Dispelling The Herbert Hoover Myth
This column was written by Jonah Goldberg.
A very old story is once again being retold, with a few of the characters' names updated to besmirch the innocent. In this story, conservatives are to blame for an economic crisis because they allegedly believe there is no role for government in the economy, and all economic crises are due to lax regulation of markets.
Cokie Roberts recently gave a sense of how old this story is on ABC's "This Week." She said of John McCain, "He's a Republican, and whenever Republicans get into this kind of mess, everybody, even people who were not born or close to being born, the specter of Herbert Hoover comes out to haunt them."
Everybody?
Roberts is correct in one sense. The specter of Herbert Hoover is conjured every time there's an economic calamity, large or small.
But you know what? Specters are ghosts. And ghosts aren't real.
The Herbert Hoover of popular imagination was a laissez-faire lickspittle of Adam Smith. But this idea began as Rooseveltian propaganda and endures as the creation myth of modern liberalism.
William Leuchtenburg, possibly the greatest authority on the FDR era, wrote some time ago, "Almost every historian now recognizes that the image of Hoover as a 'do-nothing' president is inaccurate."
After the stock market crash of 1929, Hoover browbeat business leaders to keep wages and prices high. He invested heavily in public works projects. He pushed for an international moratorium on debts. He created the Reconstruction Finance Corporation, which later became a home for many of FDR's Brain Trusters. Hoover increased farm subsidies enormously.
Some of Hoover's interventions were good but ineffectual. A few were very, very bad and very effective.
In 1932, Hoover in effect repealed Calvin Coolidge's tax cuts, increasing the rates for the poorest taxpayers by more than 100 percent and hiking the top rate from 25 percent to 63 percent. Worse, contrary to his own better instincts, Hoover signed the disastrous Smoot-Hawley trade bill that raised protectionist walls at precisely the moment the world needed trade the most.
Then there's this idea that FDR rode to the rescue, saving the day by untying the American people from the railroad tracks of runaway capitalism. Former Clinton Treasury Secretary Lawrence Summers, now a surrogate for Barack Obama, recently said on NPR: "It's very tempting to always think that the government should just stand back and let the private sector sort these problems out. That's the kind of thinking that made the Depression 'Great.'"
Summers should know better (in fact, I'm sure he does). The Great Depression was not made "Great" by government inaction. Indeed, FDR's New Deal may have been wonderful in some mytho-poetic sense, and maybe some of its reforms can be defended in some broader context, but as an effort to end the Great Depression, the New Deal was a failure. As my colleague Mark Steyn writes, "Lots of other places - from Britain to Australia - took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That's why in other countries they refer to it as "the Depression," but only in the U.S. is it 'Great.'"
Today we're hearing a similar argument about John McCain or, more often, his evil henchman, former Sen. Phil Gramm as Herbert Hoover's mini-me.
"Phil Gramm, one of the architects of the deregulation in Washington that led directly to this mess on Wall Street, is also the architect of John McCain's economic plan," Obama said recently. A couple problems: Gramm is no longer with the McCain campaign. More important: This is nonsense on stilts. The deregulation that the Obama camp most often cites is the Gramm-Leach-Bliley Act, which passed the Senate in 1999 by a 90-8 margin and was signed enthusiastically by Bill Clinton. Thirty-eight Democrats voted for it, including Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle and Barack Obama's running mate, Joe Biden. The "Leach" in the legislation's title was a founder of Republicans for Obama.
Moreover, nothing in that law has much to do with today's financial meltdown. Indeed, it has helped some financial institutions weather the storm precisely because they are more diversified.
Also, who are the real Hoovers here? Obama is sympathetic to protectionism, as is his party. He says he will raise taxes on the top income earners, and if he's remotely honest about his spending ambitions, he will have to raise taxes on everybody else as well.
Meanwhile, who sought to intervene when Fannie Mae metastasized? John McCain. Who wanted to keep the party going? The party of Roosevelt. There's blame all around, but nothing today supports the liberal ghost stories of yesterday.
By Jonah Goldberg
Reprinted with permission from National Review Online
National Review Online A very old story is once again being retold, with a few of the characters' names updated to besmirch the innocent. In this story, conservatives are to blame for an economic crisis because they allegedly believe there is no role for government in the economy, and all economic crises are due to lax regulation of markets.
Cokie Roberts recently gave a sense of how old this story is on ABC's "This Week." She said of John McCain, "He's a Republican, and whenever Republicans get into this kind of mess, everybody, even people who were not born or close to being born, the specter of Herbert Hoover comes out to haunt them."
Everybody?
Roberts is correct in one sense. The specter of Herbert Hoover is conjured every time there's an economic calamity, large or small.
But you know what? Specters are ghosts. And ghosts aren't real.
The Herbert Hoover of popular imagination was a laissez-faire lickspittle of Adam Smith. But this idea began as Rooseveltian propaganda and endures as the creation myth of modern liberalism.
William Leuchtenburg, possibly the greatest authority on the FDR era, wrote some time ago, "Almost every historian now recognizes that the image of Hoover as a 'do-nothing' president is inaccurate."
