Bush-Obama, Hoover-FDR

President Clinton likes to bask in the glory of the brisk economy of his years (like he did in the convention), when with a Republican Congress government spending was cut more than any other president's term in modern history.  There was a slight recession at the end of his term and beginning of Bush’s but not many remember since it was 9/11 that really sent the economy spinning.  In the final 2 years of Bush's term he was weakened by a Democratic Congress and tried bailouts and redistribution to turn around the economy (it's odd that Obama bad-mouths him so since he loves that too, but FDR did the same to Hoover). Hoover didn't cause the Great Depression--the Fed did that by inflating the value of money--and it isn't even part of the government. To goose the economy in 1932 Hoover not only increased government spending, but increased taxes by raising the marginal tax rate from 24% to 63%, and then FDR took it to 79% and then 83%, extending the Great Depression by many years. Bush and Obama had plenty of history to go on for their failed policies since 2007-2009 wasn’t our first rodeo, but they blew it.

I could give you pages, if not books, of citations, but you wouldn’t read them, so here are just two cites.

http://online.wsj.com/article/SB10001424052702303753904577450910257188398.html

http://www.mtpioneer.com/March-deal-Hoover.html

Hoover was hardly a conservative

He was a progressive, and FDR followed his path until it was set in concrete and took 10 years and WWII to recover. This letter was in today's WSJ by George C. Leef. According to various bios on the internet, he's a libertarian and did run for office in Michigan back in the mid-80s.

"The standard leftist narrative about our history holds that President Herbert Hoover was a die-hard laissez-faire advocate who wouldn't budge from his capitalist convictions even as the nation's economy spun into the Great Depression. The truth is that Hoover was a "big government conservative" who believed that aggressive federal economic intervention would speed recovery and reduce suffering. He specifically rejected the advice of Treasury Secretary Andrew Mellon that the best policy would be the same as President Warren Harding had pursued after the sharp 1920-21 recession: to cut taxes, cut federal spending and allow market adjustments to proceed unimpeded.

FDR did not take the country down a different path, but accelerated rapidly down the failed, counter-productive statist path Hoover had chosen. The parallels between the Hoover-Roosevelt era and the Bush-Obama era are striking."

I've been saying this for years, and I'm not even a libertarian. George W. Bush spent like a Democrat, especially on social programs, and it took Obama to get even more reckless. But at least GWB had the economic sense to encourage more tax money for the government coffers instead of discouraging it with punitive regulations, cap and trade, higher taxes, and finger wagging threats.

The Hoover-Roosevelt Redux

As I watch George Bush swing helplessly in the wind, abandoned by both his party and common sense, unable to control a Democratic congress and see Barack Obama and the Clinton Team already over the starting line, not even waiting for the bell, I am so reminded of the Great Depression, and the myths I was taught in school. But here's the truth:

"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."

Roosevelt gave us 8 more years of bad economic policies, some of which we still live with; let's hope Obama doesn't go the same destructive route.

FDR's failures will be Obama's

During high school and college courses of American History that I took (I had enough for a minor in college), President Hoover was villified, Roosevelt diefied. Sort of like Bush-Obama. It's still that way in most sources. But no sensible person can look at 1932-1942 and not see that Roosevelt totally failed with his New Deal! He taxed everything that moved, particularly poor people who were taxed for the smallest pleasures like chewing gum and movie tickets. The rich did fine. Each time the stock market would start to recover or the unemployment rate would go down, he'd throw another chunk of the alphabet (AAA, NIRA, TVA, WPA, NRA) on the fire, and whoosh, he'd put out the flame of progress.

Hoover was only in office a few months when the stock market collapsed--he had no role in that at all. Unemployment was 4% in August 1929, and the crash was in October. (Somebody tell Joe Biden.) Hoover tried a little and he tried a lot. He tried free markets, tax cuts, and tax increases. He tried bailing out banks and insurance companies. Has a familiar ring?

Some of it looks just like entry level "New Deal" to me. So if it didn't work, let's try more, and that's what FDR did, and did, and did some more. We'll never know what might have happened if Hoover and Roosevelt had done nothing. Unemployment peaked in 1933, well after FDR's 100 days. Well, if you won't blame FDR for that, then don't blame Hoover for the crash. But it never got out of double digits the whole decade, and was back up around 20% in 1938. If we hadn't gone into WWII when all the men went off to war and unemployment dropped below 3% because no one was left in town but my grandfather and my great-grandfather to run things, we'd probably still be doing the New Deal. In many ways, we never quit. And each time we get a Democrat in office it's like the ghost of FDR and he tries it all over again, whether or not we have a recession or stagflation or a tech boom.

Don't trot out the WPA and wave that at me. My home town has a nice little WPA mural in the post office. We had a sweet little state park down the road where they planted trees. It's still used today--we have our class reunions there. Bright eyed, idealistic college kids can write papers about the WPA's contribution, but what the town really had were several small companies that employed people--a printing plant, a publishing company and a fulfillment agency. That's what fed people and built homes--not the government paying people an allowance to paint, write, sing, dance or build cabins in parks or roads. For the 3 million or so who were in WPA I'm sure it was a nice chance to get away from home and earn some self respect, but most people had jobs or were working the family farm, or taking in laundry or boarders, or selling garden produce.

FDR was a brilliant politician, but none of his programs turned the economy around in the Depression. It was stop-gap government sop and Obama will take us in the same direction. Thomas Sowell says

Barack Obama's "change" is a recycling of the kinds of policies and rhetoric of the New Deal that prolonged the Great Depression of the 1930s far beyond the duration of any depression before or since.

These are the same kinds of liberal policies that led to double-digit inflation, double-digit interest rates and rising unemployment during the Carter administration. These are "back to the future" changes to economic disasters that need repeating.

Make no mistake, the political rhetoric of FDR was great. For those who admire political rhetoric, as so many of Barack Obama's supporters seem to, FDR was tops. For those who go by actual results, FDR's track record was abysmal.
Thomas Sowell