s***@diesel.eng
2009-01-08 18:28:39 UTC
Republicans Fight Obama's Stimulus Plan, Fearing Its Success Will Mean
Years of Political Oblivion
By Dean Baker, Posted January 6, 2009.
For Republicans, one lesson of the New Deal is that it left the
Democrats firmly in power for more than 20 years.
At least some Republicans are starting to muster an anti-stimulus
drive, claiming that President-elect Obama's package will not help the
economy. Their drive is centered on what they claim is a careful
rereading of the history of the New Deal. According to their account,
President Roosevelt's policies actually lengthened the Great
Depression.
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.
he 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.
Years of Political Oblivion
By Dean Baker, Posted January 6, 2009.
For Republicans, one lesson of the New Deal is that it left the
Democrats firmly in power for more than 20 years.
At least some Republicans are starting to muster an anti-stimulus
drive, claiming that President-elect Obama's package will not help the
economy. Their drive is centered on what they claim is a careful
rereading of the history of the New Deal. According to their account,
President Roosevelt's policies actually lengthened the Great
Depression.
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.
he 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.