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TechnoratiThe Anti-Stimulus Crowd: The Fear of Success
In their story, we would have been better off if we just left the market to adjust by itself. New Deal programs that directly employed people, or in other ways supported living standards, created an uncertain investment climate. They claim that this uncertainty slowed the process of market adjustment that was necessary for returning to high levels of employment.
The Wagner Act, which created the legal framework for the union organizing drives of the era, stands out as being especially pernicious in their story. The Fair Labor Standards Act, which created the 40-hour workweek and established the first national minimum wage, also gets singled out for criticism. In this new reading of history, what most people consider the great successes of the New Deal simply worsened 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.
Imagine how terrifying the prospect of 20 years of Democratic presidencies must be for the current generation of Republican leaders. This would mean that they would not retake the White House until 2028, just 20 years before the Social Security trust fund is first projected to face a shortfall.
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.
For this reason, the Republicans can be expected to adopt a strategy aimed at delaying and diluting the stimulus. We can expect their leaders to find every conceivable argument to slow down the spending that the economy desperately needs right now to prevent further job loss. While some of their concerns may be legitimate - we should all support efforts to restrain wasteful pork barrel spending and rein in corruption - these concerns should not be the basis for obstructing stimulus. The public should be careful to distinguish legitimate concerns from simple delaying tactics.
In short, we should realize that the main concern of some of those opposed to stimulus may not be that it will fail, but rather that it will succeed. Most of us don't have the same set of concerns.
30 Comments so far
Show AllToday Obama said, "If you have a solution, show me"
Well we can definitely show you Mr. Obama, in fact WE'LL SHOW EVERYBODY!!!
http://www.americanrhetoric.com/speeches/hueyplongshare.htm
It's good to see stimulus skeptics here. Of the 20 "economists" that Obama says support the need for a huge stimulus, how many predicted this mess? Those are the only ones I'd listen to.
This is a problem of debt and decades of using debt to get us out of economic hard times. All those "Keynesians" seem to forget that Keynes also said that when times were good, spending should be cut and the debt paid off. We never did this and now its time to pay the piper. You can't borrow and spend your way out of debt. Debt can only be liquidated or paid off. In 2007 we paid $400 billion in interest on the national debt. Think about that.
And take the partisan blinders off and understand that Roosevelt did not bring this country out of depression. WPA and CCC were good ideas but they did not pull us out. And the efforts to keep prices up and the NRA (National Recovery Act) activity may have prolonged things.
And the idea that Roosevelt just didn't spend enough is just that, an idea, not a fact.
want to deal with the repug's? then get your Dem' representatives to do their job and fulfill their mandates. the only reason we have enough repug's in power to influence gov't policy is that the majority of Dem' representatives continue to act with gross contempt for the public will and for the law. for starters, everyone reading this list should send an email to their congress persons asking them to state their policy on aid to israel.
and the planet became product...
there are about three representatives and one senator who are not bought and paid for by the problem. until we get corporate money out of our elections and have instant run-off voting we will never be able to successfully address the horrible situation we have got our only planet, our economy, and ourselves into.
there are about three representatives and one senator who are not bought and paid for by the problem. until we get corporate money out of our elections and have instant run-off voting we will never be able to successfully address the horrible situation we have got our only planet, our economy, and ourselves into.
Enough with the neo liberal economics! The stimulus will NOT work because it is based on DEFICIT spending. Why can't these so called journalist get it? FDR had a nation that SAVED money, that PRODUCED goods. We have a nation built on credit financed consumer purchases.
By borrowing and printing trillions of dollars more what we will do is debase our currency, meaning working Americans make less and less. The bankers want this, it means working people will have to borrow more and more, making them even more filthy rich.
The entire system must be CHANGED. Get rid of the private illegal Federal Reserve. Return to a gold and silver monetary standard. Raise interest rates to promote SAVINGS and change finance laws to promote investment in PRODUCTION, not speculation. End militarism.
