Economy,  History,  Vote 2012

Which fiscal policies of the ’30s were a disaster, Rick?

Politico reports:

Responding to a POLITICO story headlined, “Is Rick Perry dumb?”, the Texas governor said Tuesday afternoon that what he considers “dumb” are President Obama’s policies.

“What’s dumb is to oversee an economy that has lost that many millions of jobs, to put unemployment numbers that over his four years will stay probably at 9 percent, to downgrade the credit of this good country, to put fiscal policies in place that were a disaster back in the ’30s and to try them again in the 2000s,” Perry said on Sean Hannity’s radio show. “That’s what I consider to be the definition of dumb.”

I can’t be sure, but I’ll assume that when Perry talked about the disastrous fiscal policies of the 1930s, he was referring to those of Democrat Franklin D. Roosevelt (who was president for the last seven years of the decade) rather than those of Republican Herbert Hoover (who was president for the first three).

However if you judge the success or failure of policies by the unemployment rate, as Perry seems to be doing, you have to wonder which president’s policies (or lack of policies) were more disastrous.

Under Hoover, unemployment went from 8.7% in 1930 to 15.9% in 1931 and 23.6% in 1932. Hoover was president until March 4, 1933, when Roosevelt was sworn in.

Under Roosevelt, unemployment went from 24.9% in 1933 to 21.7% in 1934, 20.1% in 1935, 16.9% in 1936, 14.3% in 1937, 19.0% in 1938 and 17.2% in 1939.

Although there is disagreement over what caused unemployment to spike in 1938, it is likely that an important factor was a sharp reduction in government spending in 1937.

It’s likely Roosevelt could or should have done more to reduce unemployment during his first two terms. Not all of the New Deal was an unqualified success. If you’re a doctrinaire conservative, you probably believe he did almost everything wrong, and that fewer, not more, government programs would have cut joblessness faster. But compared to the apocalyptic economic failure of the early 1930s, were his policies really a “disaster”?

World War II– the biggest government spending program of all– ultimately ended the Depression and reduced unemployment to 1.2 percent by 1944.

For decades after Hoover left office, Democrats ran against him and his policies in subsequent elections. So if Perry gets the Republican nomination, will he run against Obama-the-latter-day-FDR?

If you want to understand why Perry’s politics are in some ways a radical departure even from the conservatism of George W. Bush, consider what Bush was willing to do during the economic meltdown of 2008.

As Dana Milbank wrote for The Washington Post :

It was the final chapter of Bush’s presidency, and is correspondingly the final chapter of his memoir, “Decision Points.” As Bush describes it, he had just been told by Treasury Secretary Hank Paulson that they should spend hundreds of billions of taxpayer dollars to buy up mortgage assets, and he approved the plan in full. “If we’re really looking at another Great Depression,” he recalls saying, “you can be damn sure I’m going to be Roosevelt, not Hoover.”
Bush acknowledges that he undertook “the most drastic intervention in the free market since the presidency of Franklin Roosevelt,” but he says it “helped spare the American people from an economic disaster of historic proportions.” He defends the “automakers’ rescue” with federal loans: “I had to safeguard American workers and families from a widespread collapse.” He admits that the AIG bailout was “basically a nationalization of America’s largest insurance company.” But, he adds, “that was a hell of a lot better than a financial collapse.”

Perhaps this is one reason why the prospect of a Rick Perry getting the nomination disturbs even some people from George W. Bush’s administration.