Obama: Carter or FDR?

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People are beginning to compare Barack Obama’s administration to the failed administration of Jimmy Carter, but a better comparison is to the Roosevelt administration of the 1930s and ’40s. Let’s look at it with the help of a publication from the Mackinac Center for Public Policy and the Foundation for Economic Education titled “Great Myths of the Great Depression,” by Dr. Lawrence Reed.

During the first year of President Franklin D. Roosevelt’s New Deal, he called for increasing federal spending to $10 billion while revenues were only $3 billion. Between 1933 and 1936, government expenditures rose by more than 83 percent. Federal debt skyrocketed by 73 percent. Roosevelt signed off on legislation that raised the top income tax rate to 79 percent and then later to 90 percent. Hillsdale College economics historian and professor Burt Folsom, author of “New Deal or Raw Deal?”, notes that in 1941, Roosevelt even proposed a 99.5 percent marginal tax rate on all incomes more than $100,000. When a top adviser questioned the idea, Roosevelt replied, “Why not?”

Roosevelt had other ideas for the economy, including the National Recovery Act. Dr. Reed says: “The economic impact of the NRA was immediate and powerful. In the five months leading up to the act’s passage, signs of recovery were evident: factory employment and payrolls had increased by 23 and 35 percent, respectively. Then came the NRA, shortening hours of work, raising wages arbitrarily and imposing other new costs on enterprise. In the six months after the law took effect, industrial production dropped 25 percent.”

Blacks were especially hard hit by the NRA. Black spokesmen and the black press often referred to the NRA as the “Negro Run Around,” Negroes Rarely Allowed,” “Negroes Ruined Again,” “Negroes Robbed Again,” “No Roosevelt Again” and the “Negro Removal Act.” Fortunately, the courts ruled the NRA unconstitutional. As a result, unemployment fell to 14 percent in 1936 and lower by 1937.

Roosevelt had more plans for the economy, namely the National Labor Relations Act, better known as the “Wagner Act.” This was a payoff to labor unions, and with these new powers, labor unions went on a militant organizing frenzy that included threats, boycotts, strikes, seizures of plants, widespread violence and other acts that pushed productivity down sharply and unemployment up dramatically.

In 1938, Roosevelt’s New Deal produced the nation’s first depression within a depression. The stock market crashed again, losing nearly 50 percent of its value between August 1937 and March 1938, and unemployment climbed back to 20 percent. Columnist Walter Lippmann wrote in March 1938 that “with almost no important exception every measure (Roosevelt) has been interested in for the past five months has been to reduce or discourage the production of wealth.”

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  • C.J. Law

    And we think we have it bad now. The country was saved from this leftist dogma by WW11. The residue of this mindset is still with us today and every Dem president since except Kennedy has added to the master plan. Obama if left to his own devices will try to go past FDR with his Obama care and destruction of personal wealth and small business, the real drivers of growth. Only the insiders due well everyone else is run over with regulation, tax tax and more tax.

  • Mark

    "Obama if left to his own devices will try to go past FDR with his Obama care and destruction of personal wealth and small business, "

    This is exactly why I pray for President Obama every day – he truly needs Divine guidance.

    • Cgerber

      Don: North Korea, Russia, Gaza, WestBank are all looking for your insight. Like Lenin said your just nothing but a usefull idiot to traitors.

  • Don

    I think you missed the point of the New Deal.

    The author, and more specifically those who the author quotes, demonize the New Deal for exascerbating unemployment, destroying wealth, and lowering production. What the author fails to understand is: this was exactly the point. The intention of the New Deal was never to return America to full employment, create wealth, or raise productivity. So, yes, if these are the goals the author outlines for the New Deal, then indeed, the New Deal should be considered a failure.

    The intent of the New Deal was to defeat all of these supposed “goals” the author asserts were the goals of the New Deal. FDR came out of the New York capital class. He knew from personal interaction with these money changers that, after the dust had settled on the Crash of 1929 and the country entered the Great Depression, that these money changers were going to exploit the national emergency to drastically gut the American standard of living. By the growth of rust belt cities like Detroit in the 30s and 40s and, in particular, the post-war boom, the New Deal was a resounding success.

