Barack Hoover Obama
In a lame attempt to defend his pathetic economic record, President Obama argued that he inherited the worst economic crisis since the Great Depression, and that he's leading America to a better place. In reality, Obama implemented policies that ensured the worst economic "recovery" since that depression.
Let's take a look back. The president during that period of turmoil, Herbert Hoover, a Republican, is commonly portrayed as having opposed government intervention and, therefore, as having done nothing to prevent the depression. However, the opposite is true.
In his day, Hoover was called the "Great Engineer" because of his fondness for social engineering. Hoover strongly believed that government, business, and unions should work together to build a better life for everyone. Sound familiar? Former president, and current Democratic fundraiser, Bill Clinton argued in favor of that same approach on Wednesday night during his DNC speech.
This is extremely important, because the stock market crash of 1929, which is widely cited as the beginning of the Great Depression, was caused by government intervention. And the intervention was inspired by this belief. Hoover, as secretary of commerce during the 1920s, and then as president, supported artificially low interest rates (with the goal of increasing credit revenue while stimulating business) and high tariffs (with the goal of protecting domestic producers). Inevitably, the market crashed, producing a recession.
Nevertheless, despite the crash, the American economy was still relatively sound at the end of 1929. If the government had allowed the recession to self-adjust, the depression wouldn't have occurred.
Instead, the government intervened, again, increasing government spending in 1930 and 1931 to unprecedented levels. But the spending failed to stimulate the economy. And the high tariffs hurt the European economy, causing a decline of American exports to a Europe that could no longer afford to buy from American producers. Then in 1932, as part of his "we're all in this together" approach, Hoover proposed a tax increase, and the House, under Democratic control, was all too happy to oblige. And, just for good measure, the tax increase was made retroactive (you gotta love that government intervention!) and had to be paid by March of 1933. The result was that people started withdrawing money from the banks, causing a bank panic.
So, let's summarize things to this point. First, government intervention caused the stock market crash and the recession. Second, government intervention caused the bank panic and the Depression.
And, unfortunately, the government wasn't done yet. The next president, Franklin D. Roosevelt, a Democrat, increased government spending to a new high, while introducing major tax increases -- so major, in fact, that the top rate was a staggering 79%. But hey, it's only right that the wealthy pay their fair share.
By 1938, after repeated tax increases and massive government spending, the economy was still in dismal shape. In the end, government intervention prolonged the Depression by years.
Now, fast-forward to 2008. It was government intervention that caused the housing market crisis, and the subsequent financial market crisis, which sent the economy into a downward spiral.
In the 1990s, the Clinton administration required financial institutions to make risky mortgage loans. Mortgage lenders were forced to lower the standards for eligibility, specifically to help minority applicants with low and moderate incomes, and lenders were sued by the federal government if a certain percentage of minority applicants were turned down for loans. The Bush administration then adopted this policy. Eventually, both minority applicants and white applicants, with little or no ability to make payments, were getting these loans. Finally, this corrupt system, built up by the government, collapsed. And the economy collapsed with it.
Where do things stand today? Well, after four disastrous years of misguiding the economy, Obama has the gall to claim that his tax-and-spend policies failed only because the current Republicans in Congress prevented even higher taxes and even higher government spending. He says that if you give him four more years, all will be well. And he cites Roosevelt as his role model! Amazing.
The 2010 midterm elections, which swept Tea Party candidates into Congress, prevented the current economic crisis from getting far worse. And the defeat of Obama in 2012 will facilitate a real economic recovery.