Another Right-Wing Talking Point Debunked

[MTAtech]

On the House floor today, Congressman David Dreier ridiculed the Stimulus Plan being debated by saying, "Henry Morgenthau Jr., Treasury Secretary under President Franklin D. Roosevelt, said in 1939, “We have tried spending money. We are spending more than we have ever spent before, and it does not work... I say after eight years of this Administration we have just as much unemployment as when we started. .... And an enormous debt to boot!”

Quote:

Though Morgenthau was Roosevelt’s treasury secretary, he was an orthodox economist who opposed Keynesian economics and New Deal spending, consistently calling for a balanced budget and reducing the national debt, even during the depression. In 1937, Morgenthau and other conservatives, claiming that the country’s economic crisis had ended, convinced Roosevelt to cut many New Deal programs. As a result, the country fell into another recession, and unemployment rates, after falling rapidly for several years, began rising again.


Morgenthau also fought (unsuccessfully) against the veterans’ bonus (for World War I vets), the precursor of the World War II GI Bill. Considering that he was against the New Deal spending programs from the start, it’s not surprising that he would claim they hadn’t worked. His claim about unemployment was entirely incorrect. The unemployment rate in 1933, when Roosevelt took office, was 24.9 percent. By 1937, it had fallen to 14.3 percent. After the premature cuts in New Deal spending, unemployment quickly rose to 19 percent in 1938. Government spending was increased again and unemployment fell to 17.2 percent in 1939, when Morgenthau spoke, 14.6 percent in 1940 and 9.9 percent in 1941. The drops in unemployment rates were actually much larger than the numbers indicate, because in the 1930s, the millions of workers employed in rural electrification, highway construction and other federal projects were officially considered unemployed, since they did not work for private firms. link

The fact that unemployment was lower after New Deal programs than before, undercuts Morgenthau's assertion that it wasn't and overall undercuts right-wing attacks on Keynesian economics.

[Chuckiechan]

Well, you get your proof in a year or so. The "stimulus" package is heavy on spending, short on tax cuts.

Obama promised 4 million jobs, cutely say "saved or created". How do you measure "saved".

If they economic engine continues to sputter with the "porkulus" plan in a year. Obama is done for.

[MTAtech]

Quote:

Originally Posted by Chuckiechan

Well, you get your proof in a year or so. The "stimulus" package is heavy on spending, short on tax cuts.

Obama promised 4 million jobs, cutely say "saved or created". How do you measure "saved".

If they economic engine continues to sputter with the "porkulus" plan in a year. Obama is done for.

The stimulus is too small -- even smaller after Republican compromises.

The economy is short 2 trillion dollars in spending. $780 billion isn't going to make up for $2T lost, so it's not heavy at all and 35% of that is tax-cuts.

As for "proof in a year or so," now matter what happens Republicans are going to frame it as a failure, just as their revisionists are framing Roosevelt's New Deal response to the Depression as a failure, even though the evidence is overwhelming in FDR's favor.

[Chuckiechan]

Quote:

The economy is short 2 trillion dollars in spending.

If you believe in the business cycle, then you understand that governments - or more accurately, taxpayers - cannot be expected to make up for lost sales when business goes in recession.

The "Great Depression" lasted 11 years and was finally broken by WW2. Is that your yardstick of success?

[Theophylact]

So tell me, Chuckiechan, why was Roosevelt reelected in 1936 and 1940?

[Vagabond]

he got more votes?

[Chuckiechan]

Quote:

So tell me, Chuckiechan, why was Roosevelt reelected in 1936 and 1940?

Probably because people got adjusted to poverty and soup lines, and the shame of accepting charity was diminished. And soon, they grew to like it.

You tell me. You're the resident genius around here...

[M_Six]

Quote:

Originally Posted by Chuckiechan

...resident genius...

I smell a new custom title for Theo.

[zen]

Quote:

Originally Posted by M_Six

I smell a new custom title for Theo.

I smell something.

[Epidemic]

Quote:

Originally Posted by Theophylact

So tell me, Chuckiechan, why was Roosevelt reelected in 1936 and 1940?

I don't know... Is re-election the yard stick of someone who makes the right choices and takes the most effective paths theo?

besides FDR's plan may or may not have worked but it did play on peoples fears about financial security. soup lines are disturbing people might well vote for the plan that seems to address those problems even if the plan is window dressing.



Personally I am not sure if FDR's plan was bad or even if present stimulous plan is bad. personally I feel it props up a broken system and simply delays the the correction at great cost. Leaving us due for a future correction as well as the cost and as well as the future value of the correction.

Look at it this way. just from a housing standpoint, government is trying to prop up the banks and help those with loans which will artificially bring the value of housing back to artificially high levels.

a 100000 dollar house 10 years ago has become worth an insane 351000 for doing nothing more than stand there and become older and the appliances reaching warranty. The problem was the artificial inflation of value at way beyond economy's 3%. In reality the house should have been worth around 130,400.

the laws of economics did not apply to the value of that house so it was false value. the only reason for the inflation was sudden increase in people buying houses who could not afford them followed by insane speculation hoping to get a piece of the pie with people buying more than they could afford on speculation.