BHO may yet play Hoover to Romney’s (?) FDR: not quite up to the task, discredits a political philosophy for a generation or more, succeeded by a slippery fellow who cheerfully reaps the benefits when the rebound occurs.
Naturally I’m going to argue that there is the small matter of getting the policy correct. FDR extended and expanded Hoover’s interventionist policies, whereas Romney (?) will reverse course, rein in spending, reform entitlements, repeal Obamacare, unwind regulations… right? Right? RIGHT?! Sigh.
A. Barton Hinkle writes in Reason that the president is following in Herbert Hoover’s footsteps:
It’s commonly believed Hoover took a hands-off approach to the country’s economic distress, and that his administration’s tight-fisted refusal to spend prolonged the misery. But Hoover was about as stingy with a government dollar as “Jersey Shore” is with hairspray.
Hoover increased federal spending by more than 50 percent, signed the biggest peacetime tax increase to that point, lavished money on public works, and signed the disastrous Smoot-Hawley protectionist tariff. FDR slammed Hoover’s “reckless and extravagant” spending and accused him of wanting to “center control of everything in Washington as rapidly as possible.” Roosevelt’s running mate, John Nance Garner, denounced Hoover for “leading the country down the path of socialism.” [Wow. WOW. Que huevos. – ed]
Hoover’s massive government interventionism did not end the Great Depression. George W. Bush’s rapid spending increases did not forestall the current malaise. And the massive government outlays of the past three years—federal spending has increased 30 percent; despite layoffs, state and local spending has grown, not shrunk—have not cured the country’s economic ills, either. Yet the answer, say countless voices in the prestige press, is to stop Washington’s ruinous “austerity” and start spending.
From The Goldberg File
My friend and AEI colleague Nick Schulz has done something I don’t have the intestinal fortitude to do: Read John Judis’s New Republic cover story on the economy. Apparently Judis believes he’s cornered Mitt Romney on the Achilles heel of Romney’s — and the GOP’s — economic agenda. Judis confronted Romney and asked him:
I want to ask you something about history. You know, when Herbert Hoover had to face a financial crisis and then unemployment, his strategy was to balance the budget and cut spending, and that made things worse. When Roosevelt came in, unemployment was twenty-five and went to fourteen percent by 1937. With deficits. Aren’t you repeating the Hoover mistake?
Ah, the “Hoover Mistake,” capitalized for your eternal reifying pleasure.
If you ever doubt that liberal historians have imbibed the partisan talking points of the New Deal, you need look no further than the maligned figure of Herbert Hoover. Judis’s characterization is simply what “everyone knows” to be true about Hoover’s response to the Depression of 1929… The problem is that almost everything “everybody knows” about Hoover is wrong… Hoover was such a card-carrying Progressive, guess who considered running on his ticket as vice president in 1920? Wilson’s toady at the Navy Department, Franklin Delano Roosevelt.
But none of that matters. Hoover was a crazy, heartless libertarian, don’t you know anything?! I mean, just look at what a spendthrift he was during the Great Depression! Hoover mistake, Hoover mistake, Hoover mistake! I’m not listening to you!
Well, if you tell a certain breed of libertarian that Hoover was a budget-balancing fiscal tightwad, you’ll get punched in the face, at least figuratively. Here’s Tim Taylor (Via Nick’s post):
Hoover’s budget strategy over his term of office was not to balance the budget. The budget ran a small deficit of -.6% of GDP in 1931, followed by a much larger deficits of 4.0% of GDP in 1932 and 4.5% of GDP in fiscal year 1933 (which, as Judis points out at a different point in his discussion, started in June 1932 and was thus mostly completed before Roosevelt took office in 1933).
Let me say it clearly: Hoover didn’t cut spending. In nominal terms, federal government spending went from $3.3 billion in 1930 to $4.6 billion in 1933. As Taylor notes, given the price deflation that came with the crash, the real federal outlays nearly tripled from 3.4 percent of GDP in 1930 to 8.0 percent of GDP in FY 1933.
In the spring of 1930, the New York Times said of Hoover’s efforts, “No one in his place could have done more” and “very few of his predecessors could have done as much.”
…Here’s Hoover defending his record in his acceptance speech at the 1932 convention as he prepared to run for another term:
Two courses were open to us. We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put that program in action. Our measures have repelled these attacks of fear and panic . . . We have used the credit of the Government to aid and protect our institutions, both public and private. We have provided methods and assurances that none suffer from hunger or cold amongst our people. We have instituted measures to assist our farmers and our homeowners. We have created vast agencies for employment.
Perhaps because I am so cynical, I’m no longer shocked that liberal historians and Democratic politicians still cling to the Hoover myth, but what is amazing to me is how liberal economists who swear they are empiricists and fact-finders propagate it as well. Paul Krugman is constantly invoking the Hoover myth. So is Brad DeLong, who has driven many decent students of economic history to the point of sputtering rage with his insistence that Hoover was a “liquidationist.”
The Hoover myth endures for a simple reason — it has to. Because otherwise the FDR myth will tip over.