The Daily Background

I hear a lot of complaining, both from the left and the right about what Obama’s stimulus package contains or doesn’t contain. And I hear a lot of people calling this sort of thing totally unprecedented. I think it’s important to remember a bit of history at times like this because it’s not like this sort of thing hasn’t ever happened before.

There’s a striking parallel between the congressional debate over the economic recovery and reinvestment bill (aka “the stimulus”) and the congressional debate over FDR’s various pieces of New Deal legislation back in the 1930s.

– In both cases, you had Republicans who had contributed greatly to a massive screw-up of the economy through laissez-faire deregulation, and then Democrats took power rather dramatically. They favored more regulation and governmental intervention to stop the plummet.

– And, in both cases, Republicans fought them tooth and nail, saying that more regulation and governmental intervention was exactly what the economy did not need at such a crucial time. In both cases, the Republicans were totally wrong.

– In both the case of FDR’s New Deal policies and Obama’s Recovery and Reinvestment Plan, neither consisted of just one idea or program to help the country recover. With FDR, he had the First New Deal, Second New Deal, Square Deal, etc etc etc. Some of them may have worked better than others, but they all had an impact. In the case of Obama, he has the Stimulus Package (which itself contains myriad programs), along with the Financial Stability Plan, the Foreclosure Plan, and so forth.

– Very few Republicans voted for any of Roosevelt’s New Deal policies, but they passed anyway due to substantial Democratic majorities in both chambers of Congress (just as today).

And the results? Well, it’s too soon to tell for Obama’s recovery plan, but it’s easy to look back at Roosevelt’s policies and understand that they worked. Here’s a sample chart of US employment (which doesn’t even include the millions employed by some of Roosevelt’s public works programs):

Sure, employment is only one indicator of economic strength, but you can find similar charts detailing private investment and GDP which show a near-identical trends in response to FDR’s policies.

My point is, people tend to forget the lessons of history when they find themselves in a crisis. And that’s dumb. So don’t do it. Eh?

Filed under: Z-TDB Blog