FDR II

The deal is done. Both sides have had their say, and now the stimulus bill which passed Congress on Friday heads to President Obama for signature. And the President, who admonished republicans for delaying passage of a bill so vital and necessary to the survival of the republic – has decided to wait until tomorrow to sign. What a showman.

There have been too many comparisons made over the last several months as to where exactly this current economy fits in relation to other historic downturns. Consensus among the Obamaniacs is that their guy is a sort of FDR II, looking to vindicate the Keynesian policies of the New Deal the Left feels is so often maligned by conservatives.

Fine, I’ll grant them this. But if we are to draw these comparisons, then Obama would be wise to heed the pitfalls presented to his Muse; namely, that one of the reasons the Great Depression dragged on for so long was because excessive taxation FDR imposed to pay for New Deal spending stagnated both private investment and public consumption. As Jim Powell over at the National Review Online points out, taxes in the period from 1933-1940 increased threefold. And the burden wasn’t just placed on the rich – the middle class and poor felt the pinch through excise taxes on beer, cigarettes and other comfort items.

Now that a good dose of the tax incentives of earlier versions of the stimulus was stripped from the final product, the fate of the Bush tax cuts should weigh heavily on the agenda of congressional republicans. The Bush tax cuts are scheduled to sunset at the end of 2010, and early signals from the Obama Administration are that he has no intention of renewing them.

Raising taxes at such a critical juncture of economic recovery appears to be a history lesson that, unfortunately, we may be doomed to repeat.