Stimulus Plan Repeats Mistakes That Spawned Great Depression
The European Union is threatening a trade war over provisions in the $800 billion “stimulus” package backed by Obama and Congressional leaders. The Great Depression resulted partly from the trade war that followed the Smoot-Hawley Tariff signed into law by Herbert Hoover, which Congressional leaders wrongly thought would help end the recession that followed the 1929 stock market collapse.
The stimulus package also contains tons of red tape and strings attached to the money it showers on state governments, in order to benefit big labor unions, like “prevailing wage” mandates that result in taxpayers paying inflated wages for construction projects. Economists have recently described how red-tape misguidedly imposed during the Roosevelt Administration lengthened the Great Depression by as much as seven years.
The “stimulus” package is losing favor among economists and the general public. Only 42 percent of the public supports it, and most independents oppose it, according to pollster Rasmussen Reports. And even economists who once supported the idea of a stimulus (like Martin Feldstein, the pro-bailout economist often cited by Congressional leaders to support bailouts and the need for a “stimulus”) turned against the bloated stimulus package when its pork-filled contents were revealed. Many economists oppose the stimulus package, which is based on economic fallacies.
A similar trillion-dollar stimulus package failed in Japan in the 1990s, producing a decade of economic stagnation known as “The Lost Decade.”