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0 pointsyummyfajitas15y ago0 comments

Hoover didn't balance the budget, he doubled the national debt.

http://en.wikipedia.org/wiki/File:Debt1929-50.jpg

It is true, however, that he raised taxes on the rich. Sound like anyone we know?

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5 comments · 1 top-level

jbooth15y ago· 4 in thread

Yes, the debt went up. Tax revenues collapsed in this period, remember.

But Hoover was trying to balance the budget. He saw it as a goal, an end to itself that would reassure credit markets and do a bunch of good. FDR saw stimulating demand as more important in the short term. That's the difference between them. Hoover was raising taxes to try and balance the budget, and only increased government spending very slightly considering he had 25% unemployment. FDR threw it all to the wind for a few years and massively increased deficits as a deliberate policy.

yummyfajitasOP15y ago

Hoover increased spending by 50%, from $3.1B to $4.6B. FDR called him a Socialist.

http://fraser.stlouisfed.org/publications/erp/page/3796/1208...

As one of FDR's brain trust stated, "practically the whole New Deal was extrapolated from programs that Hoover started."

http://www.pbs.org/wgbh/amex/goldengate/sfeature/sf_30s.html

jbooth15y ago

Interesting stuff. It does seem to turn out that Hoover pushed less for balanced budgets than I thought, although there are lots of statements attributed to him around 1932 trying to balance the budget, the tax hikes, etc.

But I thought the difference was more clear-cut than that as far as their actions.

Still, I find it hard to justify the statement that "they had the same view in regards to counter-cyclical spending and balanced budgets" -- FDR championed crazy deficits to stimulate the economy for a decade, Hoover seems to have been trying to move towards a balanced budget after a brief round of stimulus.

2 more replies

kiba15y ago

Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation. It was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932 -- increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime.

--Totally biased source, http://online.wsj.com/article/SB122576077569495545.html

nerfhammer15y ago

It's deliberately misleading. "between 1929 and 1932" is a misleading way of saying "in 1932". Almost all of the deficit increase and public works spending occurred in 1932 (due to a single bill: the Emergency Relief and Construction Act) near the end of Hoover's presidency, but by saying "between 1929 and 1932" it makes it sound like it was a consistent policy throughout the downturn. In reality by that time in 1932 the depression was already near its worst lows and Hoover had tried keeping the budget balanced prior to that and only had a few months left in office.

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