As promised earlier this week, I’m adding the FDR quote to the OOTD canon, mainly because I still can’t quite believe that Barack Obama seriously thought he could sell the idea that Franklin Delano Roosevelt was a fiscal conservative:
… FDR comes in, he tries all these things with the New Deal. But FDR, contrary to myth, was pretty fiscally conservative. And so, after the initial efforts of the New Deal and it looked like the economy was growing again, FDR then presented a very severe austerity budget. And suddenly, in 1937, the economy started going down again. And, ultimately, what really pulled America out of the Great Depression was World War II.
First, Obama frames this answer by saying, “For those of you who have studied economic history and the Great Depression…” Well, those who have studied it would know better than to assert that the US economy was “growing again” in any meaningful sense in 1937. It had finally returned to 1929 levels in terms of GDP, but unemployment was still around 14.3%, down from 25% at its peak but still almost triple the 5% range of the decade before the Depression. Federal spending was still on its way to doubling by 1939, and the Fed actions to tighten the money supply is a better culprit for the dropoff in economic activity in 1937.
Besides, how much was actually cut, and when? Here is the budget series for 1933-39:
- 1933 – $4.598 billion
- 1934 – $6.541 billion
- 1935 – $6.412 billion
- 1936 – $8.228 billion
- 1937 – $7.580 billion
- 1938 – $6.840 billion
- 1939 – $9.141 billion
The much-maligned 1937 budget was 18% higher than the 1935 budget. The 1938 budget was 6.6% higher than the 1935 budget. When shown in the series, it hardly qualifies as an “austerity” budget. Even the 1938 budget was 48.8% higher than the 1933 budget in place when FDR took office. And when FDR boosted spending from 1938 to 1939 by 33.6%, unemployment barely budged, staying above 15%. It didn’t decline until 1940 (the ’40 budget only increased 3.6% over ’39) and didn’t fall significantly until 1941, while Lend-Lease got American war production in gear before the attack on Pearl Harbor.
Perhaps Obama should study some economic history himself.
Got an Obamateurism of the Day? If you see a foul-up by Barack Obama, e-mail it to me at [email protected] with the quote and the link to the Obamateurism. I’ll post the best Obamateurisms on a daily basis, depending on how many I receive. Include a link to your blog, and I’ll give some link love as well. And unlike Slate, I promise to end the feature when Barack Obama leaves office.
Illustrations by Chris Muir of Day by Day. Be sure to read the adventures of Sam, Zed, Damon, and Jan every day!