Republican Revisionists At It Again

You’ve got to hand it to the Republicans. Even when the cupboard is bare they manage to whip up into a lather over the one thing they still think they have some remaining political capital left: fiscal responsibility. Not that they’re right, mind you, just determined. But then being right has never been a strong suit of such idealogs; given their track record on the economy, the war in Iraq, energy policy, education, the title currents, is it any wonder they’re in such a stupor. Being so consistently wrong on so many issues can lead to a defiant numbness. And, of course, when the facts don’t add up, the prevailing logic is to make up the facts as you go along, no matter how outrageous.

The latest pathetic attempt at revisionist history came from Mitch McConnell of Kentucky, who undoubtedly needs to be locked in a room with an encyclopedia. Frothing at the mouth, McConnell argued, with a straight face, that FDR’s New Deal failed to lift America out of the Great Depression. With a frightening ignorance that would’ve made Herbert Hoover blush, McConnell said. “But one of the good things about reading history is you learn a good deal. And, we know for sure that the big spending programs of the New Deal did not work. In 1940, unemployment was still 15%. And, it's widely agreed among economists, that what got us out of the doldrums that we were in during the Depression was the beginning of World War II." I’ll say this for the self-delusional; they’re entertaining if nothing else. I’m not sure what history book McConnell was reading from, but he needs to find a new library fast.

Let’s look at the real and complete facts. To listen to McConnell, you’d think that the Great Depression started in 1932; in point of fact it started in 1929, year one of the Hoover Administration. Hoover’s inaction in the face of an imploding economy would’ve made the fabled story of Nero fiddling while Rome burned seem pale by comparison. In point of fact, his indifference proved catastrophic. By the time Roosevelt took office in 1933, the economy had hit rock bottom. The unemployment rate that year was 25%. Thanks in large part to the New Deal, by 1937 unemployment fell to 14.3% and GNP was up 35% from where it was in 1933 and higher than it was prior to the stock market crash of 1929. Concerned that the Supreme Court declared the National Labor Board to be unconstitutional, Roosevelt sought to enlarge and liberalize the Court. The attempt not only failed, but outraged the public, and cost Roosevelt much of his political power. Hence, no major New Deal legislation was passed in 1938, resulting in a year-long recession. GNP dropped 4.5% - one of only two years during FDR’s tenure in which a decline was posted; the other was his first year - and unemployment rose to 19%. By 1939, it fell to 17.2%.

Beginning in 1939, the United States began a massive deficit spending program, in preparation for war. Between 1939 and 1941, the U.S. spent over $1 billion to retool its armed forces; manufacturing shot up an unheard of 50%. By 1945, the United States emerged from World War II as the world’s only economic superpower, and while deficit spending resulted in a national debt 123% of GDP, America went on to experience the greatest economic boom it has ever known.

Summing up we can conclude the following points.

1. The conservative economic policies of the 1920s -- low taxes, little regulation, lack of anti-trust enforcement -- did nothing to stop the August recession and the October stock market crash of 1929.

2. Hoover kept the Federal Reserve from expanding the money supply while bank panics and billions in lost deposits were contracting it. The Fed's inaction was the reason why the initial recession turned into a prolonged depression.

3. The economy continually sank throughout Hoover's entire term. Under Roosevelt's New Deal, it rose five out of seven years. Roosevelt's average growth of 5.2 percent during the Great Depression is even higher than Reagan's 3.7 percent growth during his so-called "Seven Fat Years!".

4. Attempts to blame Big Government for the Great Depression do not withstand serious scrutiny. The Smoot-Hawley Tariff had a minor impact because trade formed only 6 percent of the U.S. economy, and reducing trade gave Americans only that much more money to spend domestically. Hoover's other attempts at government intervention came mostly during his last year in office, when the Depression was already at its depth.

5. The first nations to come out of the Great Depression -- Sweden, Germany, Great Britain, and then everyone else -- did so after they adopted the Keynesian solution of heavy deficit government spending.

6. Keynesian economic policies have eliminated the depression from the world's economies in the six decades that have followed.

7. There are more than just a few economists who feel that the current stimulus bill may not be large enough to stop the downward spiral and jumpstart the economy. Some have estimated that the bill should be closer to $1.5 trillion, if not higher. This does not include the TARP bailout. Even at that staggering number, the national debt to GDP ratio would still be less than it was in 1945.

So there you have it. Fact over fiction; reality over fantasy. It took the better part of a decade to dig the hole we are in, and the guys who bought the shovels are still running their mouths. It’s time to tell them what they can do with their advice. Disingenuous politicians are a dime a dozen, as are their bankrupt policies.