After the stock market crash of 1929, Hoover browbeat business leaders to keep wages and prices high. He invested heavily in public works projects. He pushed for an international moratorium on debts. He created the Reconstruction Finance Corporation, which later became a home for many of FDR's Brain Trusters. Hoover increased farm subsidies enormously.
Some of Hoover's interventions were good but ineffectual. A few were very, very bad and very effective.
In 1932, Hoover in effect repealed Calvin Coolidge's tax cuts, increasing the rates for the poorest taxpayers by more than 100 percent and hiking the top rate from 25 percent to 63 percent. Worse, contrary to his own better instincts, Hoover signed the disastrous Smoot-Hawley trade bill that raised protectionist walls at precisely the moment the world needed trade the most.
Then there's this idea that FDR rode to the rescue, saving the day by untying the American people from the railroad tracks of runaway capitalism. Former Clinton Treasury Secretary Lawrence Summers, now a surrogate for Barack Obama, recently said on NPR: "It's very tempting to always think that the government should just stand back and let the private sector sort these problems out. That's the kind of thinking that made the Depression 'Great.'"
Summers should know better (in fact, I'm sure he does). The Great Depression was not made "Great" by government inaction. Indeed, FDR's New Deal may have been wonderful in some mytho-poetic sense, and maybe some of its reforms can be defended in some broader context, but as an effort to end the Great Depression, the New Deal was a failure. As my colleague Mark Steyn writes, "Lots of other places - from Britain to Australia - took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That's why in other countries they refer to it as "the Depression," but only in the U.S. is it 'Great.'"
Today we're hearing a similar argument about John McCain or, more often, his evil henchman, former Sen. Phil Gramm as Herbert Hoover's mini-me.
"Phil Gramm, one of the architects of the deregulation in Washington that led directly to this mess on Wall Street, is also the architect of John McCain's economic plan," Obama said recently. A couple problems: Gramm is no longer with the McCain campaign. More important: This is nonsense on stilts. The deregulation that the Obama camp most often cites is the Gramm-Leach-Bliley Act, which passed the Senate in 1999 by a 90-8 margin and was signed enthusiastically by Bill Clinton. Thirty-eight Democrats voted for it, including Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle and Barack Obama's running mate, Joe Biden. The "Leach" in the legislation's title was a founder of Republicans for Obama.
Moreover, nothing in that law has much to do with today's financial meltdown. Indeed, it has helped some financial institutions weather the storm precisely because they are more diversified.
Also, who are the real Hoovers here? Obama is sympathetic to protectionism, as is his party. He says he will raise taxes on the top income earners, and if he's remotely honest about his spending ambitions, he will have to raise taxes on everybody else as well.
Meanwhile, who sought to intervene when Fannie Mae metastasized? John McCain. Who wanted to keep the party going? The party of Roosevelt. There's blame all around, but nothing today supports the liberal ghost stories of yesterday.
By Jonah Goldberg
Reprinted with permission from National Review Online
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The interest rate would not be as low as that offered to prime borrowers and obviously, the amount would have to be within their ability to pay back, but still, they could have received decent loans.
Think about it.
Posted by ofbyfor2 at 08:04 AM : Oct 06, 2008
======================
While " ''subprime'' and ''ARM'' do not mean the same thing" necessarily,
they are intrinsically linked as the latter (and interest-only) are often
the only mechanism(s) available to subprime borrows to get a given mgtg,
especially when those same mechanisms are also contributors in the housing speculation which drove the price of homes well beyond traditional
appreciation rates. All of which means the homes that subprimers could afford with a traditional mgtg were substandard in quality and size.
That''s not ''The Dream'' pushed by the gods of consumption.
Suggest you revisit
www.youtube.com/watch?v=NU6fuFrdCJY
and pause it, often, and take notes and google for the facts.
(also worth watching)
http://www.youtube.com/watchv=1RZVw3no2A4&feature=iv&annotation_id=event_597487
:
yada-yada
:
Do your own *** research.
Posted by taxguydave at 06:49 PM : Oct 05, 2008
========================
Only to the extent Dems deserve it.
Regardless, if mechanisms for subprime lending were not available,
OR
if they were -BUT- the borrower were STILL
required to meet the same income criteria as
a fixed-rate mgtg,
regardless of which type of mgtg they got,
THEN
there would be no subprime component to securities fraud.
Suggest you revisit
www.youtube.com/watch?v=NU6fuFrdCJY
and pause it, often, and take notes and google for the facts.
No Politics
Is History and Economics
Andrew Bacevich - Limits of Power
West Point, Vietnam, Ret. Colonel, Boston University Professor, Father of Dead Soldier in Iraq
Good overview is recent PBS interview with Bill Moyers
Free Video here
http://www.pbs.org/moyers/journal/08152008/watch.html
He claims only the rich have benefitted from the tax cuts. But he never gives you the facts.
Here''s the facts. The low income rate of 10% will jump to 15%. The other four rates will increase: 25% to 28%, 28% to 31%, 33% to 36% and 35% to 39.6%. This hurts everybody.
This will be a 50% increase on mainly young low income workers. Not as high as President Hoover''s 100% increase.
But these tax increases will put a severe strain on our economy.
The truth is 100% of Americans will get a tax increase in 2011 with the repeal of the President Bush Tax Cuts. Not the 5% that he claims.
This is a good article.