Tag: recession

Chuck Schumer Endorses Hoover Plan

On Meet the Press last Sunday, Sen. Chuck Schumer (D-NY) said

Those on the hard right say, “Cut government spending, let’s go back to the old Reagan days.” Well, the last president who did this when we were in this type of situation was Herbert Hoover.  Herbert Hoover said the government should do nothing when we were in a recession, not a depression.  We did nothing and it related [sic] to a depression.

Reality check: Did President Hoover cut federal spending during the recession that became a depression? Not by a long shot.

 

boaz-figureSource: OMB

Federal spending was $3.1 billion (those were the days!) in 1929, the year Hoover took office and the stock market crashed. It rose modestly for two years, then shot up in 1932. It dropped a bit in nominal terms in 1933, though deflation meant that the real budget increased. Then, presumably reflecting Roosevelt’s policies, it shot up again in 1934. In real terms, the federal budget was almost twice as high after Hoover’s four years as it was when he took office.

President Bush, President Obama, and Senator Schumer are all supporting Herbert Hoover’s failed policy of increasing spending to fight recession. Let’s hope they don’t have the same results and turn a recession into a Great Depression.

Cato adjunct scholar Ilya Somin dissects the “Herbert Hoover did nothing” fallacy at Volokh.com.

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