Obama Is Making Roosevelt's 1937 Mistake
Posted: Tuesday, August 09, 2011
by Nestor Fantini
www.la-luciernaga.com
When Obama became president, he carefully studied the political and economic decisions taken by Franklin Delano Roosevelt. After all, they both entered the White House at a time when the country was in the middle of an economic crisis that threatened its basic foundation.
In the first two and a half years, Obama followed Roosevelt’s example and, in the best tradition of Keynesian economics, attempted to activate the economy by a massive influx of liquidity. Now, backed into a corner by an ideologically inflexible opposition and a public debt of more than $14 trillion, the president is moving away from this economic strategy. The same mistake that Roosevelt made and that led to the economic recession of 1937, from which the United States did not recover until World War II finally generated the necessary demand and jobs that moved the national economy back to normalcy.
A very unsettling agreement that is an unequivocal political defeat for President Obama who had promised that there would be no pact unless the rich paid their fair share of taxes, and who appears as giving in to demands of a GOP that has been hijacked by Tea Party extremists. And there should be no doubt that the term “extremists” is well applied considering that leaders of this ultranationalist movement, such as Sarah Palin, Michele Bachmann and Rand Paul, were prepared to block an increase in revenues at any cost. Even, if this meant defaulting and pushing the country towards economic collapse.
The catastrophe was avoided with the historic agreement of August 2nd. But the consequences of this pathetic deal have already been felt in the S & P’s unprecedented downgrading of the credit rating and the tremor it cause in Wall Street and other world markets.
Even more serious, the change of economic policy established by the August 2nd agreement implies spending cuts that will reduce economic activity at a time when the country has an anemic GDP growth of only 1.3% and an unemployment rate of 9.1%. A very distressing picture for Obama who, despite the political responsibility of the Tea Party, has become the first president to see a credit downgrading in the United States. A not very memorable achievement that is reflected in a CNN poll that suggests that 75% of Americans think that the country is doing badly and 54% do not approve of Obama’s job. Uncomfortable news for a president who next year wants to be reelected.
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Top-level comments on this article: (1 total)Good observations - hopefully the voters will think before voting this time.
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