Here's a very interesting letter from a pundit to the President about the austerity measures and what it means for the economy:
I can well understand, Mr. President, with what grim humor you must have listened, in recent months, to the anguished hows of business men-anguished because you had taken their advice and they didn’t like it. For years, every self-appointed spokesman for business had been demanding that you should balance the budget. To be sure, nobody suggested that we should accomplish this by increasing taxation to the level of the British, for example, which is about three times as high as our own. On the contrary, they wanted you to perform this mystic and sacred rite by economizing in expenditures. Since nearly all the abnormal spending in your administration had been for relief, that is obviously where the wanted the cuts to be made.
There is a deadly parallel between the downward movement of the business index and this enormous drop in federal spending. I am not saying that the curtailment of relief was the only cause of the trouble, or even the chief cause…no one can doubt that the sudden withdrawal of hundreds of millions of dollars of federal relief funds, the smashing of thousands of projects all over the country, did contribute materially to the creation of our present misery. Your triumph over your foes-on this point, at least-is complete.
To be sure, they do not hate you any the less because you have demonstrated that on this extremely important matter they were wrong and you were right. If anything, they hate you more than ever. One of the great mysteries that historians of the future will puzzle over is why you have aroused such bitter animosity….Taxes during your administrations have on the whole been amazingly light…Your very mild efforts to regularize Wall Street, to make the electric utilities behave, to obtain recognition of union labor, have been matters on which most sensible men have agreed with you. They have been directed chiefly against the small minority of bandits whom the majority has always wanted to discipline if it could.
Those who were demanding economy, a year ago, and now don’t like it, have gone back to the old cry about “confidence.” If you would only do something to restore confidence, they say, business would go on zooming across the landscape, full of vitamins…
The kicker is that this letter was written on April 20, 1938 from Bruce Bliven of The New Republic to President FDR. Not much has clearly changed since then, and we've gone full cycle back to the unparalleled greed of Wall Street. In 1932, when FDR was campaigning for President, this was the advice given to him by the austerity deficit hawks:
We are of the opinion that many of the troubles of the world at the present are due to imprudent borrowing and spending on the part of the public authorities. We do not desire to see a renewal of such practices. At best they mortgage the Budgets of the future, and they tend to drive up the rate of interest--a process which is surely particularly undesirable at this juncture, when the revival of the supply of capital to private industry is an admittedly urgent necessity. The depression has abundantly shown that the existence of public debt on a large scale imposes frictions and obstacles to readjustment very much greater than the frictions an dobstacles imposed by the existence of private debt.
Hence we cannot agree with the signatories of the letter that this is a time for new municipal swimming baths, etc., merely because "people feel they want" such amenities.
If the Government wish to help revival, the right way for them to proceed is, not to revert to their old habits of lavish expenditure, but to abolish those restrictions on trade and the free movement of capital (including restrictions on new issues) which are at present impeding even the beginning of recovery.
Now, today, the present cries for austerity come from the Third Way, moderate Democrats, Republicans, some members of the President's own economic task force, and the people he appointed to the Deficit Commission.
The more things change, the more they stay the same.....especially with the same old actors from Wall Street, the MIC, and neoliberal hawks coming out to trot the same tired lines about why cutting taxes for Wall Street, giving billions of dollars in taxpayer money to them, will help Main Street in spite of present evidence to the contrary.
This was a very interesting walk down history lane for me. We really do have the unfortunate tendency to repeat history. For every major step of progress we make, there is a major backslide to where we used to be. It's a bit of a Sisyphian struggle that we do as progressive activists in agitating for better economic and social policies. However, if we don't continue to act, that backslide gets larger and larger, and before we know it, we'll be worse off than we are today.
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