Monday, January 5, 2009

WHY REPUBLICANS WORRY ABOUT FDR

Dean Baker, Truthout - Franklin Delano Roosevelt with members of his cabinet. As President- At least some Republicans are starting to muster an anti-stimulus drive, claiming that President-elect Obama's package will not help the economy. Their drive is centered on what they claim is a careful rereading of the history of the New Deal. According to their account, President Roosevelt's policies actually lengthened the Great Depression. . .

In reality, any careful reading showed that the New Deal policies substantially ameliorated the effects of the Great Depression for tens of millions of people. The major economic failing of the New Deal was that President Roosevelt was not prepared to push the policies as far as necessary to fully lift the economy out of the Great Depression.

Roosevelt was too worried about the whining of the anti-stimulus crowd that he confronted. He remained concerned about balancing the budget when the proper goal of fiscal policy should have been large deficits to stimulate the economy. Roosevelt's policies substantially reduced the unemployment rate from the 25 percent peak when he first took office, but they did not get the unemployment rate back into single digits.

It took the enormous public spending associated with World War II to fully lift the economy out of the depression. The lesson that economists take away from this experience is that we should be prepared to run very large deficits in order to give the economy a sufficient boost to generate self-sustaining growth.

However, from the standpoint of Republicans, the more ominous lesson of the New Deal policies is that it left the Democrats firmly in power for more than 20 years. The Republicans did not regain the White House until 1952, 20 years after President Roosevelt was first elected

In 2028, Newt Gingrich will be 85 years old; Mitt Romney will be 81; Mike Huckabee will be 73 and Senator McCain will be 98. Even Sarah Palin will be a less than youthful 64. In short, if President-elect Obama is allowed to carry through with his stimulus package and the rest of his ambitious domestic agenda, most of current leadership of the Republican Party can expect to spend the rest of their political career in the political wilderness, far removed from the centers of power.

2 Comments:

At January 5, 2009 7:16 PM, Anonymous Anonymous said...

As a progressive Democrat, I have to disagree with this conclusion, which I find rather simplistic. If Obama continues with his plan to significantly increase the national deficits and national debt, he will essentially be handing the country over to the Republicans. There's no way the Democrats can go to the American people with a $15-20 trillion dollar debt, and four years of trillion dollar-plus deficits, and expect to win. Sorry, not going to happen. Hope I'm wrong, though.

 
At January 6, 2009 12:15 AM, Blogger Kevin Carson said...

Actually, WWII spending alone wasn't enough to fix corporate capitalism's chronic overaccumulation and underconsumption problems. What really did the trick (at least for the U.S. economy) was when FDR (with the help of Hitler, Churchill and Stalin) blew up most of the plant and equipment in the world outside the U.S. That postponed corporate capitalism's terminal crisis for a generation or so, until around 1970 when Europe and Japan had finally rebuilt their industrial capital.

 

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