http://www.jbs.org/jbs-news-feed/5945-obama-making-same-mistakes-as-fdrPresident Barack Obama is accusing Republicans of standing in the way of reform and is telling the nation that if the opposition party is unwilling to compromise that failure to get the economy going again will be their fault.
This past week in hopes of regaining support for his falling popularity, he has been outlining his anti-Republican strategy at town hall meetings and Democratic fund-raising events.
He is accusing Republicans of standing in the way of his proposals to revamp the U.S. healthcare system and stimulate the economy.
Republicans, on the other hand, blame the increase in unemployment and sluggish economy on Obama’s policies. They claim lower taxes and less government interference would help to stimulate business.
In the meantime, business people are afraid to invest in an uncertain economy and are cautious about making decisions that will be overturned by government regulation. In the past weeks Obama has made business the scapegoat for a slow recovery.
The name-calling and strategies are reminiscent of the 1930s when Franklin Delano Roosevelt introduced higher taxes and make work projects in a failed effort to decrease the soaring unemployment and put the economy back on track.
According to historian Thomas E. Woods, Jr. in The Politically Incorrect Guide to American History, FDR’s New Deal was a disaster that exacerbated the nation’s economic woes. Like Obama, Roosevelt knew nothing about economics and free enterprise. Instead, he chose the progressives’ strategies of bigger government and central planning as means to rectify the wrongs of the nation.
The National Industrial Recovery Act (NIRA) sought to keep wage rates high so as to maintain consumers’ purchasing power. It established hundreds of cartels to set “standard wages, hours of operation, and minimum prices.” Minimum prices meant businesses couldn’t decrease prices in order to be competitive. High wages meant continuing unemployment. Prices were set too high so that goods didn’t sell.
Like Obama, FDR favored labor unions over laborers and business people. Roosevelt gave a tremendous boost to labor unions with the National Labor Relations Act (better known as the Wagner Act of 1935). Unions established rules that discouraged efficiency and innovation. While wages remained high, the overall economy suffered because people couldn’t find jobs.
Like the current stimulus programs, FDR’s public works projects were supposed to provide jobs and economic stimulus. Unemployment, almost eight years after Roosevelt took power, was at 20.7 percent. Instead higher taxes diverted capital from the private sector and discouraged job creation by business. By 1935, according to Burton W. Folsom, Jr., author of New Deal or Raw Deal: How FDR's Economic Legacy Has Damaged America, Roosevelt had raised taxes to the top marginal rate of 79 percent. He proposed raising the top tax bracket to 99.5 percent, but couldn’t get it through Congress.
Roosevelt’s close friend and treasury secretary, Henry Morgenthau, testified before Congress about the failure of government economic policy. He said, "We have tried spending money. We are spending more than we have ever spent before and it does not work. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promise. I say after eight years of this administration we have just as much unemployment as when we started… and an enormous debt to boot."
The New Deal public-works projects were rife with corruption. Make-work jobs went to the western states where Roosevelt needed votes rather than the south, where his support was solid. The American Agriculture Administration (AAA) paid farmers to not plant crops and destroyed food so that prices would remain artificially high. Roosevelt’s legacy remains today in an agricultural policy which encourages crops for ethanol rather than food stuffs.
The result of regulation and new labor laws was that business people simply stopped investing. Uncertainty about government policy translated itself into uncertainty about the future.
In a similar fashion today, investors won’t invest and banks don’t loan money. Because of government overspending, anti-business regulation, and high taxes, business people are uncertain about the future. This will translate itself to continuing high unemployment
and a weak economy.
Topic: Obama Making Same Mistakes as FDR (Read 560 times)