Obama Economics: Like FDR?

[drbob]

        A number of writers have tried to draw a comparison between Barack Obama and America's 16th president, Abraham Lincoln.  Certainly, Obama has done nothing to dispel those comparisons.  Yet a more apt comparison, alluded to by historian Richard Norton Smith, in Time Magazine, might be between Barack Obama and Franklin D. Roosevelt.
   Roosevelt and his opponent Hoover, like Obama and his opponent McCain, had very different economic policies.  Hoover, even as the depression worsened, as banks in Chicago and New York City were closing, refused to allow the federal government to get involved.  Hoover also refused to permit any federal aid to the poor.  He believed that government welfare assistance was demeaning to proud Americans. 
   Obama, like Roosevelt, believes that the federal government can help ease the nation's economic woes.  Roosevelt put people to work which at practically any job he could think make up.  Whether this brought the nation out of the depression or not is debatable, but it did help to raise the confidence of Americans.  The key feature in Obama's economic policy, as announced is several speeches since his election, is jobs.  Obama says most of the jobs he helps create will be in the private sector, but he argues, putting Americans to work is what will get our economy rolling again.
   More important, Smith writes, is that Obama, like FDR, sees our economic crisis not as a problem to be managed but as an opportunity to build a bond between the American people and their leaders.  Roosevelt was able to reach out to Americans in their darkest moments and raise their confidence in themselves and their nation.  Obama is attempting to do the same thing.  He has announced a bold and open economic plan designed to build the confidence of Americans by putting them back to work. 
   Drawing comparisons like this too closely is dangerous and clearly 2009 is not 1933.  Still, one thing is the same.  Americans are proud and need to work to maintain their pride.  Jobs were the answer in the 1930s and jobs are the answer to today's economic problems.  If Obama's policies can put Americans back to work, history will view his administration as successful as was Roosevelt's government.       

[kimmi]

I also think that if he can provide these job opportunities, then it will build that bond between the people and the government.  That bond has been badly damaged to some, if not severed to most. 

Interesting comparison. 

[drbob]

Hello Kimmi.. thanks for the comment.  I think you are right the bond between people and their government has been badly damaged.  That is the same problem FDR faced after Hoover.  I hope Obama will be as successful as was FDR in rebuilding it. 

[Ghost of Jaco]

I'm not comfortable with a "bond" between citizens and Government. Our Government should always respect and fear it's citizens, and it especially should NOT be the other way around.

In any event, here's a little mental exercise:
If Haliburton agreed to create 10, 000 new high-paying jobs, would you agree to lowering their taxes?

[followsthewolf]

He!!, Halliburton has so much money that it could probably buy several small countries and donate them to the U.S. as a good-will gesture.

Ol' "Deadeye Dick" could own one or two himself by now -- 'course he might accidentally shoot some.......but that's just the risk you take when you "bond" with the Dick.

[drbob]

Hello Ghost.  Well 10,000 jobs might help a locality if they were all in a given area.  However, we lost almost 3 million jobs last year.  So, 10,000 would not make a great deal of difference for out economy.  Nevertheless, part of obama plan is to use taxes to help business create jobs.  He wants jobs in green industries, but I think he might agree to your proposal.  I'm not sure, but I think he might.

[Ghost of Jaco]

Hello Ghost.  Well 10,000 jobs might help a locality if they were all in a given area.  However, we lost almost 3 million jobs last year.  So, 10,000 would not make a great deal of difference for out economy.  Nevertheless, part of obama plan is to use taxes to help business create jobs.  He wants jobs in green industries, but I think he might agree to your proposal.  I'm not sure, but I think he might.

Hello Bob, and welcome to the 'Zone.
Here's the thing: there is no such thing as a free lunch and Obama's plan proves it (once again).
If by "using taxes" to help businesses create jobs he means LOWERING taxes, then I am all for it.
But if he means RAISING taxes, then that's just dumb on its face. Kinda like his proposal to institute a "windfall" tax on the oil industry. How, exactly, would INCREASING the cost of delivering oil to the US cause a REDUCTION in the price of a gallon of gas at the pump?
The same with the "taxes for jobs" plan. How does increased taxation provide an incentive for businesses to hire more people?
The economy is bad, I agree. How does taking more of my money away from me in the form of higher taxes help me through this bad economic hardship?

