After a decade of sub par economic growth compared to the 80’s and 90’s, the economy collapsed in 2008. There were many reasons why this occurred. Subprime mortgages that defaulted, the collapse of the housing bubble, outsourcing of good paying jobs, lack of wage increases, deficit spending and the doubling of the debt. It was a perfect storm and the collapse of Lehman Brothers broke the camel’s back.
When Obama came to power in 2009 he decided we needed to increase the debt via his so called stimulus. In reality this was a payoff to the unions and other Progressive cronies. Where did the money go? No one has a clue although I suspect some bank accounts in the Caymans and Switzerland were stimulated. Progressives defended this boondoggle as the only way to get out of the recession. They used WWII as an example that massive borrowing is not bad. The Left even claims our Post WWII Economic Boom 1945-1973 was due to this. This is nonsense and Victor Davis Hanson debunks their claims.
Since 2009, the example of the economic boom following World War II has been used by Keynesians to justify their record “peacetime” levels of borrowing intended to lift the U.S. out of the doldrums. Indeed, the more the contemporary borrowing fails, the more the vast indebtedness of the war years is invoked to reassure us. On occasion a wry lament follows that if only a spaceship full of dangerous aliens were to appear, we might have the requisite excuse to follow our grandfathers into a new collective frenzy of economic stimulus and public debt.
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For decades the liberal argument was that the New Deal cured the Depression. But in a new twist, the war has suddenly been reinvented to support the current arguments of the new Keynesians — despite the irony in the embrace of the old right-wing argument that it was the World War II defense spending, not FDR’s New Deal, that finally got America out of a near-decade-long depression.
In ingenious fashion, the new argument insists that the second downward spiral of 1937–38 — formerly ostensible proof that five years of the New Deal and of anti-business rhetoric had not worked — should be attributed only to FDR’s lacking the will or political muscle to stay the course and accelerate deficit spending, redistribute more income, and grow far bigger government. Then luckily the war came along. That crisis provided the necessary political landscape, which had been lacking during the supposed Keynesian backsliding of Roosevelt’s second term, to force through the long-awaited New New Deal. At last, the really big scare allowed the really big borrowing, and the result was the really big prosperity for the next half-century.
Read the rest: The False WWII Analogy Obama’s America is more like Attlee’s Britain than Truman’s America.
It’s funny how by claiming that WWII debt based spending got us out of the Great Depression, Progressives are admitting the New Deal failed. With the massive amounts of debt we have incurred the last 11 years, now reaching 100% of GDP, we would be unable to fight another World War.
Our debt and deficit are economically unstable. If we don’t do something about it the US will go the way of other great powers. They all fell due to debt and economic mismanagement. It’s still not too late for America but we are running out of time. As Hanson put it best, we are 1945 Great Britain not 1945 Truman’s America.
