Richard J. Garfunkel

Economic Challenges: Comparing Obama to FDR

The characterization of FDR that he did not have a plan in creating the New Deal is a bit sophomoric and inaccurate. FDR's 2nd term as governor of New York put into place many of the pre-New Deal ideas. Top future New Deal advisors as Frances Perkins and Harry Hopkins were already working on relief in New York. His role in public power was well established before his inauguration, and the Brain Trust of Moley, Berle, and Tugwell certainly were able to create a path for the emerging New Deal to follow. Unfortunately the depth of the Great Depression was never fully understood then nor now. Hoover had an opportunity to "prime the pump," but his administration had only funded 3 out of 243 projects that were authorized by October of 1932. Right-wing revisionism is alive and well in the land, and the idea that the New Deal prolonged the Depression is absurd. Claims have been made that Europe climbed out of the Deprerssion more quickly. They did with dictatorships of the right and the left. England for sure never recovered until way after the war. But of course they were essentially bankrupt.

FDR made few mistakes in his first term. Growth exceeded 9% a year and unemployment which was over 25% with another 25% only working part time in 1933 was reduced to 14% by September of 1937. If one included WPA and PWA jobs, unemployment would be at about 8-9%. The Federal Reserve raised interest rates and the Dixiecrats and the GOP pressured FDR to cut spending. A sharp recession followed with the layoff of 3 million workers. FDR quickly primed the pump, increased spending and the Federal Reserve loosened credit and by April 1938 that short, but sharp recession was over. In truth there was not enough spending.

The business community was resistant to the Securities Acts of 1933 and 1934, and the Wagner Act of 1935 that allowed labor to collectively bargain. FDR saved capitalism, saved the farms, saved the banks and people’s savings and brought needed regulation to the markets. When one includes the programs of the New Deal, unemployment wasn’t much different then the Reagan Era, where it ranged from 7.5 to 9.5 % over seven of his eight years. In fact, government employment in 1928 was 4%, in this day and age it is 16% without including all the employment directly connected to defense spending. Cut that defense spending out and reduce government employment and there would have been 12-15% unemployment before the recent collapse.

The GOP and the right-wing fiction writers, inside and out of Congress, keep on denigrating the New Deal, but unemployment has gone down in every Democratic Administration and risen in 7 out of 9 GOP administrations since 1928. Get real you plutocrats, start paying your fair share of taxes, end the golden parachutes and corporate welfare for big business, and start competing. Too many tax loopholes, too many petro dollars to OPEC and too many dollars flowing from Walmart to China! The Bush Years are the worst since Hoover, and he maybe our worst president ever. As to the Depression, statistically it ended after 43 months and therefore four months after FDR's inauguration.

Basically recessions or depressions reflect quarterly shrinkage in the economy. As to Europe, the Depression never really ended, but for sure what little democracy and representative government there was, ended with the triumph of totalitarianism of the right and the left. The quote by former Secretary of Treasury Henry Morgenthau has been over-used and has been taken out of context for years. Obviously novitiates of history seem to have forgotten history they have not lived or really read about in depth. The right-wing doesn't seem to have any solutions except more blood in the water. How would the so-called "market" provide for the nine million Americans who lost their life-savings in 5000 so-called secure banks in the economic meltdown under Herbert Hoover? Today we face another market place plagued by phony derivatives and other idiotic investment devices created by our modern brand of Wall Street flim-flam artists. If anything we need more transparency, more watch dogs and more regulation over these wolves that have caused our recent meltdown. We will get through this mess, but it will cost more money, we will be poorer in the short run and maybe if we are smart we will be better off and have a more stable economic society in the long run.

Richard J. Garfunkel
Host of The Advocates- WVOX Radio
www.wvox.com