Spending our way out of the recession – it was tried before…
(Excerpts from “Do We Need a New New Deal?” By Burton W. Folsom Jr., Imprimis, January 2009).
…There are three reasons why we do not need a New New Deal from President Obama In 2009…
…First, FDR’s New Deal did not lower unemployment. Sure the Works Progress Administration built roads, the Tennessee Valley Authority built dams, and the Civilian Conservation Corps planted trees. But every dollar that went to creating a federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors… Henry Morgenthau, FDR’s loyal secretary of the Treasury, was frustrated at the persistence of double-digit unemployment throughout the 1930’s. In May 1939, with unemployment at 20 percent, he exploded at the failed New Deal programs. “We have tried spending money”, Morgenthaugh noted. ” 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 enormous debt to boot!”…
…Second, the taxes to pay for the New Deal became astronomical. In 1935, Roosevelt decided to raise the marginal tax rate on top incomes to 79 percent and. Later he raised it to 90 percent. These confiscatory rates discouraged entrepreneurs from investing, which prolonged the Great Depression…
…Third, the New Deal divided ad politicized the country in tragic ways. Those who lobbied most effectively won subsidies and bailouts even if their cause was weak. Others who had greater needs received nothing…
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