George Santayana famously wrote 'Those who cannot remember the past are condemned to repeat it.." I have blogged about this before: the fiction that Hoover was some laissez faire purist. He spent massive amounts of money, including the infamous Hoover Dam. (Now the idea predated the Hoover Presidency and was renamed late in the FDR Administration.) He enacted tax hikes, signed into law the Smoot-Hawley Tariff Act (exacerbated global trade tensions and deeply drying up the markets for American exports), jawboned American businesses against cutting wages, based on Keynesian-like fears of the impact on the macroeconomy. If you go back to the 1932 election, you will find FDR attacking Hoover on decidedly conservative grounds: the unbalanced budget, federal government headcount, etc. Make no mistake: FDR believed in more activist government, including public works spending in early Depression-era New York as governor. Perhaps FDR wanted to stoke tensions between the Hoover-led progressive vs. conservative wings of the GOP or otherwise sought to discredit Hoover's single-term tenure. FDR was clearly ready to go beyond Hoover's principles on the reach of federal government .but was deliberately vague about his plans, knowing the electorate would scapegoat the GOP for the Depression.
The GOP from the Civil War through Hoover had embraced high tariffs for domestic protectionist reasons, while Democrats (particularly Southern conservatives) had traditionally saw as anti-consumer, favoring low rates, just enough to fund the national government and its limited agenda. In 1934, FDR signed the Reciprocal Tariff Act, It provided more of a tole to the POTUS in negotiating bilateral trade reductions; furthermore, it reduced the supermajority requirement in Congress to approve tariff reductions. When the GOP regained power a generation later, given a booming post-WWII economy and an American export market. American exporters gained more support among GOP legislators versus their traditional protectionist allies. No doubt a new political realignment where the Southern conservative block, largely alienated by the national progressives, migrated to the GOP (I know from first hand experience; Texas was solidly blue when I grew up, with Tower and Clements being the first major GOP statewide officeholders since Reconstruction.) If anything, Democrats have resisted more trade liberalization, based on Big Labor concerns of low-wage competition and domestic pressure to impose certain labor and/or environmental policies into trade pacts.
We have seen some breaches of the new trade liberal orthodoxy among Republicans, most notably George W. Bush's steel tariff hikes; But it really wasn't until Trump smelled political advantage in exploiting Rust Belt blue collar angst over foreign competition and other toxic elements of pre-Depression GOP policies, including Harding/Coolidge's immigration restrictions, largely based on labor protectionist concerns. At the same time, Trump carefully sidestepped any attempts to reform senior entitlements, which Americans feel they're entitled to after paying payroll taxes all their lives; in fact, more recently, Trump suggested a payroll tax holiday which would have exacerbated long-term financing issues.
it is no coincidence I've compared Trump to Hoover in past blogs. And you see a 100-days frenzy not unlike FDR's fast start, although FDR's landslide ushered in a supermajority eager to rubberstamp his agenda. Biden, on the other hand, has a single-digit majority in the House and a split Senate, narrowly controlled by Harris' tie-breaking vote. Most Presidents face a mid-term correction, suggesting that Biden will likely lose the House next election. Biden has probably an easier time in the Senate with 20 of the 34 seats now held by Republicans, and at least one or more those open (e.g., NC). In theory, the GOP has a chance to win back long-held Senate seats converted in AZ and GA last election/runoff. Probably the GOP's best shot, in AZ, is nominating Gov. Ducey, won't happen, in part because he's on Trump's revenge hit list.
So Biden is under pressure to deliver with a tenuous Dem majority, which is why you've seen progressives trying to do away with the Senate filibuster. There are also attempts to reinvent simple majority budget reconciliation to jam through trillions in new federal spending, first through the nearly $2T "COVID-19" relief bill, which had little to do with vaccines and more to do with a long series of domestic spending priorities, including state funding. Why the central government is bailing out states whose leadership collapsed local economies is baffling, at best morally hazardous.
I, of course, opposed Biden's $2T boondoggle. Trump, who added a quarter to the national debt, had opened the door to this nonsense by suggesting $600 stimulus payments weren't nearly enough; $2K checks would be better. Democrats, never to be out-pandered, quickly jumped on board, with many progressives arguing one-time payments needed to be replaced with monthly stipends, all financed with pixie dust or at the expense of the infamous 1%..
Biden, who like FDR wanted to put Hoover's domestic policy interventions on steroids, noticed how Trump had previously shilled for infrastructure spending, in opposition to his conservative allies, smelled infrastructure as grounds for bipartisan dealmaking. Internal improvements were, of course, a key plank in Clay's "American system", pushed later by the Whig Party (Abraham Lincoln was a Whig while in Congress) Basically, the GOP arose from the collapse of the Whigs. So, in a manner of speaking, Trump was certainly old school Republican, although Southern conservatives always resented their high tariff collections were spent by the majority Northerners, pushing their industrial priorities.
I myself paid lip service to infrastructure concerns during the early years of the blog, but in fact, as a recent Cato Institute podcast pointed out, most infrastructure is in the private sector, and private infrastructure doesn't suffer the typical issues of the tragedy of the commons. We've seen a lot of pushback, for instance, on public highway users pushing back on tolls. In fact gas taxes are often siphoned off to subsidize urban mass transit, Phenomena like overcrowded highways and poorly maintained bridges are largely a reflection of bad public infrastructure policy, and it's morally hazardous to bail out underinvestment by the public sector.
I'm not going to go into detail over Biden's new multi-trillion boondoggle. I've been nauseated enough by reports how Biden wants to subsidize electric-car charging stations, as if Elon Musk, the leading brand Tesla manufacturer, needs the taxpayer to underwrite his own electric vehicle support system. It's just in part the idea of a free lunch, all at the expense of business taxes. Just keep in mind: corporate taxes bring in just 7% of government revenue, and before Trump-era tax reform, we had one of the highest tax rates globally. Corporations don't really pay taxes; customers and investors do, not unlike how Trump's tariff policies weren't paid by foreign governments but American consumers. Total federal revenues amount to somewhere over $3.5T. Now granted, some of Biden's spending will be allocated over multiple fiscal years. but he's trying to raise more than a year's taxes in just 2 bills in his first quarter in office.
There are prices to pay for profligate spending. Already interest in serving the debt is approaching DoD budget numbers. Among other things, global investors may be unwilling to finance US spending. Accommodate monetary policy may trigger inflationary pressures, which disparately affect the lower-income. It's time for Congress to STOP THE MADNESS.
