Here comes the WPA

posted at 9:15 am on November 24, 2008 by Ed Morrissey
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Yesterday, Barack Obama’s surrogates fanned out across the talking-head shows to promote Barack Obama’s new jobs program.  Obama promises to create 2.5 million jobs in the next two years through government stimulus packages and heavy reliance on public-works programs.  Many, like the Washington Post, compare his vision to that of FDR — without pointing out that FDR’s programs failed:

The campaign did not release an estimate of the number of jobs that his latest proposal would create. But congressional aides who have been involved in developing stimulus proposals said that any plan to create 2.5 million jobs is likely to be significantly larger — probably well over $200 billion, or between 1 and 2 percent of the gross domestic product.

Such a plan would be bold by historic standards. President Bill Clinton, facing a weak economy when he took office in 1993, proposed a $16 billion stimulus package, which was blocked in the Senate. Obama’s proposal would be an order of magnitude larger, even when adjusted for the larger size of today’s economy.

Some economists have compared Obama’s proposals to the spending spree President Franklin D. Roosevelt launched during his early months in office in 1933. Roosevelt offered jobs programs, such as the Civilian Conservation Corps, and cash for public-works projects, such as the Tennessee Valley Authority, in hopes of easing the pain of the Great Depression.

Lori Mongtomery apparently took pains to use the phrase “in hopes of”.  FDR certainly hoped to alleviate the pain of the Great Depression with his experiment in federal mobilization of the civilian workforce, but he failed to do so.  FDR spent years pulling capital out of the private sector and creating civil-service jobs that underproduced and inefficiently utilized the capital.  The end result was a prolonged depression that only ended when FDR was forced to partner with private enterprise on the war effort in the 1940s.

The best stimulus package that Congress could offer would be a sharp reduction in government spending, accompanied by a decrease in tax rates on investment income — the capital-gains rate.  While few will realize any capital gains in 2008, the commitment to low rates will signal investors to start putting their resources to work again.  Best of all, it will also signal that the government won’t compete for projects that could be accomplished by private enterprise — projects that will get completed more quickly and with better quality than with heavily-bureaucratized government labor.

With Democratic majorities in both chambers of Congress, though, Obama won’t likely see that kind of long-term stimulus to the nation’s economy.  Instead, Congress will confiscate more capital to fund its own projects, making recovery more and more difficult.  They’ll expand government spending while either hiking tax rates, expanding deficit spending, or both.  In the end, that will be as effective as the CCC and the WPA was from 1933-1941.  Hopefully, this time it won’t take American voters that long to reach that conclusion.

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