President Obama has to be pulling his hair out of his head much as Franklin Roosevelt was in the late 1930's, stubborn unemployment that just will not go away, a devalued currency policy to help with exports, pumping money into the economy via the printing press, public works projects meant to stimulate the economy, and nothing, ohh nothing seems to works. In fact in the Roosevelt playbook the only thing our President has not done yet, is set wage and price controls, or set a limit on production. Maybe the Presidents advisers are not desperate enough yet to boldly go in that direction, after all it is an election year, and winning is everything.
If any of the current crop of office seekers wish to follow a play book to success than they need look no further than 1920-1921. A time when there was a severe depression in the United States, after the first World War. Prior to taking office Harding made speeches in public, while pursuing office lamenting to wage earners to expect lower wages, not because he wanted to make people poorer, but rather he at least understood that in a time of economic crisis prices of all items in the economy needed to fall. That is a parallel at least today with the downturn that has taken place starting in 2008, while of course there have been places harder hit before then for instance the State of Michigan. But Harding understood that the Federal Government had a role to play in sapping the necessary Capital for investment, and higher production projects out of the economy as well, and pledged reductions in spending upon moving into office. A promise he kept, reducing the Federal Government's spending by 50 %, yes you read that correct in 2 years the United States Federal budget was reduced by 50% !, and what followed where policies enacted and followed thru upon his death to lead one of the greatest economic expansions in the United States history, and produced a decade know as the " roaring 20's " and they were roaring for a very good reason, not only was the Federal Spending cut in half in 2 years but taxes were cut significantly ( with the result of revenues increasing significantly to the Treasury......... sound familiar ? ) tax rates on income, capital gains, inheritance, taxes on equipment, and printing and communication, as well as corporate taxes were all reduced significantly. These reductions in rates, as well as a smaller bite at the Federal Level, left room for some of the greatest improvements in technology and consumer goods known since the 1980's.
He of course at this time was advised by then Secretary of the Commerce Herbert Hoover to abandon the tax cutting ideas, and implement a different strategy, one that created vast public works projects, and make work schemes to alleviate the depressed economy, Hoover favored higher tax rates on the wealthy of the country at the time, in his enlightenment to business and growth Harding rejected these principles, which eventually when Hoover took office and enacted were major contributions to the Great Depression, which in turn Franklin Roosevelt followed Hoover's prescription and increased even more Federal Taxes and spending, which gave the country the longest economic down turn in it's entire history, rather Harding was inclined for more pro growth, pro business type of policies, and because of that along with the slash in Federal Spending the depression of that era was over relatively quick, with unemployment falling within the first year by as much as 10 %, and the unemployment rate by 1926 was as low as 1 %, yes that is correct 1 %, that was clearly a time when one could have pursued the " American Dream".
It is interesting to note that in following years, Presidents Kennedy, Reagan, and Bush have followed the tax cut route to spur the economy to some degree, and have managed to have success. Where Barack could outdo all of these men is to cut the budget by a minimum of 30 % and lower all rates on taxes to a simplified 15-20%. That action alone would spur unprecedented growth, and the effect on revenues to the Treasury would be monumental. However Barack will not follow that play book, nor do I think any of the current Republicans running for office would follow that play book, because the current system provides for the power to manage people and the economy, and while the Political class sit in the office and worry, and twiddle thumbs about what to do the productive individuals in the economy are sitting on there hands, and more importantly their cash.................waiting for the day when they can get a really good ROI.............return on Investment for their money. The only way that will happen is to force Washington, and 50 State capitals to do with less.............. much less than they are operating with now, it means a deep soul searching to figure out what precisely is the legitimate function of Government, and then only those functions will be the the processes that they will engage in, and as far as that goes the less, the better. Government is not a job creator, it is a job destroyer, and for this economic mess to correct itself, free people need to be free to engage in the free market. Consumers, and producers all meeting in the market place satisfying each others needs. That is what creates wealth, and prosperity, not flooding banks with paper money that has little value, or projects created for the sole purpose of transferring wealth from one class of people to another, that system is designed to take power away from people, and transfer it to a select group of a political class. That resembles a fascist state rather than a Republic of free people. Barack forget the Mussolini model, and follow the model of Warren Harding, you will have political success beyond your wildest dreams.
