1930's Budget Deficits

[jasonxctf]

with the current "commentary" its amazing that we are still here... 70+ years later.

 

In 1930, the Hoover administration ran a budget surplus by increasing federal tax revenues by more than 5%, even as the economy was experiencing its first year of the Depression. But in 1931, as revenues fell by 25% in the face of falling business receipts and personal incomes, the federal government ran a budget deficit to cover 13% of its expenditures. In 1932, the deficit spending massively increased even further, representing almost 60% of federal expenditures. Between 1929 and 1932, the accumulated federal debt rose by 15% under Herbert Hoover's administration.

 

During the next four years, Franklin Roosevelt's New Deal implemented all of these proposals - in spite of the pledge made in the Democratic Party's political platform of 1932. Instead of "an immediate and drastic reduction of government expenditures ... to accomplish a saving of not less than twenty-five percent in the cost of federal government," between 1933 and 1936, government expenditures rose by more than 83%. To cover this massive increase in government spending, Roosevelt's administration ran huge budget deficits. In 1933, deficit financing covered 56.5% of government expenditures. For 1934, 1935, and 1936, the figures for deficit financing for were, respectively, 54.6%, 43%, and 52.3% of government expenditures. In four years, the federal government's debt went from $19.5 billion in 1932 to $33.8 billion in 1936, representing a 73.3% increase.

 

 

[kapkomet]

with the current "commentary" its amazing that we are still here... 70+ years later.

 

In 1930, the Hoover administration ran a budget surplus by increasing federal tax revenues by more than 5%, even as the economy was experiencing its first year of the Depression. But in 1931, as revenues fell by 25% in the face of falling business receipts and personal incomes, the federal government ran a budget deficit to cover 13% of its expenditures. In 1932, the deficit spending massively increased even further, representing almost 60% of federal expenditures. Between 1929 and 1932, the accumulated federal debt rose by 15% under Herbert Hoover's administration.

 

During the next four years, Franklin Roosevelt's New Deal implemented all of these proposals - in spite of the pledge made in the Democratic Party's political platform of 1932. Instead of "an immediate and drastic reduction of government expenditures ... to accomplish a saving of not less than twenty-five percent in the cost of federal government," between 1933 and 1936, government expenditures rose by more than 83%. To cover this massive increase in government spending, Roosevelt's administration ran huge budget deficits. In 1933, deficit financing covered 56.5% of government expenditures. For 1934, 1935, and 1936, the figures for deficit financing for were, respectively, 54.6%, 43%, and 52.3% of government expenditures. In four years, the federal government's debt went from $19.5 billion in 1932 to $33.8 billion in 1936, representing a 73.3% increase.

This is generic (see, I'm trying to turn a new leaf here) but I'll say this before I can argue the point by point some other time. There's no WWII on the horizon to get rid of this mess and make the economy grow like hell. The point is that if absolutely nothing changed the late 30's and 1940 was already starting to show that the massive spending was leading to another downturn in the economy. If WWII hadn't have happened, the deficits would have skyrocketed because there would have been no large economic growth (all other things being equal) to put massive PRIVATE SECTOR money back into the economy. That's what brings you out of crap like this, not government spending. Over time, government spending is a net net wash that really doesn't change the dynamics. For a year or two, ok, for longer periods, where's the money coming from to kill these massive deficits?

 

[southsider2k5]

And it took us pretty much until the 40's to recover totally.

[mr_genius]

And it took us pretty much until the 40's to recover totally.

 

And that recovery was with a much less competitive global market; WWII completely wrecked major economic power houses. The US homeland went basically untouched as Germany, England, Russia, ect took tons of damage. I guess we need China and India to destroy each other.

[kapkomet]

And that recovery was with a much less competitive global market; WWII completely wrecked major economic power houses. The US homeland went basically untouched as Germany, England, Russia, ect took tons of damage. I guess we need China and India to destroy each other.

That would rock, except we wouldn't have anywhere to get our cheap crap from anymore. Then what would we do?

 

[mr_genius]

That would rock, except we wouldn't have anywhere to get our cheap crap from anymore. Then what would we do?

 

Those $5 dollar Walmart T-shirts would probably cost $10

 

noooo

[southsider2k5]

That would rock, except we wouldn't have anywhere to get our cheap crap from anymore. Then what would we do?

 

There really is a reason that inflation has been not existant for such a long time.

[kapkomet]

There really is a reason that inflation has been not existant for such a long time.

The only reason.

[Balta1701]

And that recovery was with a much less competitive global market; WWII completely wrecked major economic power houses. The US homeland went basically untouched as Germany, England, Russia, ect took tons of damage. I guess we need China and India to destroy each other.

And instead of a huge fraction of the wealth being concentrated in the hands of a very small and shrinking few, the U.S. emerged from that war with the strongest middle class at any point in the last century. There is no sign anywhere of that purchasing power reappearing.

[kapkomet]

And instead of a huge fraction of the wealth being concentrated in the hands of a very small and shrinking few, the U.S. emerged from that war with the strongest middle class at any point in the last century. There is no sign anywhere of that purchasing power reappearing.

Which then leads me to - you still support bankrupting everything for who knows how long to fund GOVERNMENT health care (BS on the "PUBLIC" option, it's semantics, and you all know it). Oh, what's a few more trillion? It CANNOT be sustained, and AGAIN, instead of throwing out the baby with the bath water, why can't our entire government (forget who's in power right now or last year, whatever) fix the baby instead of throwing in the whole damn ocean?