I really with more Americans better understood how economies and markets work. We get so much bad economic legislation because people do not understand the "no free lunch" thing.

[awol]

Hello Bob, and welcome to the 'Zone.
Here's the thing: there is no such thing as a free lunch and Obama's plan proves it (once again).
If by "using taxes" to help businesses create jobs he means LOWERING taxes, then I am all for it.
But if he means RAISING taxes, then that's just dumb on its face. Kinda like his proposal to institute a "windfall" tax on the oil industry. How, exactly, would INCREASING the cost of delivering oil to the US cause a REDUCTION in the price of a gallon of gas at the pump?
The same with the "taxes for jobs" plan. How does increased taxation provide an incentive for businesses to hire more people?
The economy is bad, I agree. How does taking more of my money away from me in the form of higher taxes help me through this bad economic hardship?

I really with more Americans better understood how economies and markets work. We get so much bad economic legislation because people do not understand the "no free lunch" thing.

this was directed at dr. bob, but i can't help but reply.  appologies if i step on your toes, dr. bob.  no disrespect intended.

so, were bush's tax cuts contingent on hiring, or were they accross the board?  if they came no strings attached then how is it any different from the bailout money that we've seen squandered?  (i wonder how many new jobs were created when that money came through)

by raising taxes (actually just allowing the tax break to expire) we ARE lowering taxes on business that choose to reinvest thier profits in their business... by buying newer equipment, hiring more staff, whatever.  just because you don't understand it, doesn't make it not so.  seems simple to me.

[Ghost of Jaco]

this was directed at dr. bob, but i can't help but reply.  appologies if i step on your toes, dr. bob.  no disrespect intended.

so, were bush's tax cuts contingent on hiring, or were they accross the board?  if they came no strings attached then how is it any different from the bailout money that we've seen squandered?  (i wonder how many new jobs were created when that money came through)

by raising taxes (actually just allowing the tax break to expire) we ARE lowering taxes on business that choose to reinvest thier profits in their business... by buying newer equipment, hiring more staff, whatever.  just because you don't understand it, doesn't make it not so.  seems simple to me.

I was/am not in favor of either bailout.

Please explain "by raising taxes we are lowering taxes..." I admit I just don't get that, it sounds like a direct contradiction.

Btw, here (again for you awol) is a link to an excellent short course in basic economics. It probably takes about half an hour to get through and well worth everyone's time and is a fascinating read:

http://www.jim.com/econ/contents.html

If you don't have time to read the whole thing, please at least read "The Lesson", and #5 "Taxes Discourage Production".

[awol]

you'll pardon me if i don't consider "jim" the final authority on economics.

that said, businesses that have greater expenses make less money (on paper) than their counterparts that do not have such great expenses, though the value of the company in production capacity may have exceeded the more lean counterpart.

in short, less profit = less taxes.

want less taxes, buy more stuff, hire more people.

[Ghost of Jaco]

you'll pardon me if i don't consider "jim" the final authority on economics.

that said, businesses that have greater expenses make less money (on paper) than their counterparts that do not have such great expenses, though the value of the company in production capacity may have exceeded the more lean counterpart.

in short, less profit = less taxes.

want less taxes, buy more stuff, hire more people.

What jim explains on that website is pretty much basic economics. Principles that are almost universally agreed upon by economists, they are not just his "opinions".

Well, let's take your concept a little further and see how it pans out.
Less profit = less taxes, so 0 profit = 0 taxes. (Do businesses that operate at a loss get taxpayer money refunded, then?)
0 profit means layoffs, firings, etc in the real world.
People who cannot make a profit in a business typically close up shop and go do something else. I find it hard to believe that you think businesses should try to reduce profit in order to escape paying taxes.