Of course, by destroying the dollar and turning the USeconomy into third world status the politicians will accomplish this in the long run, but with much pain and agony for working people that could have been averted. The great danger of this path is that in the midst of the calamity it will create we may get a Hitler as leader instead of an FDR. It is why I, and many other Americans, have left the country.
Having lived through the Great Depression, let me tell you that the WPA
and the CCC did not get us out of the depression.{roads and bridges}
It was after the invasion of Pearl Harbor when we began to build
guns, tanks, trucks, destroyers, submarines, landing craft, parachutes,
Planes of all kinds. We have, since 1941, created an industrial base, that lasted
until Bill Clinton and the Bush Family came into Power. The sell-out of our
industrial base to China is considered a serious crime in my understanding.
Building roads and bridges is what FDR did until 1941, and we had not
recovered from the Derpression.The destruction of our industrial base should be
made public so that we can hold the Clintons and the Bush family for this
treasonous act.
Let's not fix this economy--let's change. The assumption is that this production/consumption/profits economy is the end all/apex of economies. But just as the agricultural economy was not the apex (though Jefferson seemed to want it to be), neither is the Industrial/consumer economy. We are in transition to a service/knowledge/caring economy and this needs us to broaden our perception of how an economy can run.
A Full Spectrum economy is that broader vision. Right now, we have a 3 sector economy where all 'economic activities' that we include in the GDP are measured. Those 3 sectors are markets, government and illegal (prostitution/drugs, crime etc.). A Full spectrum economy is a 6 sector economy where we would measure the current 3...and then add to it 3 other areas--the household economy, unpaid volunteer and natural economies. When we include these into our economy--moving monies through them enables us to head into a new economic system--Service/knowledge/Caring and not keep ourselves tethered to the old system that has runs its course--just as the agricultural economy ran its course.
Change is the natural order of things--but in transition, most people run back to keeping the old order going. We can't afford this--and it appears that the current stimulus package is focused too much on the old sectors (which is why Republicans feel they should be left alone to 'right themselves) Obama and crew need to focus more on funding the 3 new sectors--as these will enable us to reduce the 'consumer' economy and re-employ people in the new sectors instead. The levels of consumption of the late 90's will never happen again...let's stop trying to shore that old system up!
Tax breaks = no money to pay for things like roads, bridges, schools, healthcare.
Face it people, the US is broke. It is handing out fiat money to companies that produce crap no one is buying. Even Toyota is cutting back massively on production.
Car sales are the worst in 30 years. Construction projects and hew house starts are swirling down the pipe. Major oil projects that would have been a band-aid solution to American energy woes have been abandoned.
The economies of Iceland, Ireland, the UK, Spain, Greece and Japan are bleeding out on the floor.
The US is so deep in debt, to solve the problem would take all the currencies in the world added up just to pay the interest.
The recipients of the bank bailout took the money they were given with no oversight, and instead of using it to attempt to refloat the economy, looted the bailout for their own profit and hid the rest, and are now refusing to show what they have done with it.
The Detroit Big Three have been given just enough rope to hang themselves during the first 100 days of Obama's presidency.
Jim Kuntsler is looking more and more right as time goes on. And many mainstream economist are now openly admitting that this year will make 2008 look like a day at the park...
Walk in peace.
AMEN BROTHER !
I don't blame the writer for trying to be positive. But what I find myself asking day after day is...Is this all he's got? This is like..."it"? These are his best ideas and people to carry them out? This is the best we can do?
Uh-boy.
This is not looking good. Not looking good at all.
Ever since the Raygun Era, the word "stimulus" has been misused to justify fuzzy math ideas of giving tax breaks to the wealthy at the expense of allowing the country's critical public infrastructure to languish. Obama should spend time cutting back on reckless defense spending and cutting down on Wall Street bailouts. Never mind, he supported those two reckless spendings in his Senate tenure. Plus, he plans to continue cutting the budget on public transportation as if it's not bad enough already.