 

[Balta1701]

Which then leads me to - you still support bankrupting everything for who knows how long to fund GOVERNMENT health care (BS on the "PUBLIC" option, it's semantics, and you all know it). Oh, what's a few more trillion? It CANNOT be sustained, and AGAIN, instead of throwing out the baby with the bath water, why can't our entire government (forget who's in power right now or last year, whatever) fix the baby instead of throwing in the whole damn ocean?

There's one big flaw with your logic.

 

If we do nothing, health care will bankrupt this government even faster.

 

There really is no way around it. In 10 years, anything close to the current growth rates, health care spending will be like 25% of the economy. We'll have to shut down the defense department to pay for medicare. If we don't bend the curve downwards (technical expression) then we won't just be talking about the evils of rationing or the evils of deficits.

 

Solve the health care crisis and your long-term debt problem vanishes. The public option is an absolute key to doing that.

[kapkomet]

There's one big flaw with your logic.

 

If we do nothing, health care will bankrupt this government even faster.

 

There really is no way around it. In 10 years, anything close to the current growth rates, health care spending will be like 25% of the economy. We'll have to shut down the defense department to pay for medicare. If we don't bend the curve downwards (technical expression) then we won't just be talking about the evils of rationing or the evils of deficits.

 

Solve the health care crisis and your long-term debt problem vanishes. The public option is an absolute key to doing that.

Okay, (this really should go back into the other thread), but no it doesn't. That's the big lie, IMO. Which by the way, NO WHERE in the other thread or anywhere else have I ever suggested we do nothing.

 

Anyway, with that said: using logic and what they've told us. we'll cover prexisting everything, insure everyone, and yet, there will be cuts in costs massive enough to take care of this deficit caused by other issues? There has to be HUGE rationing to even make a dent in it, and they know it. It's about power and control over SELF, and not property, and that's where I draw the line. Tax me to death - but leave me alone. That's my basic premise.

 

Now with that said, this must necessarily add to the deficit. It has to. And to your point, there's nowhere for the massive influx of wealth like there was in the 1940's to curb this. You cannot entitle the entire world on the US government. Where's the line?

 

[mr_genius]

And instead of a huge fraction of the wealth being concentrated in the hands of a very small and shrinking few, the U.S. emerged from that war with the strongest middle class at any point in the last century. There is no sign anywhere of that purchasing power reappearing.

 

Agreed, that is also a big factor.

[southsider2k5]

And instead of a huge fraction of the wealth being concentrated in the hands of a very small and shrinking few, the U.S. emerged from that war with the strongest middle class at any point in the last century. There is no sign anywhere of that purchasing power reappearing.

 

That's because we still have 10 years of depression to go before we destroy the upper classes.

[Texsox]

I have debated here for years that the government deficits are our greatest long term threat, that much like Russia, we will borrow ourselves into extinction. And many people here have explained why we need to cut taxes and increase the deficit during these tough economic times.

 

/popping some corn

[NorthSideSox72]

If the Stimulus Bill had been written to be much more focused, and we made it a real priority to spend serious money specifically on it, across the board from R&D to tax incentives to loan guarantees to infrastructure construction... the new energy economy COULD be the non-lethal equivalent of WWII. Unfortunately, we are only making a small dent there, and had to spread the money out into eight bajillion different other areas too.

 

[kapkomet]

I have debated here for years that the government deficits are our greatest long term threat, that much like Russia, we will borrow ourselves into extinction. And many people here have explained why we need to cut taxes and increase the deficit during these tough economic times.

 

/popping some corn

Which is a complete fabrication.

 

/burns some corn

[southsider2k5]

Which is a complete fabrication.

 

/burns some corn

 

As usual.

[DukeNukeEm]

And that recovery was with a much less competitive global market; WWII completely wrecked major economic power houses. The US homeland went basically untouched as Germany, England, Russia, ect took tons of damage. I guess we need China and India to destroy each other.

And which country paid to rebuild France, (half of) Germany and the UK? Oh yeah, the United States. Where's the complaining about the deficits that we ran up in the post-war period which came before the historically unprecedented growth in America during the immediate post-war and the 50's?

[DukeNukeEm]

There's this problem with World War II that makes any sort of reference to that era difficult. The war was so ungodly f***ing HUGE that countless effects can be attributed to any one cause, and often those results contradict each other. It was a unique occurrence that cannot be repeated without cataclysmic repercussions.

Edited August 26, 2009 by DukeNukeEm

[NorthSideSox72]

There's this problem with World War II that makes any sort of reference to that era difficult. The war was so ungodly f***ing HUGE that countless effects can be attributed to any one cause, and often those results contradict each other. It was a unique occurrence that cannot be repeated without cataclysmic repercussions.

I guess that's why they called it a World War, huh?

 

[kapkomet]

And which country paid to rebuild France, (half of) Germany and the UK? Oh yeah, the United States. Where's the complaining about the deficits that we ran up in the post-war period which came before the historically unprecedented growth in America during the immediate post-war and the 50's?

And which country ended up getting paid back a whole lot in spades through trade and other mechanisms?

 

 

[lostfan]

Weren't all those countries in debt to the United States at one point?

[kapkomet]

Until the cheap s*** China/India takes over the manufacturing of the planet to keep Western inflation in check movie started, I think so.

[mr_genius]

And which country ended up getting paid back a whole lot in spades through trade and other mechanisms?

 

exactly, countries owed us money. people don't understand that these debts have interest.