    Those who denounced FDR as a “traitor to his class” intended to combat urbanization and industrialization with a return to 19th century standards of living: 1e hour work days and sweatshops for sub-American pay. We see this today with capitalists exploiting the current economic crisis. The last thing America today needs is more “Rick Perry Jobs” at Wal-Mart and Carl’s Jr. Unfortunately, too many Americans are too short-sighted to see anything beyond their next meal, particularly when hard economic times hit. That’s why America needs leaders like FDR and the New Deal Democrats to make the hard decisions like Good Jobs vs full employment.

    • Cgerber

      Don your nothing but a usefull idot like Lenin and Stalin talked about. I make a bet your work for the Gov, make your living of the Gov, you get a check from the Gov, or just another Propaganda Mininster liek Bagdad Bob called our national Media. Go to Russia, North Korea, Mid East, Iran, and let"s see what type of darling your are!

      • Don

        Damn dude. I don’t crap on you because you wanna suck cock for pocket change. Rock on with your bad self!

        The only fallacy present in supply-side economic analysis is that a rising tide lifts all boats. If the last decade taught us anything, this is demonstrably false. No one disputes that a regulation-free market environment is the most efficient way to distribute resources towards productivity. But productivity and efficiency are the enemies of workers and their standard of living.

        Also, the dichotomy presented is a false analogy of absolutes. No one is advocating a so-called “planned economy”. But an economy where every worker is guaranteed a living wage with 20% unemployment, but a social safety net to protect what those who are between jobs have earned is a remarkably more fair and healthier society that products American values of family and community even if resources aren’t utilized in the “most productive” way possible.

  • Reason_For_Life

    Walter Williams has nailed down one of the most important features of the Obama administration – its continued reliance on Keynesian fallacies to justify its insane economic decisions.

    It's not as though no one knows that these things don't achieve their supposed goals. "Planned" economies have failed catastrophically for centuries. Roosevelt's policies deepened and lengthened the Great Depression. The Japanese "Lost Decade" is now nearly 25 years old. Europe is in shambles. China has daily riots that go unreported.

    The US is mired in a "recession" that seems interminable because bureaucracies have been created and empowered to stop all economic progress. No drilling for oil or gas. No business that might possibly endanger a dying species. Minimum wage laws that keep teenagers unemployed. No construction of factories or plants in right-to-work states.

    The restrictions are endless and the recession will be too.

    Ludwig von Mises demonstrated that without a free market pricing system economic calculation was impossible. His book, "Socialism" laid waste to every conceivable kind of planned economy. He wrote that book before the Great Depression had its first dip.

    Friedrich von Hayek showed how markets produce a spontaneous ordering that is inherently more efficient than any "planned" economy ever could be. He wrote his work during WWII.

    Jean Baptiste Say showed that supply and demand were the same thing. People don't buy and sell goods and services for money. They trade goods and services that they produce for the goods and services produced by others using money as the intermediary to facilitate and simplify the trades. Say wrote about this in the early 19th century, nearly two hundred years ago!

    Now we have a president who ignores the principles of economics that have been discovered over the last two centuries in favor of a radical egalitarianism of the kind that turned the French Revolution from freedom to tyranny and resulted in the Reign of Terror and Napoleon!

    History repeats itself because people repeat errors. Obama may not merely reproduce the poverty and hopelessness of the Great Depression. He may well give America its second revolution, one whose radical transformation of America will end the dream of the Founders and with it our world.

  • alexander

    <<<<<<<Obama: I reversed recession until 'bad luck' hit">>>>
    only a total imbecile could think of it…………..great advisers, I guess……….and what are they all using?

    • ebonystone

      "………….and what are they all using?"

      Must be something in that Kobe beef he's so fond of.