Funny thing, I actually owned a business that didn't make a profit, and I still had to pay taxes out the wazoo. I got out of that business, btw. Profit is the motivator that causes businesses to expand to new markets, hire more employees, pay higher salaries and bonuses, etc. Profit is a good thing. And more of the profit businesses get to keep, the better for the economy as a whole.

[awol]

What jim explains on that website is pretty much basic economics. Principles that are almost universally agreed upon by economists, they are not just his "opinions".

big word, almost.

Well, let's take your concept a little further and see how it pans out.
Less profit = less taxes, so 0 profit = 0 taxes. (Do businesses that operate at a loss get taxpayer money refunded, then?)

i would assume so, but then admittedly, i know little about operating a business.

0 profit means layoffs, firings, etc in the real world.

f you too.  (any dismissive statement like "in the real world" only really means "f you".  it never comes with any substance)

Funny thing, I actually owned a business that didn't make a profit, and I still had to pay taxes out the wazoo. I got out of that business, btw.

i've no reason to believe any of this.  especially out of you.

Profit is the motivator that causes businesses to expand to new markets, hire more employees, pay higher salaries and bonuses, etc. Profit is a good thing. And more of the profit businesses get to keep, the better for the economy as a whole.

oh, so you think a business will forgo a tax advantage for a needed expansion, and choose to expand when there is little or no tax advantage?

[drbob]

Hello everyone... Thanks to you all for your comments.

Some of you have asked me for details of Obama's recovery plan.  Will tax cuts by tied to hiring.  I don't know.  I doubt if Obama knows right not what his final recovery plan will look like.  No doubt whatever he proposes, will be debated in Congress and compromises will have to be made.  Even the president does not get everything he wants all the time.  So, I will wait and see, along with you to see the final plan. 

I noticed a lot of people expressing best wishes for Obama's presidency.  I think all Americans agree with that sentiment.  I think we must keep in mind that the problems, domestic and foreign, that this nation faces are deep and complex.  No one, no matter how good, can fix them quickly.  Even if Obama does the right things, or economic problems will not be over in a year.  I hope folks will give him a chance. 

Even FDR's economic policies did not work quickly.  The U.S. did not really start to recover from the depression until some time into his second term. 

[Palehorse]

Hello everyone... Thanks to you all for your comments.

Some of you have asked me for details of Obama's recovery plan.  Will tax cuts by tied to hiring.  I don't know.  I doubt if Obama knows right not what his final recovery plan will look like.  No doubt whatever he proposes, will be debated in Congress and compromises will have to be made.  Even the president does not get everything he wants all the time.  So, I will wait and see, along with you to see the final plan. 

I noticed a lot of people expressing best wishes for Obama's presidency.  I think all Americans agree with that sentiment.  I think we must keep in mind that the problems, domestic and foreign, that this nation faces are deep and complex.  No one, no matter how good, can fix them quickly.  Even if Obama does the right things, or economic problems will not be over in a year.  I hope folks will give him a chance. 

Even FDR's economic policies did not work quickly.  The U.S. did not really start to recover from the depression until some time into his second term. 

I agree, although given the media's propensity for over analysis and critiquing every move of a sitting POTUS, I am not very optimistic surrounding the sustainability of the high level of support and optimism currently held by the general public.

Unfortunately it seems the American public has clearly demonstrated that they are easily led about by persistant media barrages and opposing perspectives. "Monday morning quarterbacking" is the rule of the day surrounding so-called media "experts" that in reality, have far fewer qualifications and experience in government than those holding the reins of power. Yet in their desperation folks will cling to anything it would seem. . .

[kimmi]

I agree, although given the media's propensity for over analysis and critiquing every move of a sitting POTUS, I am not very optimistic surrounding the sustainability of the high level of support and optimism currently held by the general public.

Unfortunately it seems the American public has clearly demonstrated that they are easily led about by persistant media barrages and opposing perspectives. "Monday morning quarterbacking" is the rule of the day surrounding so-called media "experts" that in reality, have far fewer qualifications and experience in government than those holding the reins of power. Yet in their desperation folks will cling to anything it would seem. . .

I can't agree with you more.  Listening to these so called experts makes my head hurt.  I'm not sure how you become an expert in something you've never done before.