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Obama's Great Depression
The president is following in Herbert Hoover's footsteps.
A. Barton Hinkle
Last week the White House picked a Virginia fire station as the venue for the president's principal campaign stoper, legislative sales pitch. The choice was apt. At roughly the same time the president was lamenting how "cities and states like Michigan and New Jersey . . . have had to lay off big chunks of their forces," Sen. Majority Leader Harry Reid declared, "It's very clear that private-sector jobs have been doing just fine; it's the public-sector jobs where we've lost huge numbers."
Oh. Guess you can go home now, Wall Street occupiers! All those unemployment reports? False alarms.
To be fair to Reidwhich may be more than he deserveshe was defending the part of the American Jobs Act that would appropriate $35 billion for state and local government hiring. That might help offset the savage cuts of the past year, except for one thing: The cuts have not been that savage. From September of last year to this past month, state and local payrolls have shrunk by 260,000 positions out of more than 20 million. That comes to roughly 1 percent of the work force.
The situation looks much worse for the private sector. It has added jobs at an anemic rate in the past few months, but it still has far to go before it claws its way back to the employment peak of November 2007. At that time total non-government employment stood at 124 million. It's now 109 million. Barack Obama has joined George W. Bush in a dubious category. They are the only two presidents besides Herbert Hoover to see the number of job-holding Americans decline on their watch.
The parallels with Hoover don't end there. It's commonly believed Hoover took a hands-off approach to the country's economic distress, and that his administration's tight-fisted refusal to spend prolonged the misery. But Hoover was about as stingy with a government dollar as "Jersey Shore" is with hairspray.
Hoover increased federal spending by more than 50 percent, signed the biggest peacetime tax increase to that point, lavished money on public works, and signed the disastrous Smoot-Hawley protectionist tariff. FDR slammed Hoover's "reckless and extravagant" spending and accused him of wanting to "center control of everything in Washington as rapidly as possible." Roosevelt's running mate, John Nance Garner, denounced Hoover for "leading the country down the path of socialism."
Hoover's massive government interventionism did not end the Great Depression. George W. Bush's rapid spending increases did not forestall the current malaise. And the massive government outlays of the past three yearsfederal spending has increased 30 percent; despite layoffs, state and local spending has grown, not shrunkhave not cured the country's economic ills, either. Yet the answer, say countless voices in the prestige press, is to stop Washington's ruinous "austerity" and start spending.
How many moons orbit the planet they're living on? If a $900 billion spending hike is austerity, what in the world does extravagance look like?
Actually, it looks something like the $440,000 Washington spent on a museum for antique bikes. Or the half-million-dollar federal outlay for beautifying decorative rocks. Those are some of the things Sen. John McCain recently urged Congress to stop using tax dollars foralong with the National Corvette Museum in Kentucky and a giant coffee pot in Pennsylvaniaon the theory that maybe the money could be used better elsewhere. The Senate didn't buy it, and last Wednesday his colleagues shot down his proposal 59-39.
This kind of thinking shows why the congressional super-committee has deadlocked. The super-committee is supposed to hash out a deal by Thanksgiving to reduce the deficit. According to the narrative in the prestige press, blame for the impasse falls on the GOP's tax intransigence. Democrats won't agree to spending cuts until Republicans agree to revenue hikes, goes the story, and Republicans are fanatical. But that narrativelike Hoover's austerity and the austerity of this summer's recent budget dealis a myth. Given the recent spending explosion, blaming the GOP for not meeting Democrats halfway is like blaming the victim of a mugging who hands over 95 dollars and then refuses to go halfsies on the last five bucks. Man, what kind of selfish jerk isn't willing to meet his opponent halfway?
As even The New York Times conceded a couple of months ago, "There is something you should know about the deal to cut federal spending that President Obama signed into law on Tuesday: It does not actually reduce federal spending. By the end of the 10-year deal, the federal debt would be much larger than it is today. Indeed, both the government and its debts will continue to grow faster than the American economy."
That story also noted, "The Congressional Budget Office estimates that the federal debt is likely to exceed 100 percent of the nation's annual economic output by 2021." Well. According to the latest figures, U.S. debt is on track to exceed GDP by Halloweenthis Halloween.
Herbert Hoover would be proud.
http://reason.com/archives/2011/10/25/obamas-great-depression