Let's get things straight.......if it is not Nancy Pelosi, allegedly, watching out for American Samoa and her husband's Starkist investments, then it is Senator Feinstein watching out for her husband, Richard C Blum, and his contracts with DOD worth over 1.4 BILLION DOLLARS....The Democrats have done a great job of hiding their "Conflicts of Interest" and the money their families have gained from their votes ......Yes, Republicans have done a great job for Dick, George, Halliburton, Carlyle,Bechtel, General Electric and so many more.......
All of Congress, except maybe Dennis Kucinich, have watched out for their interests...Not one, has thought of the American People first.........Watch "Zeitgeist" the movie or "Camelot Project with Richard Hoagland" to learn a little about the "They" that are running this country.
Actually, I meant to include both the Democrats and Republicans in Congress but this article just so happened to be about Obama's plan that I forgot. Of course both parties suck shit.
Americans were lazy enough, uninformed enough and stupid enough to put the Republicans in power for over a generation (I'm including Clinton) with catastrophic results we are now living through. It will be amusing, in a stomach churning way, to watch them plot their return to power - the kinds of lies they will tell, who will tell them, how they will be told and how the MSM will cuisanart those lies for easy swallowing and digestion. Don't count too much on "the throng of eager shoppers" not be fooled again.
Dean Baker wants to redistribute wealth from the people to the elites except instead of the elites spending it on war/oil enterprises or pocketing it, he wants them to spend it on something different that allows the Demoks to differentiate themselves from the Repuks. The people get more of the same: Hyper-expensive transportation is but one example. Current transport policy means that we travel three times what we should, and the externalized (hidden) costs of the infrastructure, vehicles, and fuel are all ten times per mile what they should be. By limiting our travel, and using only the most efficient modes, we can cut the cost of travel from around five work hours/week to one half work hour/week. And this is just the transport sector. Every sector in the US economy is a racket. Dean Baker's very familiar and very wrong Reaganite/Friedmanite/Clintonite assumption is that we need more economic activity. The truth is we need less, MUCH less. We need to cut the 50 hour work week down to 15. We need to cut the production and the consumption way down. The remaining production should be in the hands of the people, serving the people's better interests. This brings economic, social, and ecological stability, and sustainability. You continue to let the elites control your society, you continue to have delusion, slavery, destruction.
The primary role of government in the economy should be to provide a strong safety net, including single-payer, universal health care.
Beyond that the accomplishments of the New Deal are questionable. Sure it brought the country out of the Depression but at the cost of 70 years of military Keynesianism. The consumerism that has provided jobs outside of the military-industrial complex has provided little else except pollution and excuses to use the military to secure the supply of resources that consumerism requires. I see little advantage to stimulating such activity.
How about reducing the amount of time that we spend at work?
It's a little premature for anyone to discuss Obama's proposed stimulus plan when few details have yet been revealed.
Ah, yes, Obama, you really do need to get the republicans cooperation on this bill. In fact you need to consider their every wish and demand. What a pile of wimpy-weak-willed rubbish! Change we can believe in, indeed.
The Rupublican plan, as it will soon be revealed by the neatly timed failure of the Detriot Big Three early in Obama's presidency, which will lead to a complete economic implosion that will utterly ruin the world economy.
Then the surviving Republicans and their cockroach-like media talking heads wll proclaim over the few functioning DTV cable boxes that the whole mess is that uppity black man's fault...all while the newly impoverished masses are out hunting rats for that night's dinner.
Walk in peace.
The republican viewpoint is basically the Feudal Lord, serf thing. The "little people" and what they need or want is totally unimportant - those at the top will see to it that they don't starve - at least not those needed for the slave labor to keep the money flowing up. Seems crazy that so many poor people hang onto the party and don't really even know what the party platform is.
It isn't "some Republicans" coming up with all the crap about Roosevelt and the New Deal era. It's all those big think tank repug corporations filled with old white males who're cooking it up. Then the flunkies will start spewing it until we're all saturated. A window into the Obama presidency before it even gets up and running.
