When the Republican party last lost its way in 1992 having their President unseated and still having minorities in both houses of Congress, the party needed a demagogue to follow. They chose Ronald Reagan. Now, in 2009 as they have again lost their way, they are choosing to target two great Presidents: Bill Clinton and Franklin D. Roosevelt.
The So-Called, "Clinton Surplus Myth"
Most recently, Republicans have targeted the Bill Clinton surplus saying that the national debt increased every year of the Clinton administration. That is true (source: treasury.gov), but it is too simple a way of looking at this situation. Let's look at it at a more person level.
Now, I emailed a person with such a claim on his blog and he quickly responded. His page has the explanation that if you borrow $500 from your friend and make $1000, spending $1200 then you've spent in deficit. But that analogy applies to a government spending more than it makes and borrowing the rest...like now. The following analogy applies to the late 1990s and early 2000s under Bill Clinton.
Let's say you owe $100,000 and you pay 5% per year in interest. At the end of the year, you owe $105,127 (using the continuous compounding equation). You make $50,000 and spend $45,000 during that year. So at the end of the year, you spend that $5000 to pay down the $105,127 debt you owe. Yet, your debt has increased to $100,127. You spent less than you took in, but your debt has increased.
Now think about this in terms of the national debt. The national debt was between $4T and $6T during the Clinton administration. The amount of interest that piles up on th
at debt is the hardest part of paying it off and will be an issue for many years to come.
Now, in all fairness, most people present the so called "Clinton surplus myth" in the context of, "without condoning Pres. Bush's irresponsible spending" but the bottom line is, the problem Clinton faced with paying down the debt is doubled for President Obama thanks to Pres. Bush's doubling of it. Republicans should find a new issue to work with because after Reagan, Bush41 and Bush 43, Americans aren't listening to their claims of fiscal responsibility.
"FDR Caused or Prolonged the Great Depression"
It started when Brit Humes of Fox News said, "now everyone agrees the New Deal failed". Keith Olbermann rightly responded, "wow he must have a lot of invisible friends." Mitch McConnell just said on the Senate floor, "we now know the New Deal programs did not work". Many
Republican pundits cite the New Deal "failure" as proof that spending is not stimulative.
Starting with Mitch McConnell...he stated that by 1936 the unemployment rate was still 15%. That's absolutely true and that's an inexcusable number. But it's inexcusable for President Hoover...not Roosevelt. Because when FDR took office in 1933 the unemployment rate was almost 25%. That's a 10% drop in just three years. The only thing inexcusable about 15% is that Hoover let it get that high.
While Mitch McConnell was misleading, but other Republicans have fudged the numbers in an even more misleading way. A lot of Republicans say that "the unemployment rate was still 18% by 1938". That is also true...but again it is misleading. In 1937, the unemployment rate was about 14% because FDR got nervous about the deficit and cut spending which is now considered his biggest mistake...the recession came back and FDR quickly put his foot back on the gas.
And to that point, that recession called the "Roosevelt Recession" is the most definitive proof we have that spending stimulates the economy. For four years, unemployment crashed from its high of 25% at the start of the Roosevelt administration. This was as he spent billions of dollars in deficit because it was absolutely necessary. And then, he hit the brakes and most economists from all parts of the political spectrum agree caused the recession. We have no more definite proof than that that spending is stimulative for the economy.
So let's not fudge the facts here. FDR got us well on our way to economic stability and had WW2 not gotten us out sooner, we would have been out by fully recovered by the late 1940s, an incredible feat. Under Herbert Hoover, the unemployment rate went from 3% to 25%...and he was a ONE TERM president.
In Hoover's second year, unemployment was just about where it is now. Just two years later it was 25%. That's what would have happened if we hadn't passed this spending bill.
Of course, there are the Glen Becks of the world who think that FDR "caused" the Depression but they're not worth elaborating on. Clearly the Depression peaked in 1933 as FDR was inaugurated and the stock market first crashed in 1929 (right VP Biden?)...neither his fault.
