02.12.09

Another misleading GOP talking point on the New Deal

Posted in Around The Nation, Around The State, Right Wing Lies, The Economy at 1:43 pm by wcnews

Since the economy went into a tailspin in September of 2008 the GOP has been ramping up the spin on FDR, the New Deal, and the Great Depression, in an attempt to make sure we don’t get another New Deal like fix for our economy.

The first attempt by the radical right was an attempt to say that the New Deal made the Great Depression longer than it should have been. Debunked here, here, and here. Utterly culminating in this ignorant comment of GOP Rep. Steve Austria yesterday that “FDR caused the Great Depression”.

Not to be outdone our GOP U.S. Senator, and  soon-to-be candidate for Texas governor, Kay Bailey Hutchinson is using the latest misleading talking point.  This one is part of an Op-Ed that’s making the rounds in Texas, Casting a ‘no’ vote on the stimulus. Here’s the quote.

Henry Morgenthau Jr., Treasury Secretary under President Franklin D. Roosevelt, confessed, “We have tried spending money. We are spending more than we have ever spent before, and it does not work.”

To be fair, she’s not the only one, many others in her party have been using it in the debate on the stimulus. It’s a pretty damaging quote, taken by itself and without context. Here’s some context, from a rebuttal, by an economist, An economic crisis requires spending – fast.

Though Morgenthau was Roosevelt’s treasury secretary, he was an orthodox economist who opposed Keynesian economics and New Deal spending, consistently calling for a balanced budget and reducing the national debt, even during the depression. In 1937, Morgenthau and other conservatives, claiming that the country’s economic crisis had ended, convinced Roosevelt to cut many New Deal programs. As a result, the country fell into another recession, and unemployment rates, after falling rapidly for several years, began rising again.

Morgenthau also fought (unsuccessfully) against the veterans’ bonus (for World War I vets), the precursor of the World War II GI Bill. Considering that he was against the New Deal spending programs from the start, it’s not surprising that he would claim they hadn’t worked. His claim about unemployment was entirely incorrect. The unemployment rate in 1933, when Roosevelt took office, was 24.9 percent. By 1937, it had fallen to 14.3 percent. After the premature cuts in New Deal spending, unemployment quickly rose to 19 percent in 1938. Government spending was increased again and unemployment fell to 17.2 percent in 1939, when Morgenthau spoke, 14.6 percent in 1940 and 9.9 percent in 1941. The drops in unemployment rates were actually much larger than the numbers indicate, because in the 1930s, the millions of workers employed in rural electrification, highway construction and other federal projects were officially considered unemployed, since they did not work for private firms.

Knowing the context of where Morgenthau stood in realtion to the New Deal and Keynsian economics from the beginning, makes quite a bit of difference in evalutaing his comments in regards to our current situation.  It takes most, if not all, of the sting out of it.  Today, more than likely, Morgethau would be more in agreement with someone who believes in what Hutchison, and the vast majority of her GOP cohorts believe, and would be against the stimulus plan.  Obviously  she was attempting to use that quote to show that a New Deal Keynsian didn’t think the New Deal had worked, when that’s clearly not the case.  Hope she didn’t think no one would notice.

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