To the Washington Examiner: 6-2-09

 

Ms. Hollingsworth characterization of FDR's actions in creating the New Deal, and reversing the economy's freefall are sophomoric and inaccurate. 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

http://www.wvox.com

 

 

Virginians know there’s no such thing as free money


By: Barbara Hollingsworth
Examiner Columnist | 6/1/09 6:21 AM

Three contenders are still duking it out for Virginia’s Democratic gubernatorial nomination, but party strategists have already turned their attention to the general election, where either Creigh Deeds, Brian Moran or Terry McAuliffe will take on Republican “Bob for Jobs” McDonnell.

Common Sense Virginia, an out-of-state group funded by the Democratic Governors Association, is running a series of negative TV ads admonishing McDonnell for his supposedly “career-long failure to stand up for laid-off Virginians,” and for leading the fight to reject $125 million in federal stimulus funds to extend unemployment benefits. This despite the fact the former attorney general wasn’t even in the legislature when Virginia became one of the first states to refuse it. What heartless monster, the ads imply, would turn down free money for laid-off workers?

But they don’t tell what the late Paul Harvey used to call “the rest of the story.” The real question is what responsible public official would take the money, knowing full well that the federal strings attached will strangle future job creation?

The House of Delegates rejected the $125 million because they would have been forced to make permanent changes in Virginia law that extended unemployment benefits to 6,867 part-time workers and another 1,043 in retraining programs– who would still be eligible for benefits after the federal stimulus funds ran out.

States that accept the money are not allowed to include an automatic cut-off date, so the expansion would be a permanent new entitlement. The governors of Alabama, Alaska, Louisiana, Mississippi, South Carolina and Texas also turned down all that “free money” because it would wind up costing employers millions more down the road.

Virginia’s unemployment benefits had already been extended from 26 weeks to a year and two months without the disputed $125 million, House Speaker William Howell told me. So why is three percent of Virginia’s $4 billion stimulus package becoming such a big issue in the campaign?

Under Gov. Tim Kaine, who also happens to be chairman of the Democratic National Committee, unemployment in Virginia nearly doubled to 6.8 percent. That’s not exactly something to brag about when you’re asking people to keep your party in office.

Attacking McDonnell for a vote he didn’t even make diverts attention from the real issue: Virginia is losing jobs. Raising payroll taxes will accelerate this process, not reverse it.
The government can force employers to lay off workers, but even President Barack Obama himself can’t force them to hire. FDR found this out the hard way when all of his make-work efforts barely dented the double-digit unemployment that plagued his administration long after the Great Depression had ended in Europe.

In “New Deal or Raw Deal?,” historian Burton Folsom, Jr. quotes FDR Treasury Secretary Henry Morgenthau, who frankly told the House Ways and Means Committee: “...We have tried spending money. We are spending more than ever spent before and it does not work...after eight years of this Administration we have just as much unemployment as when we started... And an enormous debt to boot!”

It was only when FDR launched a massive military buildup in 1941 that unemployment finally fell below 10 percent. But since President Obama plans to scale back military production, so there won’t be surge of ship-building in Newport News anytime soon.

The current strategy could very well backfire when it becomes clear that two Democratic governors are leaving Virginia with growing ranks of unemployed workers  – not exactly something they want voters to think about when they go to the polling place this November.

Barbara F. Hollingsworth is The Examiner’s local opinion editor.