Real Tax Cuts, Not an Obama ‘New Deal,’ Will Lift Economy, Say Experts
January 9, 2009 - 8:16 PMAmerica does not need a new New Deal or a stimulus package to rescue its foundering economy, said historian Dr. Burt Folsom and economist Stephen Moore on Friday.<b style="mso-bidi-font-weight: normal"></b>
President-elect Barack Obama, however, said in an address at George Mason University on Thursday that government spending is the only solution to the country’s economic woes, and advocated a stimulus package expected to cost taxpayers between $700 billion and $1.3 trillion.
“The question to address is, ‘Do we need a new New Deal?’” said Folsom. “No we don’t need a New Deal. The first reason we don’t need one is the most obvious: the old New Deal didn’t work. There is no reason to believe that a new New Feal would work any more equitably or would be more effective than the old New Deal. ”
Folsom said that President Franklin D. Roosevelt’s New Deal, which was a 1930s stimulus plan crafted to lift America out of the Depression and put people back to work, never did reduce unemployment.
Even Roosevelt’s treasury secretary, Henry Morgenthau, recognized that FDR’s stimulus spending did not work, said Folsom.
“Morgenthau, after being in charge of this economic debacle called the New Deal, finally sort of exploded in 1939 and said, ‘We are spending more money than we have ever spent before, and it does not work,” quoted Folsom. “‘I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started and an enormous debt, to boot.”
But in his speech, Obama argued that spending is the only way to solve the nation’s economic woes.
“It is true that we cannot depend on government alone to create jobs or long-term growth. But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe,” said Obama. “Only government can break the cycle that is crippling our economy -- where a lack of spending leads to lost jobs, which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.”
Moore, a specialist on taxes and the economy, said that another New Deal would not help the economy and suggested Obama try implementing real tax cuts instead.
‘We need alternatives to the Obama stimulus plan,” said Moore. “We need to call for a one-year suspension of the income tax. If we want to see this economy recover, bring tax rates down to zero. We will get jobs.”