Obama Says Recovery, "Takes Time" -- Historically Not True With Conservative Tactics
We are all familiar with The Great Depression, mostly because of how long it went. What's not discussed frequently is the drastic, yet quite brief, depression of 1920.
Quick history lesson:
In 1920 the country elected Warren G. Harding as president (yes, this is right where season one of Boardwalk Empire ended). Like Obama, Harding was inheriting a TERRIBLE economy. Unemployment had sky-rocketed from 4% to 12%. GNP declined 17 percent. The stock market had lost roughly half of its value. Top tax rates were at 77%. The nation was accumulating debt at unprecedented levels.
Any of this sound familiar?
What did President Harding do? He did not implement a government stimulus package or increase the taxes on the rich to make them "pay their fair share." Instead, Harding slashed federal spending by 50%. He reduced tax rates across the board.
The result was that in roughly 18 months, the country was out of this economic nightmare. Unemployment fell to 6% in 1922 and to 2.3% by 1923. The country was able to trim their debt by 1/3rd. In short, it kicked off the roaring twenties where many average Americans enjoyed unprecedented quality living highlighted by buying their first car, radio, and telephones.
Of course, things didn't stay this way. As president Hoover came into office towards the end of the 20's, he began to increase spending and taxing again, and again the US faced economic peril. The difference between 1929 and 1920, is that the government tried to tax and spend its way out of trouble the second time which resulted in the all too well known Great Depression spanning around a decade.
While slashing government spending by a full 50% in one year may not be appropriate now, one can't deny that a more fiscally conservative approach with less spending and taxes has been EXTREMELY effective in the past, and doesn't require the time the current president is asking of the American People.
To learn more on this 1920 Depression, this article sums up well with lots of references: