Krugman Recommends

NY Times editorialist and recent Noble Prize winner Paul Krugman has decided that the incoming administration should party like it's 1934. The outcome will almost certainly be a party like Orwell's 1984.

In his recent column, Krugman contends,

Suddenly, everything old is New Deal again. Reagan is out; F.D.R. is in. Still, how much guidance does the Roosevelt era really offer for today’s world?

The answer is, a lot.

What, you may ask — given that FDR managed to extend a business downturn into a 10-year Depression with 17-25% unemployment by violating his campaign promises and putting Hoover's policies on steroids, adding a few of his own — would that be? Krugman's answer is:

The reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.

Huh? Can he be referring to the FDR whose "bold experimentation" created the enormous, and enormously costly, WPA and the Civil Construction Corps? The creator of the biggest welfare system in history, Social Security?

This is the man who raised taxes and expanded government spending like no one before him. Corporate taxes were raised 15%. In 1935, at the depth of the Depression, FDR raised the top marginal income tax rate to 79%. (Hoover had already raised it from 24% to 63% in 1932. During WWII it increased to 91%.) This was the president who expanded Hoover's disastrous Reconstruction Finance Corporation that turned the government into America's piggy bank.

He also created the Undistributed Profits Tax as part of the Second New Deal.

Business profits were taxed on a sliding scale; if a company kept 1 percent of their net income, 10 percent of that amount would be taxed under the UP Tax. If a company kept 70 percent of their net income, the company would be taxed at a rate of 73.91 percent on that amount.

How's that for confiscatory behavior? But that's not enough to suit Krugman. He has far grander goals in mind.

Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal health care system, that will change the shape of American society for generations to come. [emphasis added]

Of that last, I have no doubt whatever. Progressives (i.e. American Fascists [see Jonah Goldberg's book Liberal Fascism]) like Krugman have had that overriding goal since the turn of the 20th century.

That, after all, is admitted even by this mother of all liars and those of his ilk. Dissatisfied with America's culture, economic system, and — beyond all else — individual freedom, they seek to destroy the last by undercutting the second, in order to permanently modify the first.

It remains to be seen whether they will succeed.