Economic analysts in government and in the media have stated that the present financial crisis in America is 'the worst since the Great Depression.'
Maybe, maybe not.
It depends on what we do now.
The Great Depression began in the early 1930s following a deep recession resulting from the infamous Stock Market crash in 1929. From 1929 until 1932 the U.S. suffered from a recession, not a depression. But that recession was nothing compared to what would follow when President Herbert Hoover made one fatal mistake in 1932.
Most historians and economists trace the beginning of The Great Depression to a program initiated by the administration of President Herbert Hoover to place a hefty tax surcharge on all those making over $100,000 per year.
Remember, this was 1932, and $100,000 was considered wealthy.
The act put the economy in an immediate tailspin from which it never recovered until the U.S. entered World War II. From 1932 until the U.S. joined the War in 1941, America was held in the death-grip of a deep economic depression that threw millions out of work and onto the long bread lines.
In many ways the U.S. is presently in circumstances greatly similar to those of 1929-1932. We are on the brink of recession; some would maintain that recession has already begun.
Further, we have a Presidential candidate who proposes massive tax increases on capital and those who create wealth and jobs, similar to Herbert Hoover's tax policy in 1932.
It is a simple fact of economics that you cannot avoid economic meltdown during a recession if you hit capital and those who create wealth and jobs with hefty tax increases.
In the name of giving a tax cut to '95% of Americans,' 40% of whom have been shown to pay no taxes at all to begin with, Barack Obama would place a hefty tax burden on the very ones who are in a position to help the country dig out of a recession and avoid a possible depression.
To tax those who use their wealth to fuel the economy is tantamount to economic suicide for the nation. If Obama and the Democrats are allowed to raise those taxes we could well see the beginning of the 2nd Great Depression within the next year.
In other words, if you think it's bad now, 'you ain't seen nothing yet.'
Friday, October 31, 2008
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4 comments:
Bill Clinton raised taxes in 1993, then the economy took off.
Ronald Reagan raised taxes in 1983, then the economy took off.
Factually speaking, the economy went into a tailspin in 1929 when the market crashed, not 1932 as you claim.
Factually speaking, you are wrong on all 3 counts.
Ronald Reagan cut taxes.
Bill Clinton's tax increases did not cause the economy to 'take off.' A GOP majority in Congress, elected in 1994, took eoonomic measures including budget cuts that contributed to an expanding economy.
And the Great Depression did NOT start in 1929. That was a recession. The Depression started in 1932 after a severe 3-year recession.
ok, but where is your evidence to back up the 3-year recession thing. you can't just say the taxes caused it without giving legitimate information/statistics to back it up.
'Recession' and 'depression' are relative terms based upon comparisons. As you will see from the facts, what occurred from 1929 until Hoover's massive tax increases in 1931 was nothing compared to what took place following 1931.
When the stock market crashed in 1929 the country was already in the midst of a recession. That recession became severe following the crash. But it was not until late in 1930 that the first 'run on the banks' occurred, followed by a wave of bankruptcies.
But even by the end of 1930, fully a year after the market crash, unemployment was at 8.7%--roughly the same as with other severe recessions the nation has experienced since then, such as during the 1970s.
In the Spring of 1931, there was a second run on the banks resulting in more panic. By the end of the year unemployment had risen to 15.9%--very high to be sure.
But what happened in 1932 was the proverbial straw that broke the camel's back. The President and the Congress approved raising the top income tax rate from 25% to a whopping 63%. Unemployment then skyrocketed from 15.9% to a massive 23.6%.
1933 was even worse. Unemployment rose from 23.6% to 25%, and the nation was firmly in the death grip of low wages, low profits, a greatly diminished money supply, and a GNP that fell yet another 2.1% following the free-fall of the years between 1929 and 1932.
Thus, history shows that the nation's hard economic times were at their peak, that is, at their very worst, in the years 1932 and 1933--immediately after Hoover and Congress raised taxes significantly on the wealthiest Americans.
Even FDR's New Deal did not end the Great Depression. While unemployment fell to 21.7% in 1934--FDR's 2nd year in office--the unemployment rate by the end of 1938 was still a whopping 19%--a full 6 years into FDR's presidency.
Only when the nation began to make preparations for our entry into WWII did the Great Depression end. That was in 1939--the year FDR began to vastly expand the military. From 1939 until 1941, the nation gradually pulled out of the Depression, thanks to the build-up of goods and hardware in anticipation of entering WWII.
So, you tell me, based on the evidence of history, available in any history textbook or other works on the period, what other major economic policy changed between 1931 and 1932-33, other than the massive tax increase?
There was none. The tax increase on the wealthiest Americans plunged the nation into the 2 worst years of the crisis, 1932-33.
Hope that helps. But do your own research, and keep an open mind.
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