FDR, Where Are You When We Need You?
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The federal government announced today that the national deficit next year will surpass half a trillion dollars. That figure doesn’t include the tens of billions of dollars in additional war funding for Iraq and Afghanistan. This in itself will force the presidential nominees to focus on the economy as the number one issue.
According to Edward Altman, a finance professor at New York University’s Stern School of Business, GM and Ford Motor Co. stand a 46% chance of going bankrupt within five years. Citigroup has laid off 11,000 employees in 2008, the largest in its history for the same time frame. Starbucks is planning to close 600 stores nation wide. Fannie Mae and Freddie Mac require an emergency bail-out by the US Treasury and so far this year seven banks have defaulted, forcing the federal government to step in and make deposits good. Mutual of Omaha has taken over the First National Bank of Arizona and a myriad of other companies are having serious financial difficulties or on the verge of bankruptcy. America is in dire financial straits with no profound or laudable leadership at hand.
Obviously, with it being an election year nothing will be done. The left fights the right and we, the American people, are caught in the middle. Nancy Pelosi and Harry Reid are putting a halt on the congressional vote for offshore drilling while the Republicans spend twelve billion a year in a tiresome war. Oh Mr. Roosevelt, where are you when we need you?
The deficit, slated to hit $482 billion in the 2009, is being financed by China, Japan and India in the form of US bonds. Is America selling out? What happens if one or more of these countries decides to pull the plug and cash in their holdings? It’s no different than a broker or bank calling a margin or a note, if you owe you have to pony up. Our country is on the brink of economic destruction. Whether it be a corporation, individual or government, the same economic law applies to all — you don’t outflow more than you inflow.
The national deficit is set to exceed nine and a half trillion dollars at the end of the year, the largest in history. If Senator Obama is elected we can count on more spending, tax cuts for the middle class, $150 billion of economic stimulus aimed at the “green energy sector”, Universal Health Care and an additional $60 billion in national infrastructure projects on top of dishing out more loans and financial assistance for higher education. Can America really afford all that?
On the other side, McCain is now pledging to balance the budget by the end of his first term. But previously, Senator McCain proposed a series of costly tax cuts to stimulate the ailing economy. Which is it sir?
At a campaign stop he said, “American workers and families pay their bills and balance their budgets, and I will demand the same of the government.” Sounds good, but at this point it is unclear how he plans to do so. If he intends to extend the Bush tax cuts while cutting corporate and other taxes it seems highly likely that it would increase the federal budget deficit. He has always been hawkish on balancing tax incentives by cutting spending, but in this economic climate it seems his ideas are far more chimerical than real.
All in all, I believe Mr. McCain’s ideas are better for America than the tax and spend proposition of Senator Obama, but make no mistake about it America, the next few years are going to be tenuous at best.
Comment by Bill - Florida on 31 July 2008:
proletarian: The FDR reference, was it for effect, or do you think an FDR mindset, and his type of policies are called for and what that could mean specifically.
Comment by proletarian on 31 July 2008:
Bill, I am not an advocate for socialism and FDR was the quintessential socialist. Nor am I a big proponent of government entitlement programs or federal government dictating moral and social agendas. With that said, my point was and still is, we are in dire economic straits. That in itself calls for drastic measures.
According to the definition of recession (two or more quarters of declining GDP) we are not in one. However, if you look at the historical statistics, bankruptcies, mortgage and credit defaults, bank failures, soaring costs of food and energy, escalating unemployment, etc., that led to and sustained the “great depression”, we are close to being there once again. The only point I was making in reference to FDR was that he was a great president and the only one I know of who has gone through and pulled us out of such a maelstrom of econimic times. Never in our history has anyone endured times such as those.
No doubt he was a socialist. But his methods worked then and would possibly work again now, albeit it is a different epoch. He had vision and sagacity, coupled with audacity. He proposed, and Congress enacted, sweeping programs to bring recovery to businesses and agriculture. He brought relief to the unemployed and those in danger of losing their homes. He established the Tennessee Valley Authority in a time when 13,000,000 people were unemployed and almost every bank was closed. His relief measures included the Federal Emergency Relief Administration and the Civilian Conservation Corps, which hired 250,000 unemployed young men to work on local projects. He pressured Congress to empower the Federal Trade Commission with new broader and more sweeping regulatory powers and he expanded Hoover’s agency, the Reconstruction Finance Corporation. It was a major source of financing to railroads and industry, thus creating more jobs as well. He instituted the Agricultural Adjustment Administration and the National Industrial Recovery Act, all successfully adding to new jobs and economic stability.
The litany could go on eternally, but suffice it to say, FDR’s visionary ideals worked for the times. Would they, or something like them, work now? Who is to say. All I know, and the crux of my post, was that we have no leadership, no direction at hand.