jhay78;1269666 wrote:Enlighten us.
Which "throw-stuff-against-the-wall-and-see-what-sticks" policy of FDR's got us out of the Great Depression?
Well Jhay as the picture shows, such an effort will be a waste of time because you are a true believer and the faith of a true believer will not be shaken.
However, here's a quick attempt.
First, of all we have to understand what the great depression was.
The great depression was a period between 1929-1939/1941 wherein unemployment remained above 10%. During this time frame there were two recessions.
So, it was similar to today wherein we recovered from the great crash in 1932 with the first part of the New Deal but it wasn't enough of a recovery and unemployment remained high. The Second New Deal with the Works Progress Administration did not go into effect until later (more on that in a minute).
Similar to President Obama last summer, FDR turned to deficit-reduction with acts such as the wealth tax act of 1935 as a conservative coalition took power in Congress and FDR heralded the advice of his conservative/budget hawk treasury secretary in pursuit of a balanced budget. (This was back when conservatives would agree to tax raises in pursuit of balanced budgets....something Milton Friedman later excoriated as "balancing the budget for the liberal welfare state" and "starve the beast" was born).
Thus, the great mistake of 1937 in which he actually achieved a balanced budget happened and the U.S. went back into a recession and FDR looked like he was headed to a defeat in 1940. However, in 1938 he abandoned his balanced budgets approach and launched a $5 billion spending program ($76 billion in today's dollars) in just the spring of 1938 as WWII was on the brink.
Additionally, the WPA which was passed about the same time he began turning to austerity, due to the increased in unemployment, spent nearly double than more than double its initial appropriation of $4.8 billion dollars to $13 billion dollars ending the recession of 1937. The unemployment rate dramatically dropped at that point up until 1941 when Pearl Harbor was attacked and the WPA on steroids took place with the largest full employment program in history for the mobilization for World War II.
As you can see, precisely when FDR turned to budget balancing is when the recovery returned to recession...which is precisely what the CBO predicts will happen if we allow the tax raises and spending cuts scheduled for next year to go into effect.