FDR and Unemployment

1-10-09

Letter to the Lake County Bee Blog- www.record-bee.com

This article is typical of the claptrap that is promulgated by the apologists for the New Deal critics. In fact, unemployment went down every year in the FDR’s first two administrations. The unemployment by March of 1933 had reached almost 25% and another 25% were only working part time. We were in economic slippery slope that saw the closing of thousands of banks, breadlines, Hoovervilles, hobos riding the rails, Okies abandoning the dustbowl plagued farms, food commodity prices tanking and all sorts of other disasters created by the Harding-Coolidge bubble years, and the inaction and failed policies of Herbert Hoover. Only when the new Dixiecrats of the south, who controlled Congress by the late 1930’s and their conservative Wall Street GOP buddies and allies, pressured FDR on spending did we hit another severe economic bump. That cutback in spending, to create a balanced budget, caused a severe, but short recession that was quickly ended by priming the pump once again. In fact, if one took in to account employment through the WPA, and PWA, and not including the CCC, unemployment dropped to about 8%, not far different of what we experienced under Reagan. It is obvious to all, but a few troglodytes of the right that FDR saved America and thus capitalism. That is why he is written about in over 1000 books, of which the vast amount over 95% are quite favorable.

Speaking of reality in unemployment, in fact, according to data from the U.S. Department of Labor Bureau of Labor Statistics, in 1981, Ronald Reagan's first year in office, the U.S. average unemployment rate stood at 7.6 percent. During Reagan's presidency, it reached a high of 9.7 percent, and had declined to a level of 5.5 percent when Reagan left office. The rate from when Reagan entered office through his last year declined by 2.1 points, far less than the eight-point drop for which Brooks credited Reagan. (Besides that obvious reality in November of 1981, ten months into the Reagan Administration, unemployment had risen to 8.5% and continued to rise to almost 10% through February of 1983.) When Reagan left, with 5.4% unemployment and a huge national debt, his successor failed completely. The low tax rates on the top brackets caused more deficits, and even the Bush popularity (95%) brought on by the swift victory in Gulf War I, couldn’t save his administration. He was beaten by an unknown governor from Arkansas and his vote total of 37% was on of the lowest by an incumbent in way over 100 years.

Remember, today government employs about 16% of our workforce as opposed to 4% in 1928, which also includes teachers. If one took into account the employment in our universities and colleges supported by their tax-exempt status and the huge defense spending that hires millions in related industries which depended on that part of the budget, unemployment would be very close to 16%.

Since 1928 there have been 13 presidents, 7 Republicans (Hoover, Eisenhower, Nixon, Ford, Reagan, Bush Sr, and Bush Jr) and 6 Democrats (FDR, Truman, JFK, Johnson, Carter and Clinton).Six of the seven Republican Presidents had unemployment increase while in office.  Ronald Reagan is the only Republican President since 1928 to leave office with a lower unemployment rate. All six Democratic Presidents had unemployment decrease or stay the same while in office.  The worst Democratic performance was Jimmy Carter, who had the same unemployment rate when he left office as when he entered. Viewing the President's 4 year term gives an even more pronounced effect. Of the Republican President's 9 terms, unemployment has increased in 7 of the 9 terms. Of the Democratic President's 10 terms, the unemployment rate never increased. Also, according to the NY Times, OP-Ed, of October 14, 2008, written by Tommy McCall, a former editor of Money Magazine, in the 80 years since the election of Herbert Hoover, there have been 40 years each of Democratic and Republican administrations. If one invested $10,000 in the 40 years of the democratic presidents the return on that investment would have been$300,671. Conversely, if one invested that same $10, 000 in the 40 years of GOP rule, the return would have been $11,733. If you exclude out Hoover’s four years the return would have been $51,211.

Now, as in 1929, less people own more of America! In the midst of this incredible increase in executive compensation, Ronald Reagan’s administration lowered the highest tax brackets by more than 60% from 71% to 28% in 1986, while raising the bottom tax rate from 11 to 15%. In reality the Reagan Administration created two tax brackets. The poorest earners paid up to 15% and multi-millionaires paid a little more than double? Did this increase revenue to the Treasury? No! No wonder we experienced record deficits. Did it increase wealth to the wealthiest? Yes! Recent articles have debunked the “urban myth” promulgated by the flat-taxer’s and other anti-tax groups that tax cuts increase revenues. In fact, tax cuts without expense reductions create greater deficits. With that in mind, the Reagan years offered some of the biggest deficits, (tripling the National Debt), continued high unemployment, averaging over 7% in his tenure, and great private sector increases in wealth.

Therefore let us get on to problems at hand the country is in trouble, we have just experienced one of the worst and most incompetent presidents in history, and any one has to be better.