Kevin Price
Obama's mentors included Hoover, as well as FDR
FacebookTwitter
By Kevin Price
March 10, 2010

Calvin Coolidge oversaw one of the greatest expansions in the history of the US economy. When Coolidge took office, he believed tax rates were too high. With top rates at over 70% following World War I and facing a protracted recession, Coolidge believed it was time to take serious actions. The combined top marginal normal and surtax rate fell from 73 percent to 58 percent in 1922, and then to 50 percent in 1923 (for incomes over $200,000). In 1924, the top tax rate fell to 46 percent (for incomes over $500,000). The top rate was just 25 percent (for incomes over $100,000) from 1925 to 1928, and then fell to 24 percent in 1929.

The reduction in tax rates fueled the productivity engine of the US during these years, leading to inflation rates below 2 percent, unemployment below four percent, and the number of people who made over $100,000 a year actually quadrupling over his years in office. In addition to leading to economic expansion, these policies led to a dramatic increase in tax revenue. I call it the "Wal-Mart Principle" of taxation. Charge as little as possible per item (or activity) and you will make more than any of your competitors in your profits. Low tax rates lead to much greater economic activity and a huge increase in revenue.

Many historians perceived Coolidge's successor, Herbert Hoover, as one who continued his predecessors limited government policies. Coolidge was actually quite critical of Hoover, stating "That man has given me nothing but advice, and all of it bad." Hoover actually pursued several policies that remind one of Barack Obama, not Calvin Coolidge.

In fact, Hoover turned the depression into a "Great" one through several, government interventionist, policies:

  • Supporting artificially high wages. When unemployment reaches approximately 25 percent, your objective should be eliminating the barriers between people and jobs. Wages are a huge barrier to employment The Hoover Administration pressured businesses to keep wages high and prices low. The Secretary of Labor at the time, James Davis said "There never has been a crisis such as we have had as the stock market crash that threw...millions out of employment that there wasn't a wholesale reduction in wages...If Hoover accomplishes nothing more in all of his service to the government, that one outstanding thing of his administration — no reduction in wages — will be a credit that will be forever remembered not by the working classes alone but by business men as well, because without money in the pay envelope business is the first to suffer" (The Politically Incorrect Guide to the Great Depression and the New Deal, by Robert P. Murphy, Ph.D.). What a legacy, backing a policy that forced widespread unemployment.

  • Undermining international trade. The Smoot-Hawley Tariff Act of 1930 unleashed a chain of events that was seen first in the stock market crash of that year and crippled any efforts towards recovery for years to come. The tariff act put a huge cost on all goods coming into the United States. Investors on Wall Street knew that this would lead to retaliation and would greatly devalue the companies and the stock that represents them. This led to massive sock selling and lit the fuse to the depression. It took until the 1940s before the barriers finally began to fall and economy recover.

In addition, Hoover raised taxes to levels not seen since Coolidge took office (when the country was in another recession) and he implemented domestic programs that were precursors of the New Deal (including subsidies and loans similar to what we see today).

In the end, Hoover was a big government proponent who sounded similar to Barack Obama today. At the Republican National Convention of 1932, Herbert Hoover stated, when receiving his party's nomination that "We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action." I'm sure advocates of free markets at the time find themselves asking, "how's that change working for you?" The differences between FDR and Hoover were simply in the scope of their activities, not in their nature. They both believed in massive government and they both failed miserably, placing this country into a decade and a half of despair. Obama is taking the US on a similar course and on a fast track that would be the envy of Hoover or FDR. We need to go back to what works — less government and not more. We need to create a predictable economic environment that can only be created through less taxes and regulations. It is obvious that we need freedom and not government expansion.

© Kevin Price

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

Click to enlarge

Kevin Price

Kevin Price is Publisher and Editor in Chief of www.USDailyReview.com

His background is eclectic and includes years of experience in both business and public policy, as well as two decades of experience in broadcast journalism. He was an aide to U.S. Senator Gordon Humphrey (R-NH) and later went on to work in policy areas with some of the nation's leading think tanks including the National Center for Public Policy Research and was part of the Heritage Foundation's Annual Guide to Public Policy Experts... (more)

Subscribe

Receive future articles by Kevin Price: Click here

More by this author

 

Stephen Stone
The most egregious lies Evan McMullin and the media have told about Sen. Mike Lee

Siena Hoefling
Protect the Children: Update with VIDEO

Stephen Stone
Flashback: Dems' fake claim that Trump and Utah congressional hopeful Burgess Owens want 'renewed nuclear testing' blows up when examined

Jerry Newcombe
Church should be about worship, not entertainment

Laurie Roth
Trump, the truth, and America will prevail in spite of leftist evil plans

Cliff Kincaid
Terrorist attack in Baltimore

Tom DeWeese
DOJ ignores 2nd Amendment

Linda Goudsmit
CHAPTER 11: Critical Race Theory: A species of the ideological thought genus Marxism

Pete Riehm
They have tried everything to destroy Trump, but assassination

Tom DeWeese
When your red state governor dresses in blue

Rev. Mark H. Creech
Revelation Chapter 22: Eternal recompense

Tom DeWeese
YIMBYs, workforce housing, and community land trusts: All means to an end to private property

Jerry Newcombe
The vice president visits an abortion clinic—and the people yawn?

Pete Riehm
Like our Commander-in-Chief, America is clueless, feckless, and powerless

Selwyn Duke
Did anti-white, DEI bias steal a state final spot from a white basketball team?
  More columns

Cartoons


Click for full cartoon
More cartoons

Columnists

Matt C. Abbott
Chris Adamo
Russ J. Alan
Bonnie Alba
Chuck Baldwin
Kevin J. Banet
J. Matt Barber
Fr. Tom Bartolomeo
. . .
[See more]

Sister sites