Brit Hume asserted on Your World that "the New Deal -- everybody agrees, I think, on both sides of the spectrum now, that the New Deal failed. The debate is over why it failed," later stating, "President [Franklin] Roosevelt waged what could only be called a jihad against private enterprise." In fact "everybody" doesn't "agree" that the New Deal failed; Nobel laureate Paul Krugman, among others, has said that Roosevelt did not go far enough to end the crisis and that his attempts to balance the budget hindered recovery.
Loading the player reg...
Fox News Washington managing editor Brit Hume joined the ranks of conservative media figures attacking President Franklin D. Roosevelt's response to the Great Depression as a failure that worsened the economic crisis of the 1930s, asserting on the January 7 edition of Fox News' Your World that "the New Deal -- everybody agrees, I think, on both sides of the spectrum now, that the New Deal failed. The debate is over why it failed." He later asserted that "President Roosevelt waged what could only be called a jihad against private enterprise." However, Hume's assertion that "the New Deal failed" has been flatly rejected by some prominent economists, including Nobel Laureate Paul Krugman, who has said that Roosevelt did not go far enough to end the crisis and that his attempts to balance the budget hindered recovery.
In a November 10, 2008, New York Times column, Krugman wrote that Roosevelt's policies included "long-run achievements" that "remain the bedrock of our nation's economic stability" and that Roosevelt's short-term successes were constrained because "his economic policies were too cautious."
Krugman further wrote:
Now, there's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it's important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.
F.D.R. wasn't just reluctant to pursue an all-out fiscal expansion -- he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.
During a roundtable discussion on ABC's This Week on November 16, responding to Washington Post columnist George Will's assertion that "the first New Deal didn't work," Krugman stated, in part: "Roosevelt got the economy moving somewhat. By 1937, things were a lot better than they were in 1933." He continued, "Then he was persuaded to balance the budget, or try to, and he raised taxes and cut spending and the economy went back down again. And it took an enormous public works program known as World War II to bring the economy out of the Depression."
Similarly, in a January 6 column, Dean Baker, co-director of the Center for Economic and Policy Research, wrote: "In reality, any careful reading showed that the New Deal policies substantially ameliorated the effects of the Great Depression for tens of millions of people. The major economic failing of the New Deal was that President Roosevelt was not prepared to push the policies as far as necessary to fully lift the economy out of the Great Depression." Baker continued:
Roosevelt was too worried about the whining of the anti-stimulus crowd that he confronted. He remained concerned about balancing the budget when the proper goal of fiscal policy should have been large deficits to stimulate the economy. Roosevelt's policies substantially reduced the unemployment rate from the 25 percent peak when he first took office, but they did not get the unemployment rate back into single digits.
Further, in a November 17 post on his personal blog, University of California-Berkeley economics professor Brad DeLong wrote, "Private investment recovered in a very healthy fashion as Roosevelt's New Deal policies took effect. The interruption of the Roosevelt Recovery in 1937-1938 is, I think, wel [sic] understood: Roosevelt's decision to adopt more 'orthodox' economic policies and try to move the budget toward balance and the Federal Reserve's decision to contract the money supply by raising bank reserve requirements provide ample explanation of that downturn."
Progressive economists are not alone in crediting Roosevelt's policies for easing the economic crisis. As Newsweek senior editor Daniel Gross noted on his blog on January 4, 2007, Federal Reserve Chair Ben Bernanke -- appointed by President George W. Bush -- wrote in his Essays on the Great Depression, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."
As noted in County Fair, during the "Mythbuster" segment on the January 7 edition of MSNBC's 1600 Pennsylvania Avenue, host David Shuster highlighted Fox News' role in spreading the myth that Roosevelt's New Deal worsened the Great Depression.
From the January 7 edition of Fox News' Your World with Neil Cavuto:
NEIL CAVUTO (host): I'm wondering, too -- there is another argument, not advanced by too many economists these days, but a lot of economists missed the slowdown anyway -- but who have said we've thrown a lot of money at this through the Fed, and what -- it's backing up the banking system, et cetera, and the money it's been flushing the system with to help banks and financial institutions, period.
And we're already seeing the fruits of that. Whether you agree or disagree with the wisdom of this sort of thing, we might already be seeing that, so why pile more on to this? I know that is a key Republican argument, but where does this whole debate stand?
HUME: Well, I think that this debate fits in with the debate that's been raging sort of below the radar for decades now, really more than a half-century -- has been the debate over why the New Deal failed to lift the U.S. economy out of the Great Depression. It didn't come out, Neil, as you well know, until we had the massive deficit spending that accompanied the second World War. And that finally --
CAVUTO: That's right. Eight years later. Eight years after that New Deal. Right.
HUME: That's right. Well, then, the New Deal -- everybody agrees, I think, on both sides of the spectrum now, that the New Deal failed. The debate is over why it failed. People on the left believe it failed because Roosevelt, at the end of the day, really didn't do enough spending, that it simply wasn't spending -- he was not spending, whether deficit spending or not, on a scale grand enough to lift the damaged U.S. economy out of that depression.
There are people on the other side of the spectrum who would say, maybe, but look at this as well. President Roosevelt waged what could only be called a jihad against private enterprise. He prosecuted leading figures in it, Andrew Mellon being a conspicuous example. He prosecuted little companies, butcher shops in New York, as has been laid out in Amity Shlaes' book about the new -- book about the history of the Great Depression.
It created a very uncertain, even poisonous atmosphere for business. That is not the atmosphere that you want, and I'm bound to say, Neil, that I don't think that's the atmosphere the Obama administration is seeking to create. The Obama administration is not showing any signs it wanted to wage the kind of war on private business that Roosevelt waged. The question, of course, still is whether the spending on the scale that we're seeing will end up doing more harm than good --
CAVUTO: Or that it would tantamount to that, anyway. And that gets us back to the spending that is planned and waking up after the party of that spending.