DO WE NEED A NEW NEW DEAL?
By Dr. Burton W. Folsom, Jr.
First, the federal programs in FDR’s New Deal did not lower unemployment. Sure, the Works Progress Administration built roads, the Tennessee Valley Authority built dams, and the Civilian Conservation Corps planted trees. But every dollar that went to creating a federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors.
What’s worse, some New Deal programs had terrible unintended consequences. The Agricultural Adjustment Administration, for example, overhauled agriculture by paying farmers not to produce on part of their land. After farmers took the federal dollars, the U.S.A. developed shortages of the very crops taxpayers were paying farmers not to produce. By 1935, for example, the U.S.A. was importing almost 35 million bushels of corn, 13 million bushels of wheat, and 36 million pounds of cotton. Simultaneously, we had an army of bureaucrats in the Department of Agriculture to inspect farms (and even to do aerial photography) to ensure farmers were not growing the crops we were importing into the country.
Second, the taxes to pay for the New Deal became astronomical. In 1935, Roosevelt decided to raise the marginal tax rate on top incomes to 79 percent. Later, he raised it to 90 percent. These confiscatory rates discouraged entrepreneurs from investing, which prolonged the Great Depression.
Henry Morgenthau, FDR’s loyal Secretary of the Treasury, was frustrated at the persistence of double-digit unemployment throughout the 1930s. In May 1939, with unemployment at 20 percent, he exploded at the failed New Deal programs. “We have tried spending money,” Morgenthau noted.
Third, the New Deal divided and politicized the country in tragic ways. Those who lobbied most effectively won subsidies and bailouts, even if their cause was weak. Others, who had greater needs, received nothing. Walter Waters, who led a march of veterans on Washington, lobbied successfully for a special bonus for veterans, whether they had been in battle or not. When asked why veterans — instead of longshoremen or teachers — should receive a special bonus of taxpayer dollars, he said:
Thus, as money became available, those with effective political lobbies won the subsidies and others, who sometimes had more just causes and greater need, received little or nothing. In the case of the veterans, in 1936, they won a $2 billion federal bonus — a sum exceeding six percent of the entire national debt at the time. Teachers, by contrast, were less effective lobbyists and won almost no federal subsidies. Silver miners, led by Senator Key Pittman of Nevada, won a silver subsidy that paid almost $300,000 a day each day for 14 years, but coal miners were left out.
In another example, under Presidents Hoover and Roosevelt, Illinois lobbied effectively and won $55,443,721 under the first federal welfare grant, while Massachusetts received zero federal dollars. Without federal money for welfare needs, Massachusetts valiantly raised its own funds to secure what Illinois extracted from Washington. The Boston Civic Symphony repeatedly gave concerts to benefit the jobless. City officials and teachers raised money and took pay cuts. Massachusetts Governor Joseph Ely believed that no state should receive federal aid and that private charity was the best charity; that federal relief ruined both taxpayers and those in need. “Whatever the justification for relief,” Ely said, “the fact remains that the way in which it has been used makes it the greatest political asset on the practical side of party politics ever held by an administration.” Ely added that “millions of men and women . . . have come to believe almost that there is no hope for them, except upon a government payroll.”
Federal dollars always become political dollars, and the Democrats moved to use federal money to gain votes at election time. In Pennsylvania, Joseph Guffey, the successful Democratic candidate for the U.S. Senate in 1934, ran a campaign ad that said, “Compare this $297,942,173 contributed by Pennsylvania to the U.S. U.S. Treasury with the cash and credit of $678,074,195 contributed to Pennsylvania by the Roosevelt Democratic administration.” Vote Democrat, Guffey and others proclaimed, and the federal faucet will keep running. James Doherty, a New Hampshire Democrat, said, “It is my personal belief that to the victor belong the spoils and that Democrats should be holding most of these [WPA] positions so that we might strengthen our fences for the 1940 election.” One WPA director in New Jersey — a corrupt but candid man — answered his office phone, “Democratic Headquarters.”
If history is a guide, we have every reason to believe that, if President Obama institutes a New New Deal, then universal health care, federal bailouts, and jobs stimulus programs will be costly, will be politicized, and will fail.
