In the latest Commentary, James K. Glassman of the World Growth Institute explains some history that people like Newsweek scribe Jonathan Alter tend to ignore:
The track record is discouraging. Despite Franklin Roosevelt?s aggressive spending, unemployment reached 25 percent in 1933, fell only to 14 percent by 1937, and was back up to 19 percent in 1939.1 In the end, the New Deal did little or nothing to resuscitate the economy. Certainly, inept monetary policies helped prolong the Great Depression, as did tax increases, constant interventions in the conduct of business, and the erection of global trade barriers, beginning with the Smoot-Hawley Tariff in 1930, more than two years before Roosevelt took office. There was a stretch of twelve years from the stock-market crash to Pearl Harbor, and, during that time, fiscal stimulus simply did not jump-start the economy (or, in Keynes?s own metaphor, ?awaken Sleeping Beauty?). Now, some do attempt to make the case that Roosevelt did not increase government spending enough during the early and mid-1930?s and that it took World War II and the unprecedented infusion of government dollars into the economy to provide the stimulus that finally pulled America from the swamp.
But even if that were true?and considering the fact that federal spending tripled during the Great Depression, rising from 3 percent of the country?s gross domestic product to nearly 10 percent in 1939,2 it does not seem the likeliest explanation?it still does not offer much in the way of guidance through our current thicket. Few economists today believe the United States could tolerate the kind of budget deficits that developed during World War II, which ran more than 50 percent of gross domestic product, or about $7 trillion annually in current terms. When the federal government ramped up its spending during the war, it had not yet grown into the entitlement cash machine it is now, spitting out trillions of dollars a year in retirement and health-care benefits.
