Fred Barnes - Fox Pundit made incorrect comments that FDR was wrong in deficit spending while Reagan was correct on cutting Taxes.
Fred Barnes made a comment on 12/24 where he said "... There are two models, Brian. There is the Franklin Roosevelt model during the Depression and the Ronald Reagan model during 1981 and '82, a very deep recession. One worked, the other didn't. FDR, the model that Obama seems to be following did not work. The economy was in terrible shape at the end of the '30's as it was in the beginning of the '30's.
Ronald Reagan cut taxes and engaged the one group that Obama doesn't seem to be interested in engaging the business community, corporations, and entrepreneurs. And Reagan gave them tax cuts, and they built jobs like crazy that were permanent jobs..."
(http://www.foxnews.com/story/0,2933,473089,00.html)
So many misstatements in so few sentences ...:
• FDR’s New Deal spending did work. Real GDP Growth did increase from 84.3 in 1931 to 113 in 1940 (in 1929 dollars) Admittedly13.9 % is unacceptable high, but one has to remember the unemployment rate was 25.2 % in 1933. (http://en.wikipedia.org/wiki/Economic_history_of_the_United_States#Great_Depression:_1929.E2.80.931
941)
• Fred’s theory that Government spending did get us out the Depression totally falls apart down when one considers World War II. There was massive Government spending creating jobs and improving our Industrial Infrastructure. Government Spending increased from 9.34% (1940) to 46.59% (1943) as a percentage of GDP. Clearly Fred omitted the fact the increased Government spending did get us out of the Great Depression. (http://eh.net/encyclopedia/article/tassava.WWII). The spending was couple with a massive increase in taxation from 8% to 20% of GDP.
• Regarding the Reagan miracle tax cuts and cutting spending ("... He cut spending..."), this is incorrect. As a percent of GDP Government spending was 21.3 %( 1975), 21.6% (1980) and 21.8% (1990). Mort was right! Reagan did increase defense spending so he did not cut overall spending. (http://www.cbo.gov/doc.cfm?index=3521&type=0). Fred is probably just considering domestic discretionary spending. Unfortunately to economist spending is spending no matter whether it is domestic or defense spending. Reagan never proposed a balanced budget. As a matter of fact, he and Congress basically agreed on overall spending. Reagan want to increase Defense spending and decrease domestic spending they compromised and ended up at the same overall spending. From 1982 to 1987 Congress only recommended $90 Billion more than Reagan or just $15 Billion a year ("Day of Reckoning" Freidman pg 276)
Fred was making these misstatements in context to Obama’s possible $500 B to $800 B. over 2 years. People need to call conservatives I fear if the unemployment rate reaches 9 or 10 % this is not near enough deficit spending. We may need to borrow $800 B to $1 Tr this year to get us out of this problem.
Here is another Post I made on Reagonomics
http://www.dailykos.com/...