The American Political & Cultural Left:
Liberals, Statists, Socialists, Marxists, & Other Leftists:
The Democratic Party, Academia, & the Mainstream Media
A Ph.D. in History from the University of Pittsburgh (1976), Burton W. Folsom, Jr., is Professor of American History at Hillsdale College, holding the position of Charles F. Kline Chair in History and Management. Dr. Folsom is author of New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America (2008); Empire Builders: How Michigan Entrepreneurs Helped Make America Great (1997); The Myth of the Robber Barons: A New Look at the Rise of Big Business in America (1987 & 1991); and Urban Capitalists: Entrepreneurs and City Growth in Pennsylvania's Lackawanna and Lehigh Regions, 1800-1920 (1981). Dr. Folsom is Editor of the anthology of essays on economic history and free market capitalism, Spirit of Freedom: Essays in American History (1994).
In The Myth of the Robber Barons and some of his other books, Dr. Folsom revises commonly held views about the role of capitalism in the social developments of the Industrial Revolution and the Gilded Age. He describes "robber barons" as constructive visionaries who benefited American consumers and played an integral part in the industrialization of the U.S.A.
Formerly, Dr. Folsom was associated with the free-market think tanks, the Free Enterprise Institute and the Mackinac Center for Public Policy, and was a frequent guest of the Libertarian group, the Foundation for Economic Education.
The foregoing article by Dr.Folsom was adapted from a speech delivered by him on January 9, 2009, in Washington,
D.C., at a seminar sponsored by the Hillsdale College Allan P. Kirby, Jr. Center for Constitutional Studies and
Citizenship. The article first appeared in Imprimis, January, 2009 (Volume 38, Number 1).
Africa: Black Africa *
Africa: North Africa *
American Government 1
LINKS TO PARTICULAR ISSUES & SUBJECT MATTER CATEGORIES
TREATED IN THE PROGRESSIVE CONSERVATIVE, U.S.A.:
American Government 2 * American Government 3 * American Government 4
American Government 5 * American Politics * Anglosphere * Arabs
Arms Control & WMD * Aztlan Separatists * Big Government
Black Africa * Bureaucracy * Canada * China * Civil Liberties * Communism
Congress, U.S. * Conservative Groups * Conservative vs. Liberal
Constitutional Law * Counterterrorism * Criminal Justice * Disloyalty * Economy
Education * Elections, U.S. * Eminent Domain * Energy & Environment
English-Speaking World * Ethnicity & Race * Europe * Europe: Jews
Family Values * Far East * Fiscal Policy, U.S. * Foreign Aid, U.S. * Foreign Policy, U.S.
France * Hispanic Separatism * Hispanic Treason * Human Health * Immigration
Infrastructure, U.S. * Intelligence, U.S. * Iran * Iraq * Islamic North Africa
Islamic Threat * Islamism * Israeli vs. Arabs * Jews & Anti-Semitism
Jihad & Jihadism * Jihad Manifesto I * Jihad Manifesto II * Judges, U.S. Federal
Judicial Appointments * Judiciary, American * Latin America * Latino Separatism
Latino Treason * Lebanon * Leftists/Liberals * Legal Issues
Local Government, U.S. * Marriage & Family * Media Political Bias
Middle East: Arabs * Middle East: Iran * Middle East: Iraq * Middle East: Israel
Middle East: Lebanon * Middle East: Syria * Middle East: Tunisia
Middle East: Turkey * Militant Islam * Military Defense * Military Justice
Military Weaponry * Modern Welfare State * Morality & Decency
National Identity * National Security * Natural Resources * News Media Bias
North Africa * Patriot Act, USA * Patriotism * Political Culture * Political Ideologies
Political Parties * Political Philosophy * Politics, American * Presidency, U.S.
Private Property * Property Rights * Public Assistance * Radical Islam
Religion & America * Rogue States & WMD * Russia * Science & Ethics
Sedition & Treason * Senate, U.S. * Social Welfare Policy * South Africa
State Government, U.S. * Subsaharan Africa * Subversion * Syria * Terrorism 1
Terrorism 2 * Treason & Sedition * Tunisia * Turkey * Ukraine
UnAmerican Activity * UN & Its Agencies * USA Patriot Act * U.S. Foreign Aid
U.S. Infrastructure * U.S. Intelligence * U.S. Senate * War & Peace
Welfare Policy * WMD & Arms Control
Africa: Black Africa *
Africa: North Africa *
American Government 1
POLITICAL EDUCATION, CONSERVATIVE ANALYSIS
POLITICS, SOCIETY, & THE SOVEREIGN STATE
Website of Dr. Almon Leroy Way, Jr.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
An Online Journal of Political Commentary & Analysis
Dr. Almon Leroy Way, Jr., Editor