Skip to content

The Republican Economic Mistake

Two days ago I posted a story about a Republican Congressman who claimed that FDR caused the Great Depression though his deficit spending (“borrow and spend”) — which would have been a neat time-travel trick since FDR didn’t get elected until almost four years after the Great Depression started. But as we know, most “big lies” are based (however tenuously) on some small kernel of truth. Bruce Bartlett identifies this kernel of truth and exposes the lie built on it in a clear (but wonky) article in Forbes magazine.

First, I feel the need to point out that nobody would consider Forbes a hotbed of liberalism, and Bartlett himself is a Republican economist who worked for Reagan, Bush I, and several staunch conservative groups, and wrote a book about supply-side economics. Bartlett explains in the article that FDR did indeed make the depression worse, but not by borrowing and spending, but by the exact opposite — by attempting to shrink the deficit in the middle of the depression by reducing spending, even running a budget surplus in 1937. Bartlett says “Economists are unanimous in their view that this was one of the greatest economic mistakes in history.”

Senate Republican leader Mitch McConnell claims “We know for sure the big spending programs of the New Deal did not work.” But Bartlett demonstrates (and has the numbers to back it up) that this is simply wrong: “the true failure of the New Deal was that deficits were much too small, not too large.”

Ironically, Republicans implicitly acknowledge the truth of this when they argue that “the only thing that brought us out of the depression was World War II,” as Sen. John Ensign explained on Feb. 7.

Yet Republicans conveniently overlook the fact that it was massively larger budget deficits–which averaged close to 20% of GDP from 1941 to 1945–that were the principal contribution of the war to economic recovery.

It is ironic that it takes a staunch conservative Republican economist to point out that the current Republican leadership is lying to you, and proposing that we repeat one of the greatest economic mistakes in history. The last eight years have dramatically demonstrated the disastrous results of neoconservative economic policy. When the Republican party loses even the Reagan era conservative economists, you have to wonder what the current leadership is drinking.

Via untravel. The same blog entry has an interesting discussion about the distinction between reasonable and unreasonable disagreement and how it applies to bipartisanship.