The Reagan Legacy Project
The year was 1992. There was a general feeling of pride throughout America after we stepped in to Iraq to help out the helpless Kuwait. But then, the recession came into full swing and people began to question Bush's ending the war in Iraq with the dangerous Saddam still in power. So when some no-name Governor from Arkansas who nobody ever heard of came along and unseated a man who had been in the White House twelve years between his own Presidency and his Vice Presidency, the Republicans were shell-shocked.
So the Republicans decided to take Reagan's mediocre Presidency and turn it into something great. Now don't get me wrong, Reagan got us out of a bad economic way, but the way he did it is different from what the legacy project says. And his views on foreign policy were at times criminal.
In 1981, Reagan delivered on his campaign promise to cut taxes. At the same time, he increased spending on defense. During his first year as President, Reagan essentially kept the deficit he inherited from Jimmy Carter, just $74B, the same. But then, in 1982 it went to $128B then $208B peaking at $218B in 1986 (Source: CBO.gov).
President Reagan realized his mistake and attempted to balance the budget. He raised payroll taxes and cut benefits quite famously in 1983. The automatic raises in payroll taxes have yet to be repealed still affecting the middle class today. The only thing that does not rise quickly enough is the maximum tax amount which positively affects millionaires who are only taxed on their first one hundred grand.
After 1981, Reagan raised taxes many times. Just after the Carter recession having everything to do with oil, Reagan raised gas tax. He also raised the same taxes he originally cut restoring 1/3 of the original cut just a year after it happened. He raised taxes more than any time since world war two.
And the notion that his tax cuts were what led to the economic boom in the 1980s is also incorrect. Again, he surged defense spending. That creates high paying jobs and stimulates the economy. That's supposedly a Democratic philosophy, right?
Reagan stimulated the economy by spending billions and giving a jolt to the economy with an income tax rebate in 1981. Why do the same men and women voting against the Obama stimulus constantly a man who did the same thing throughout the 1980s?
Eleven people were convicted during the Reagan administration out of fourteen arrests. Among the list of convicts was Reagan's Defense Secy. Caspar Weinburger. Why? The Iran-Contra Affair. During the mid 1980s, the Reagan administration decided to take the easy way out of a hostage crisis (American hostages) in Lebanon caused by Hezbollah.
Rather than send troops to Lebanon to convey a, "we're American, you mess with one of us, you mess with all of us" attitude, the Reagan administration (and I don't say Reagan because we don't know that...he withheld a lot of evidence) Reagan began bribing Iran with weapons under the table. Israel would sell weapons to Iran, the U.S. would replace Israel's weapons and Israel would give us the money from Iran. In return, Iran promised to do everything it could to get the hostages freed. Reagan admitted it was wrong but maintained his innocence.
Earlier, in 1983, Reagan had invaded a small island nation of 110,000 called Grenada. The U.N. and world denounced it as a flex of Reagan's muscle and nothing more. Immediately after the attack, Reagan's approval rating jumped a few points and he needed that because his rating was getting into Carter territory. No other major power, not even Great Britain, helped out in this invasion. Historians will treat it as nothing more than what it is...flaunting of power.
So please, Senator McConnell and others, let's stick to facts when we discuss millions of people out of work, okay? Let's remember who balanced the budget before you claim your party is the fiscally responsible one. And let's remember how quickly spending forced the unemployment rate down and how the only recession Roosevelt caused was caused by a lack of spending.
And most of all, let's remember that under Reagan, government was not the solution to our problems...it was the problem. Reagan created so many jobs in the defense industry related to government spending (that he allegedly opposed) that when the Cold War ended it caused a major recession. Reagan did not reverse Carter's Government-Economic Complex like he promised, he made it so large that this nation could not survive without it and it took years to fix that problem between George H.W. Bush and Bill Clinton (only to be destroyed again by George W. Bush).
In other words, you're a sitting Senator...let's stick to the facts, okay?
No comments:
Post a Comment