1 Boring Old Man

The Anti-Stimulus Crowd: The Fear of Success
by: Dean Baker, t·r·u·t·h·o·u·t | Perspective

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.

The 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 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.

In Krugman‘s model, the Republicans are thinking about what to do for the country, but they’re just wrong. In Baker‘s way of thinking, they’re thinking about the long term viability of their Party. I find myself thinking that both Krugman and Baker are giving the Republicans too much credit. I don’t think they think that much about what they’re doing. At least, not in that way.

During the McCain Campaign, I was appalled by what the man said. I’ve always liked McCain, but during the Campaign, his negativity and irresponsibility shocked me. It had me asking, "Who is this person I thought I knew?" Since the Campaign, he has seemed tp me like his old self.  And that’s how the Republican Party has worked since Nixon days. – C.R.E.E.P., Donald Segretti, Lee Atwater, Karl Rove, Steve Schmidt, Ken Starr, Dick Cheney, etc. They’ve had a formula – unrelenting contemptuous attack on anything the Democrats say or do. They destroyed Carter and wounded Clinton. There’s no reason to think they won’t try to do the same thing with Obama. This Republican Mythology about the New deal is just another Talking Point, nothing more. It’s all over Fox News, Rush Limbaugh, and coming out of the mouths of the usual Republican suspects – always suffused with contempt and sarcasm. It’s what they do. I don’t think it has anything to do with the issues – it’s just how they finally got some power. "Lets everyone say the same thing over and over and maybe it will stick." How easily we forget: