Just what we need when the country is in debt to the tune of trillions of dollars for future entitlement liabilities, a new public works program:
President-elect Barack Obama added sweep and meat to his economic agenda on Saturday, pledging the largest new investment in roads and bridges since President Dwight D. Eisenhower built the Interstate system in the late 1950s, and tying his key initiatives – education, energy, health care –back to jobs in a package that has the makings of a smaller and modern version of FDR’s New Deal marriage of job creation with infrastructure upgrades.
The president-elect also said for the first time that he will “launch the most sweeping effort to modernize and upgrade school buildings that this country has ever seen.”
“We will repair broken schools, make them energy-efficient, and put new computers in our classrooms,” he said in the address.
The president-elect is bringing new elements of his domestic agenda into his economic recovery plan, committing to a path toward giving every American access to an electronic medical record as part of an “economic recovery plan … that won’t just save jobs, it will save lives.”
Lets not forget the billions the government is throwing at the private sector to bail them out. But hey, lets throw money into public works programs with the hopes of rekindling the New Deal of FDR that worked so swimmingly. Or did it?
You see, the New Deal did not save our country from the depression, World War II did.
These new jobs created by the New Deal are made with the money confiscated by government. Instead of letting the individual keep that money themselves and spending it at grocery stores and retail outfits, which would then in turn create jobs because more money would be coming in to the businesses he wants to force you to pay for government jobs that are so inefficient stand-up comedians make a living off of jokes about them. Hell, that money could of gone into the individuals bank which then would have been sent out in new loans to other individuals to open new businesses, which would then create jobs.
But Obama doesn’t think the private sector is capable. Instead, he wants to create those jobs from your money himself.
Burt Folsom, a professor of history at Hillsdale College in Michigan, describes a few of the programs FDR instituted in a speech:
The Works Projects Administration was set-up under Roosevelt with his good friend Harry Hopkins. They created, to use their rhetoric, over five million jobs. We had unemployment of eight or nine million people and this agency all by itself created five million jobs. People were building roads, putting gravel on roads, sometimes asphalt and cement, all over the country. They built courthouses in different counties. They built football stadiums for high schools around the country. Sometimes they built bridges, but mostly roads. The point is they did those kinds of projects. The people were given money. Taxpayer dollars paid for the projects. They were completed. Supposedly they created five to six million jobs. But where did the $10 billion come from that supported them? Did the government have an independent source of revenue? No, they had to get it from somewhere.
~~~Another New Deal program was the AAA, our first serious government program in farming. Typical farms back in the thirties were about 160 acres. Sometimes they were larger. But let’s just say that we have a typical 160 acre farm. What the AAA did under the Agricultural Adjustment Act was to allow farmers to take one-quarter of their land out of circulation and pay them to do it. The idea here was we had overproduction of crops, so the prices were low. So you paid farmers not to produce. So a farmer takes his acreage out of production. He is often paid $10 an acre to do that. Then he grows food on the other three-quarters of his land. Did we get the ten dollars an acre from an independent source of revenue for the government to pay for this? The textbooks almost never tell you where it comes from but of course it comes from the taxpayers.
~~~The WPA and the AAA are two of the best-known programs. It’s interesting that the word boondoggle was first applied to the WPA. I’m looking at this in the most charitable way. I’m assuming that a lot of what the WPA did was worthwhile. A lot of these roads were so poorly built and constructed, and were slowly built because the more slowly they were built the longer people could get paid to build them. Right? And the WPA had so many poorly built roads that other WPA workers had to come to redo those roads. It’s also very interesting that so many of these were created in Democratic congressional districts. And it is very interesting also that so many of the people who got the jobs were people who were appointed to their jobs by the Democratic precinct chairman in the area. And it’s also interesting how when all that money became available, many Congressmen decided to start voting more with Franklin Roosevelt so that they could get money coming in to their district. So you see the political motivation.
He also goes into the taxation of the depression era and the results of these high taxes. Something Obama has also wanted to copy from FDR:
In 1929, when the Great Depression hit, the top marginal tax rate was 24 percent. That was the rate on top incomes. The bottom rate was one-half of one percent. In other words, the taxation started at one-half of one percent. There was an exemption, too, and the exemption was high enough to keep 98 percent of all Americans off the income tax rolls. But we had a small federal government back then.
In 1932, the marginal tax rate went up to 63 percent on top incomes. In 1935 Roosevelt pushed it up to 79 percent, and we started at five percent, and the exemption was lowered, so more people were paying taxes. But it starts at five percent and it goes up to 79 percent. Now, you could see why, right? All these programs had to have a payment. But here’s something that is not explained. What about the work ethic of those people in those top brackets? In 1929, you were telling them, you get to keep three-fourths of whatever you make. Now you’re telling them you give more than three-fourths to the government. What’s your work ethic going to be with a 79 percent tax? Tax-exempt bonds, stamp collections-that was Roosevelt’s personal exemption, he had a good stamp collection-coin collections, foreign investments, Swiss banks, anything to shelter that money. But do you see why the depression is prolonged? Who’s going to invest to create the jobs to get us out when you’re being taxed 79 percent? Do you think the revenue then is going to go up when the tax rate is 79 percent? Very good thinking, we have some supply-side thinking in the crowd. We raised in 1929 over $1 billion. It was almost $1.1 billion in income tax revenues. In 1935 when the tax rate was 79 percent, our take for the government on income tax was $527 million-less than one-half of what it was in 1929. Did you catch that? Twenty-four percent of something is something, and seventy-nine percent of nothing is nothing-because the high tax rates chased capital into tax-exempt investments.
Therefore in order to get money, Roosevelt had to tax poor people, so he instituted excise taxes-especially on whiskey and tobacco. Prohibition ceased to be law. He explicitly said I want that whiskey in there so we can tax it. Disproportionately middle-class and lower-class people drink. Roosevelt wanted their money. We therefore had a high excise tax on whiskey and tobacco. We instituted for the first time in our history a federal gasoline tax. See, the income tax hits the rich back in the twenties, now we are putting in excise taxes because we have to fund the New Deal. The money has to come from somewhere, and the rich people just sheltered their investments. We had other excise taxes on cars, taxes on tires, on telephone calls, telegrams, movie tickets, and bank checks. And they wanted to do it on soft drinks, but Coca-Cola was too strong a lobby, so they settled for grape concentrates. The revenue from excise taxes in this country went from $500 million in 1929 to $1.36 billion in 1935.
What I want you to see is these programs-WPA, AAA, and Silver-are funded by excise taxes on middle-class, lower-class people drinking, smoking, driving cars, going to movies. That is where much of the funding for the New Deal came from.
Now, with Roosevelt you say, “My gosh! How could he win elections?” Roosevelt went on the campaign trail in 1936 and said, “You poor people are doing your share, but the rich are avoiding the taxes. We should make them pay.”(Curt-sound familiar?) And he recommended a tax to congress, on all income over one hundred thousand dollars. His recommendation in 1941 was for a 99.5 percent tax on all income over one hundred thousand dollars. And when the budget director said, “What!” Roosevelt’s comment was, “Why not?”
When congress refused to pass that bill, Roosevelt was furious. Therefore he instituted a 100 percent income tax, by executive order, on all income $25,000 or more. I repeat, Roosevelt instituted an executive order on April 27, 1942 for a 100 percent income tax on all income over $25,000. How many of you knew about that? Oh good, somebody did. Actually, the Republicans won the next election and voted it out, and Roosevelt had to settle for 90 percent. He had to settle for a 90 percent marginal tax. Here’s a quotation from Roosevelt, it was during World War II, “Discrepancies between low personal incomes and very high personal incomes should be lessened.” Oh, and he used the war as a crisis, you see. “And I therefore believe that in this time of grave national danger, when all excess income should go to win the war, no American citizen ought to have a net income after he’s paid his taxes of more than twenty-five thousand dollars.”
And this is the guy Obama wants to emulate. Someone who actually came up with the idea that a 100% tax on income is a good idea. Someone who couldn’t see the simple fact that the higher you tax, the less money comes in. No one creates new jobs when people’s income is taxed so high.
So Obama’s plan? Emulate FDR by raising taxes and creating inefficient jobs from your money instead of letting you keep that money to spend and create better and more efficient jobs.
Going to be a great four years eh?
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