The President is into the third year of his term in office. The nation has weathered through a stock market crash and crushing bank failures that began in the previous administration. Public spending programs, while softening the worst part of the economic calamity, have not had the ‘miracle’ effect of bouncing the nation back to prosperity. Political opponents claim that this spending is not doing any good and must be stopped. The real answer, in the belief of the President’s opponents, is to reduce borrowing, increase the reserve requirements for the banks and balance the budget. The result of the tight money and reduction of government spending was to create a recession within a depression.
The President was Franklin Roosevelt the year was 1937. The major parties and players were the same as today, and they are making the same poor decisions. George Santayana remarked, “Those who cannot remember the past are condemned to repeat it.” When the deficit spending by the government was eliminated, the economy contracted. We can see similar effects in today’s news. As the stimulus program is starting to phase out, the economy is slowing, the rate of employment is slowing and the total unemployed figure is stagnant. The burden of recession weighs heavily on the middle class where men and women are unemployed or under-employed. That second job, which once just made ends meet, is non-existent. Why do our leaders think that if they follow the same course as others did in 1937, that the outcome would be significantly different. The Great Depression was only completely ended by the massive government spending and shared sacrifice of World War II.
Polls indicate that the people of the nation understand that shared sacrifice is required from our generation. The government must resume exercising the theory of Keynesian economics and intervene in the economy with more stimulus. I hope that I am just being a pessimist, however, is does seem that we are on the verge of re-living history.