Welcome to the new New Deal, just like the old New Deal. Remember, the one that prolonged the misery of the Great Depression? Many Americans, especially the older generation, remember FDR fondly. After all, he was the president who told them they had nothing to fear but fear itself and led them to victory in World War II. It’s easy to forget the nuts and bolts of the past when it has such a happy ending but many economists are now revisiting the Great Depression. What they’re learning is that the New Deal merely exacerbated the problems facing America at that time.
Henry Morganthau, Roosevelt’s treasury secretary, came to that realization in 1939. “We are spending more money than we have ever spent before, and it does not work,” Morganthau finally admitted. “I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started and an enormous debt, to boot.”
Sound familiar? It will if we allow Barack Obama to implement his new New Deal once he takes the reins of power. If you don’t understand anything else about this financial mess, understand this: Government cannot create wealth, it can only confiscate it. Every dollar Obama uses to “stimulate” the economy is a dollar that could have been circulating in the free market system. With a $1 trillion stimulus package on the way, Americans will find themselves with less spending power. Either Obama will have to tax us to get the money or he’ll just print more, devaluing the money already in our pockets. Either way, it’s going to cost us and it’s going to cost us big.
Steven Moore, a columnist with The Wall Street Journal and an expert on taxes and the economy, suggested suspending the income tax for a year.
“If we want to see this economy recover, bring tax rates down to zero,” Moore says. “We will get jobs.”
He’s right, in theory, of course, but suspending the income tax would have a devastating impact on the federal government. Not that that’s necessarily a bad thing. Maybe it’s time to lob a grenade into the government camp. Chances are good it would probably blow up something we don’t need anyway. But, there’s a better, more measured approach. Tax cuts across the board. So many liberals are demanding that Obama roll back the Bush tax cuts but what he should be doing is expanding them. He’s already proposing a middle-class tax cut. By that very act he’s admitting that tax cuts stimulate the economy. Then why not stimulate it top to bottom? Why? Because that would ruin his class-warfare scheme.
You see, Barack Obama doesn’t really understand tax cuts and their effect on the economy. What he does understand is how to pit one group against another. The Internal Revenue Service tells us that the top 5 percent of wage-earners now pay nearly 60 percent of the income taxes. Conversely, the bottom 50 percent of wage-earners pay less than 4 percent of the income taxes. Tell me, who is in need of a tax break? Yet, the rich will never see a tax break under Obama. They’ll only see tax increases. And, after all, it’s the so-called rich who create most of the jobs. Instead of a New Deal, it’s time for a new direction. But don’t count on it with the wimpy Republicans we now have in Congress.
Phil Valentine is an author and nationally syndicated radio talk show host with Westwood One. For more of his commentary and articles, visit philvalentine.com.