Citizenship, Economy

It started with Hoover(?)

© 2013 Earl L. Haehl Permission is given to use this article in whole as long as credit is given. Book rights are reserved.

Herbert Hoover was an engineer and a manager. Never before or since has that combination sat in the Oval Office. Hoover liked the idea of a coherent executive budget instead of each agency or faction lobbying for their own turf. In theory this makes good sense—a President with managerial expertise looks over the entirety of the Executive Branch and makes sure everything necessary is covered within the means (funding) provided by the available revenues. It only makes sense—or to use the most misused term in political debate common sense.

A note here. My favorite line from Common Sense, a hot headed tract by Thomas Paine under the pseudonym, An Englishman, begins, “Government at its best is a necessary evil….”

Mr Hoover liked the idea of controlling the elements of the country. As Secretary of Commerce he seized control of the airways with the assistance of Congress and the help of an outlandish broadcaster named John R Brinkley. The Federal Radio Commission (now the FCC) was created at the request of the broadcasters to be less arbitrary than the Secretary of Commerce. Hoover also appointed himself assistant secretary for interference in all other departments. He expanded regulation after the Federal Reserve tanked the Stock Market in 1929, which weakened the economy. He did, however, veto the Smoot-Hawley Tariff which was the proximate cause of the 1931 recession—it was passed over his veto.

Hoover’s successor Franklin D Roosevelt turned his economic relief over to Frances Perkins, Hugh Johnson and other progressives who based their solutions on Woodrow Wilson’s war mobilization tactics and the writings of Max Weber and Benito Mussolini. So instead of attacking the regulations that had caused the downturn and returning to sound money as promised (Barry Goldwater said he could have run on FDR’s 1932 platform) we got the New Deal. The New Deal expanded the scope and powers of the Department of Labor (Perkins’ empire) and began the entitlement state through social security which was designed to get older workers out of the workforce.

With the growth of entitlements under Lyndon Johnson and later presidents the national budget became one in which borrowing became necessary to cover the newly essential functions of government in addition to wars and military adventurism. The Johnson through Carter Administrations vastly expanded the role of the federal government in welfare, medical care, education and public safety/emergency management to the point that states and localities are dependent on federal funds—as an aside, the general taxation authority the feds got in 1913 has increased to the point that the states are limited in what they can tax.

Congress decided in 1917 to limit the Treasury’s borrowing authority. This was in response to Wilson’s public entry into World War I—he already had troops occupying much of Mexico where he intervened in the civil wars as well as many areas of Central America and the Caribbean where United Fruit had interests. Domestic affairs did not generally require borrowing before the second world war.

Increasing the borrowing limit may be necessary for a short term obligation but if it becomes necessary to fund the essentials of government then it is a long term problem and the answer has to be to cut spending, cut programs, cut the interference which depresses the economy. Ultimately we will have to stop borrowing and start paying down or most assuredly we will default. On the other hand, the entitlement spending has become a third rail in politics—DO NOT TOUCH. Neither the rock nor the hard place is safe.

So we will continue to have shutdowns, gridlock and dissension. All are culpable.

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