Will Progressives Ever Learn?

I am writing this on ”tax day”, the day that half of us give to the government far more than we take back, and the other half who pay no taxes, takes back all they can get from our massive entitlement system. Tim Ryan, the Republican Congressman from Wisconsin, said that even before discounting for the uncontrolled spending of the current administration, in 10 years 70% of the population will be pulling out more than it puts into the entitlement system. Imagine what the numbers will be when we consider the Stimulus Plan, the Omnibus budget, and Obamacare not to mention the extended unemployment programs, and all the other “temporary” entitlements put in place by this out-of-control Congress and Administration.

The myth that government can create jobs or control the economy is just that…a myth! FDR proved this during the Great Depression. All those government programs failed to create sustainable jobs and in 1939 the unemployment rate still exceeded 20%, while in Europe the average rate was about 12% in 1938. Even with WWII, when you consider that 10-12M soldiers were at war and 15M people were making tanks and guns, most of those jobs had little use after the war. So in October of 1944 FDR spelled out his vision for a post war America. And you guessed it; it was more of the same. Government subsidized housing, federal health care, more TVA projects, all those goodies compliments of the federal government.

Roosevelt died before the war ended and his successor, Harry Truman, urged Congress to enact this New Deal encore. Both chambers of Congress gave him a resounding NO! No federal program for health care, no full-employment Act, limited federal housing, and no increase in the minimum wage or Social Security benefits. Instead, Congress reduced the income tax rates for the rich and middle class, corporate rates were trimmed, and FDR’s “excess profits” tax was repealed, so that corporate rates effectively went from 90% to 38% after 1945.

By the late 1940’s, the invigorated economy was generating more revenue than during the war when tax rates were higher. Price controls were eliminated in 1946 and the U.S. began running budget surpluses. Unemployment, which was double digit during the 30’s, was 3.9% in 1946 and remained in that range into the next decade.

I’m not saying that our current great recession is the same, the factors that contributed to it are different than those that existed in the 30’s. However, the lesson is clear, when a bipartisan Congress has the will to stop an ego-centric leader who is on the wrong path, it can. The people are beginning to wake-up to the fact we have the power in the ballot box to change things even in a mid-term election.

The facts I have provided are cited in a book I read recently entitled “New Deal or Raw Deal” (Simon & Schuster, 2008), by Dr. Burton Folsum, Jr., a professor of history at Hillsdale College. I hope that President Obama picks up a copy, it’s far more useful at this stage of his life than the writings of Saul Alinsky or anything that Hugo Chavez would give you.