroyed more jobs than it created.
Many New Deal programs were pure politicstargeting federal money to lure specific voting groups into the Democratic Party. For example, Social Security taxes, FDR confessed, were never a problem of economics. They are politics all the way through. Tie older voters to the Democratic Party.
In a similar vein, FDR funded the Works Progress Administration (WPA) with $4.8 billion to build roads, bridges and other infrastructure projects. But he targeted most of the road-building to favored Democratic congressmen. James Doherty, a New Hampshire Democrat, agreed with the President: It is my personal belief, Doherty announced, that to the victor belongs the spoils and that Democrats should be holding most of these [WPA] positions. After FDR and the Democrats trounced the Republicans in the 1936 presidential election, Sen. Carter Glass of Virginia said, The 1936 elections would have been much closer had my party not had a four billion, eight hundred million dollar relief bill as campaign fodder.
Republican Sen. Hiram Johnson of California, who voted for FDR in 1936, nonetheless agreed with Glass. He described FDR as going around the country saying, I will allot a few million dollars to this particular place, and a few million dollars to some other. Johnson concluded, He starts with probably 8 million votes bought. The other side has to buy them one by one, and they cannot hope to match his money.
Who paid for FDRs federal campaign fund? The taxpayers. FDR gained revenue from taxes on cigarettes, alcohol, telephone calls, telegrams, cars, tires and bank checks. He also increased taxes on corporations and incomes. In 1932, the year FDR was elected, only one in 20 American families paid the income tax and the top rate was 25%. By FDRs death in 1945, almost two in three American families paid income taxes and the top rate was 94% on all income over $200,000.
No wonder the Great Depression persisted. Entrepreneurs and businessmen had no incentives to create businesses or expand existing ones.
President Obama publicly admires and tries to emulate FDR. And Obama is experiencing two of FDRs problems: expensive new programs that dont work, and discouraged entrepreneurs who are saddled with much of the bill for taxes and new regulations.
Burton Folsom Jr., a professor of history at Hillsdale College, is author of New Deal or Raw Deal? and co-author (with his wife, Anita) of the forthcoming FDR Goes to War (Simon & Schuster, 2011).
Obama doesn’t even know how the Sun comes up.
He doesn’t have any idea that it failed.
if the devil don’t get you, Roosevelt will.
Mr. Obama has a VERY poor grasp of American history.
Send Zer0 to the re-education camp.
No. 0b0z0 doesn't believe he should know anything because he thinks he's a big deal.
Obama believes the only failure of the New Deal was a failure to spend enough money.
0bama thinks he is smarter than the central planners of the 1930’s.
They also probably think it took too long, and that with their genius (the advisors led by Obama), they can do a much better job this time.
Of course, you and I know that that's delusional, but that's probably what they believe.
Of course he does!
But that was back in the day.
He needs to show us again so
all of us are sure it wasn’t
I don’t wholly believe that it’s just a case of Stupid. No one could inflict, & Continue to inflict the Catastrophic Damage he’s saddled us with by being merely Stupid.
The man’s just plain Evil. Think about it. EVERYTHING he’s touched, He’s Ruined.
The law of averages implies that if it were just Stupid, he’d have to have gotten at least Something right.
Nada, Zero, Absolutely Nothing.
You really have to Try to turn in His kind of Screw Ups.
The larger problem is that federal spending cant create jobs.
These people are actively working to destroy America with Communist solutions.
It was the Communist plan in 1934. It is 0bamas Communist plan today.
And when people become THIS freaking STUPID and inattentive to their freedoms, THIS is the PRESIDENT they deserve.
1 minute satirical Obama video here:
Hurry before some diversity loving (RIGHT!) Obamaniac at YouTube pulls
Morgenthau’s comments just seem to fly over the heads of dedicated Keynesians as they always come back with the refrain of how not enough money was spent for a long enough time.
Joe Biden says that the New Deal was a Big Fugin Deal.
But for the war, his standing would be a lot lower.
Also, people expected less and put up with a lot more back in the 1930s.
That's what his fans now don't realize.
He and his crew have one agenda. And that is National Socialist Democrat. They are well on the way and all they need now is a catastrophic event to implement it totally.
He already has his Krupp, his Goebels, and his brown shirts. They are taking over all the strategic industries such as Electric manufacturing and have the ability to trace anyone. They have a majority of population that would inform on the others if they are threatened.
The text books teach the kids that FDR was a hero, and they lap it up.
But the politicians of the time knew better and quickly changed the constitution to limit presidents to 2 terms after he was gone.
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