The main problem seems like its going to be "tax cuts" for wealthy individuals, corporations and "business friendly" de-regulation- touted as 'economic stimulus' in order to get Senate Republicans on board. In other words, "trickle-down" neo-conservative theory, which got us into this mess in the first place, as if more of the plague is just the thing to cure the plague.
One of the big excuses will be the "need" for bi-partisanship, unifying "consensus" solutions instead of a tough fight in which all the major campaign contributers would have to face the prospect of disappointment.
This would seem to follow the same track as the "bail-out" which often appears as a temporary expediant that has "the people" picking up the losses while business and industry go on with their "financial management" ways prospecting for the next bubble to pad their incomes and off-shore accounts without having to do any work supporting the public interest long run ( e.g. improving rail transport, reigning in NASA manned programs, ending the wars).
Why should the Republicans object to Obama's stimulus package? The more it's unveiled the more it looks like a Republican plan.
Consider the following: 20% of the stimulus package (up $155 billion) is going to tax cuts for Big Business, while individual workers would get a tax credit of $500, or $1,000 for families.
Oh, by the way, remember Obama's promise to raise taxes on people who make more than $200,000? That little item was dropped from Obama's stimulus plan.
Change we can believe in? I think not.
The partisan tone of this article really misses the mark. The crisis is not a struggle between the good Democrats and the bad Republicans. They are essentially one party.
FDR's efforts prevented revolution by restraining laissez faire capitalism, but that's about it. Nothing essential was changed.
We're back to ground zero and we have the opportunity to make structural changes in the monetary system itself. The private monetary system is the cause of the current crisis.
I recommend to Dean Baker the new Nation article by William Greider in which he makes a number of proposals to remedy the situation. He proposes, among other things, that the Fed be absorbed into the Treasury. This means that the Fed would become a true government agency, subject to Congressional oversight and control. In other words, Greider proposes that we eliminate the private monetary system that lies at the root of the current crisis.
This proposal would allow the intent of the Constitution, Article 1, Sect 8, clause 5, to be implemented for the first time in the history of the US.
We are at a turning point in the history of our country. New Deal halfway measures will not return this nation to a sound financial basis. Our monetary system must be fundamentally changed.
Nice it's good to see someone on the left finally realize the Federal Reserve is evil. For too long this has been an issue only Ron Paul type Libertarians have been aware of, which is too bad because while Paul is right about opposing U.S. empire he is deadly wrong in his deregulation oriented laisez affaire capitalist views. Deregulated capitalism is only more of the same of what has gotten us into trouble in the first place not to mention the horrible environmental, worker safety, and worker pay effects it has.
Partisan tone? I read it as satire.
The paragraph about the ages of current Republicans was the giveaway since its superfluous to the tone of the article.
That is right!
In the depression our accumulated national Debt was nothing compared to what it is now with Debt liabilities of over 60 trillion dollars and growing by the trillions monthly.
Also during the depression we produced much more of what we consumed. Today our production to consumption ratio is so bad that it adds to the debt all by itself without any bailouts.
Adding to the growing exponential debt with stimulus without taking ownership of our monetary system is what has got us to where we are.
The Republican idea that goin deeper in debt will not get us out of debt is sound fact and we need to keep it in mind when we are forced into spend and spend with all that economic theory that has got us into this Debt based War economy while common sense is all we have left that hasn't been tried. When the inflation hits and gas prices rise from the trillions of fast cash printed (if it ever really does get printed) reality will hit like a ton of bricks.
Then on top of that you have to wonder who is goin to buy a trillion dollars worth of Treasury securities at zero interest to back up the trillions in already promised new money?
Roosevelt had it easy because winning the war with all those new markets opening up and with the world goin off the gold standard and on to the American Dollar fiat standard was the beginning of the modern ponzi monetary system... it lasted for many years but debt gets deeper and the numbers don't lie.
Send in the clowns.
Having livable wages, unions and labor standards are a bad thing?
I guess these same Republicans consider the current system a resounding success? Can politicians really be STUPID enough to believe this swill or are they counting on the stupidity and or greed of "Thier base" ?
all of the above