More Stimuli

CVN MCCONNELLRepublican legislators on Capital Hill are still whinning, still lying.  The latest whopper came today from Senate minority leader Mitch McConnell. Speaking in the Senate Chamber McConnell repeated his earlier assertion is that when we look at history,

“…we know for sure that the big spending programs of the New Deal did not work. In 1940, unemployment was still 15%. And, it’s widely agreed among economists, that what got us out of the doldrums that we were in during the Depression was the beginning of World War II.” (1)

First of all, when we look at history there is very little that we can say we know for sure.  Historians argue virtually everything from the widest of generalities to the most minute of details.  Indeed, scholars frequently look at the exact same set of data and manage to extrapolate completely different theories, interpretations, and policy implications from the data in question.  So at the outset, I would warn anyone who may read this to be wary of anyone who claims to know anything for sure, without a doubt.  I am about to tell you what I know for sure based on my reading of history and you probably should believe me either.

The reality is that while we do know that the New Deal and its spending programs did end the Great Depression, evidence that big spending in general did is so overwhelming that we actually might be able to say that we know for sure big spending ended the Great Depression.  Right off the bat, McConnell is not only stating absolutes that he can’t back up, but he is twisting the truth into lies in hopes that most Americans will never know the difference.  PROVE HIM WRONG!

We can go further in criticism of this statement than simply refuting absolutes.  We can easily call into questions the things he claims to know for sure and expose them as statements that, while containing grains of historical fact. are meant to mislead and create false truths to be fed to the masses who are not so well versed in the details of the nations economic history.  First McConnell states that, “In 1940, unemployment was still 15%.”  While it is true that in 1940 unemployment was around 15%, what McConnell fails to qualify his statement with is the fact that the unemployment rate had fallen some 13% as a result of the New Deal.  In 1933 when the First New Deal was implimented, the unemployment rate was at 25%.  Because of the jobs created by New Deal spending, between 1933 and 1937 unemployment fell to as low as 12%, then moved up a bit to around 15% prior to the U.S. entrance into WWII. (2)  In addition, not only did the New Deal help to drastically reduce the unemployement rate during the Great Depression, but it also helped increase GDP consistently between 1933 and 1937.  During that time period, the heart of New Deal spending, GDP increased by over $250 billion from around $600 billion to over $850 billion by 1937,gdp20-401

 Senator McConnell’s attempt, by citing an unemployment number almost twice the current rate, to paint a picture in which the New Deal failed to solve the nation’s unemployment problem and stimulate the economy melts away like sugar in water upon even the most casual exploration of historical records.  McConnell’s statement and intention regarding unemployment and the New Deal is shown as a half truth at best, and at worst one that is meant to deliberately mislead the American people in an attempt to dissuade them from supporting President Obama and his political party.  McConnell, the leader of the Republican Party in the Senate, is playing politics with our nation, with our economy, with our future prosperity.  He is despicable and should be exposed for the obstructionist that he is.  He should be promptly voted from office at the earliest opportunity.

The next and final portion of this statement that must be addressed is his assertion that the majority of economists agree that was WWII that got us out of the Great Depression.  The implication being made is that it was not the big spending programs of the New Deal that got us out of the Great Depression and that therefore history shows us that big spending, such as that currently being proposed by Congressional Democrats and President Obama, is proven to be ineffective at pulling our economy out of dire economic straits.  Again, if we actually take only casual glance at historical records we can see this assertion for the misleading statement that it is.

The statement all by itself is true, just as is the statement made regarding the unemployment rate in 1940.  However, the implication being made by McConnell is easily shown as false.  Economists do largely agree that while the New Deal went far in alleviating the suffering of the Great Depression by creating jobs for the millions who were out of work and hungry, it did not end the depression.  The New Deal was not a perfect package that solved the problem no questions asked.  McConnell is misleading because while correctly stating that it was WWII that ended the Great Depression, he stops there leaving us with implication that New Deal big spending failed.

What McConnell leaves out is an explanation of how WWII brought us out of the Great Depression.  Did the war cause so much consumer confidence that banks started lending and consumers starting spending?  People began investing again becuase the war brought them such a sense of security, safety, and confidence?  No.  This is not what happened.  The reason that WWII brought us out of the Great Depression is because the U.S. government, in order to wage war against Germany and Japan on a global scale, had to pump more money into many different segments of the economy than was ever done through the New Deal.  That’s right, it was BIG GOVERNMENT SPENDING that ended the Great Depression.  The U.S. government spent some $341 billion on its involvement in WWII. (3)  The equivalent in todays terms, taking inflation over 60 years into account, is $3.5 trillion dollars. (4)  Compre this to the $32 billion that was spent on the New Deal, the equivalent today of around $500 billion. (5)  So what our government is proposing to spend today could be said to be roughly about what was spent during the New Deal, a bit more, when adjusted for 60 years of inflation.  That didn’t work, but not because the stimulus does not come in the form of tax cuts, as McConnell and his Republican Party would have us believe.  Rather it didn’t work because it wasn’t enough spending.  It took seven times the amount of spending that took place in the New Deal to pull the U.S. out of the Great Depression.  When viewed from this perspective, we can safely predict that the current stimulus plan may fail because it does not spend enough.

bombsTrue, the money spent during WWII was not spent on roads, bridges, unemployment benefits, or food stamps.  It wasn’t grants to the National Endowment for the Arts, grants for scientific research and development in green energy or aid to sorely underfunded and grossly over-mandated school districts.  It wasn’t spending on these things that ended the Great Depression.  However, the stimulus provide by WWII that did bring that economic crisis to a close also did not come in the form of massive tax cuts as the Republican Party and its leaders would have us have us believe we should impliment to solve the current crisis.  It was MASSIVE spending on bombs, textiles for uniforms, paychecks, planes, ships, bullets, rubber, oil, food, and everything else that goes into supplying and equiping a military for a global conflict.  In fact, it was spending more than three times more than what congress is currently proposing be spent to stimulate the economy.

The exposure of this misleading and false interpretation of history begs the question of whether massive spending similar, if perhaps not quite so generous, to that seen during WWII could bring us out of our current and deep recession.  Republicans have tried to make the claim that the stimulus proposes to spend too much money by comparing it to The New Deal and showing that this bill proposes to spend even more.  But when we look at history objectively, we can see that during the Great Depression and the New Deal, even more spending was exactly what was needed.  While the big spending of the New Deal didn’t solve the problem, it turns out that this is because the spending wasn’t big enough.  It was not until even more massive spending, equivalent to some $3.5 trillion today, was undertaken to prepare for and fight WWII that enough stimulus was provided to the economy to jolt it out of the depression.

Once again, Republicans are lying to the public in order to create fear.  Only now the great menace is not the terrorists, but the Democratic Party and big government spending.  The boogeyman big spending will further damage the economy and Americans will suffer.  Unless we put massive business tax cuts in place we are all doomed!  Don’t buy into their fear mongering.  Don’t take their lies at face value.  Look at the history, look at the numbers yourself and it becomes clear that big spending ended the Great Depression and big spending can pull us out of our current recession.

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One Response to “More Stimuli”

  1. The New Deal was incredibly effective at getting us out of the Great Depression, and most current economists agree that the reason it didn’t work even faster was that Roosevelt caved to Republican belly-aching about deficit spending. (basically the same thing current Republicans are doing about Obama’s Job Bill – I refuse to call it a stimulus bill because of the cultural association of stimulus with bank bailouts.)

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