Change-For Better Or Worse

Change-For Better Or Worse

CCT: 01/07/09 · 2:30 am :: posted by Robert

"Change" is the fashionable word of the day. Change to what? Nobody asks that simple question often enough to get an answer.

Why? -- Because most people don't want one. They simply want to discharge the "ins" and replace them with the "outs." Then they try to dignify their decision by attaching to it an uplifting word.

Time has passed since the election and the meaning of the word "change" is beginning to take shape.

Let's check a wee bit of history before going further.

Franklin Roosevelt took office (1933) during the Great Depression when national debt was $19 billion. FDR went on a spending splurge devoted to federal projects that were supposed to put people back to work. The deficit increased to $34 billion at the end of his first term (1936). The unemployment rate in that year was 19 percent. His federal programs had failed.

It was war with Hitler, not "change" by FDR that ended the Great Depression.

Fast-forward to 1960 and another president who wanted "change." John Kennedy was the young champion of the day. He was assassinated in 1963 and a like-minded but more legislatively skillful Lyndon Johnson succeeded him.

The Vietnam War was in its infancy. The cost of Defense under both men increased by 11 percent -- revenue, by 25 percent. In other words, the economy supported the war -- there was no need for a deficit. Yet there was one. Why? Because the cost of the newly-created Welfare State increased by 41 percent.

What was the reason given for the deficit of $21 billion? War!

The Vietnam War escalated under Lyndon Johnson (1965-68). The cost of Defense increased by 25 percent; revenue, by 33 percent. Again, the economy supported the war; there was no need for a deficit. But there was one. Why? Because the cost of Johnson's Great Society programs went up 46 percent.

What was the reason given for the $39 billion deficit? War!

When Johnson left office, the Welfare State was buried deeply in the federal budget, growing each year like a weed in an un-watered lawn. The disparity between its growth and the growth in revenue continued. Deficits, once a rarity in the U.S. except in time of war or major economic problems, became commonplace. Debt grew, grew and grew again.

There was always a convenient excuse -- war, energy, etc. But these were not the causes of repeated deficits. Excessive government spending on the Welfare State was the root cause. And nobody dared to say so -- still don't.

Now a new president wants "change." And the change he seeks has a familiar ring. Like FDR, he seeks to address current economic problems with bromides from the 1930s -- infrastructure spending. And like LBJ he wants to create a Great Society.

True, infrastructure projects are overdue in the United States. They have been cancelled, delayed and aborted over the years mostly for the same reason -- lack of funds. Why? Because the unspoken priority of government for the past half century has been the creation and protection of the Welfare State. Activating these projects now may have modest economic impact, but they are not the answer to the major causes of the recession.

A new smokescreen is being spread behind which the Welfare State will be strengthened once again. The headlines will be bridges, roads, tunnels and Green jobs. But in the "recession"aid- proposals, look also for nationalized health insurance and a healthy package of give-a-ways.

At the end of it all, the assistance package as advertised, except for that which is directed to financial markets, will suffer the same fate as FDR's did. The economy will continue to struggle until time heals it, or an enlightened savior appears.

Government and debt will be larger; the power of the U.S. will dwindle. The end of an era of greatness will be at hand.