There are two ways to look at this: 1) we are engaged in the proper massive spending required to pull this economy out of the grips of a Great Depression. The comparison to World War 2 is, however, tricky as the economic situation then and now are completely different. (Will explain in later post); 2) or you can compare the massive spending and coming massive taxing like the failed New Deal programs of the 1930s.

We will see… More on this later.

My only comment at this time, for a President and current Congress that promised to be the most “transparent” and “ethical” in history, it seems the difficult and more honorable path would be to buck the trend. To stand up and acknowledge minority rights and to honor the constitution, as has clearly not been done – that would have been what this administration promised.

Congress is broken and has been for some time. We The People must consider insisting that our politicians begin to honor the constitution. The Republicans have used this option to lower taxes and do things that Democrats cried foul over, just as Republicans are now doing. Both have been wrong. We need change, real change.

Here is a look at reconciliation’s controversial history:

Dec. 5, 1980 | Though reconciliation was established during the Ford administration as a means to keep spending in check, it went unused until the final days of the Carter presidency. As one of his last acts in office, President Jimmy Carter signed the Omnibus Reconciliation Act of 1980, designed to slim the budget deficit through revisions to a range of entitlement programs.

Aug. 13, 1981 | The Omnibus Reconciliation Act of 1981, passed by a Republican Senate, cut $130 billion from several discretionary programs, including welfare and food stamps.

Sept. 3, 1982 | A Republican Senate approves the Tax Equity and Fiscal Responsibility Act of 1982, which first opened Medicare to HMOs.

Sept. 8, 1982 | For the second time in less than a week, Congress uses reconciliation to pass a $13 billion bill amending the food stamp program, the federal employee pay program and farm subsidies.

April 18, 1984 | The Omnibus Reconciliation Act of 1983, approved by a Republican Senate, was a deficit-reduction measure that made changes to the annual cost-of-living adjustments to the retirement accounts of federal employees.

April 7, 1986 | A Republican Senate passes the Consolidated Omnibus Budget Reconciliation Act of 1985, otherwise known as COBRA. The act allows laid-off workers to keep their health care coverage.

Oct. 21, 1986 | The Omnibus Budget Reconciliation Act of 1986 cuts $17 billion from the nation’s deficit through changes to Medicare and the sale of the government’s stake in the Consolidated Rail Corp.

Dec. 22, 1987 | Democrats, back in control of the Senate, pass the Omnibus Budget Reconciliation Act of 1987 establishing federal standards for nursing homes under Medicare. The measure also expands Medicaid eligibility.

Dec. 19, 1989 | Democrats approve the Omnibus Budget Reconciliation Act of 1989, stripping $39 billion from the deficit while overhauling doctor payments for Medicare.

Nov. 5, 1990 | President George H.W. Bush signs a Democratic measure, the Omnibus Budget Reconciliation Act of 1990; In addition to establishing pay-as-you-go rules for federal spending, the bill also implemented tax increases and added cancer screenings to Medicare.

Aug. 10, 1993 | Democrats, in control of Congress and the White House, pass the Omnibus Reconciliation Act of 1993. It cuts $504.8 billion from the budget while creating new tax rates for businesses and individuals and also establishing federal vaccine funding for children.

Dec. 6, 1995 | Republicans, back in control of Congress, pass the Balanced Budget Act of 1995 through reconciliation. President Clinton vetoes the measure.

Aug. 22, 1996 | President Clinton’s welfare reform bill is passed by a Republican-controlled Congress through reconciliation. The bill separates Medicaid from welfare for the first time.

Aug. 5, 1997 | Republicans use reconciliation to pass President Clinton’s Balanced Budget Act of 1997. Besides setting the U.S. on the path to a balanced budget, the bill created the Children’s Health Insurance Program. The same day, a tax-cutting measure is also passed through reconciliation.

Sept. 23, 1999 | President Clinton vetoes Republicans’ Taxpayer Refund and Relief Act of 1999.

Aug. 5, 2000 | Republicans in Congress pass the Marriage Tax Relief Reconciliation Act of 2000, which President Clinton vetoes.

June 7, 2001 | A day after his party loses control of the Senate, President George W. Bush signs the Economic Growth and Tax Relief Reconciliation Act of 2001, his first major tax cut.

May 28, 2003 | President Bush, with Republicans back in control of Congress, signs the Jobs and Growth Tax Relief Act of 2003, his second round of tax cuts.

Feb. 8, 2006 | After Republicans use reconciliation for the third time in his presidency, President Bush signs the Deficit Reduction Act of 2005; the bill cuts spending on Medicare and Medicaid.

May 17, 2006 | President Bush signs an extension of his earlier tax cuts approved by a Republican Congress in the Tax Increase Prevention and Reconciliation Act of 2005.

Sept. 27, 2007 | Democrats, in control of Congress once again, use reconciliation to pass the College Cost Reduction and Access Act of 2007. President Bush signs the $20 billion reform of student aid.

Sources:

* The Brookings Institution
* The Library of Congress’ THOMAS
* Congressional Research Service

My source

However, as a student of history I am beginning to have some cause for concern. With the recent closed door signing of a bill by the President to increase the Federal deficit to $14.3 trillion, along with: a potential massive health care bill and the jobs bill that supposedly will create jobs (remember we already had one that was to keep us from seeing 8-9% unemployment; we are now hovering around 10%.)  That’s not to mention Cap and Trade and other bills lurking in Congress. The fact that future taxation will have to become a burden for not just the wealthy but for most of us who hold jobs, has got me wondering if Mr. Beck is right?

According to the report [linked above]:

White House Office of Management and Budget projects that these changes will raise taxes on wealthy Americans by $636.7 billion over the next decade.

Spend and tax did not get America out of the Great Depression as unemployment never stabilized because the job creation initiatives by FDR failed to initiate true economic recovery (it was a government injected mirage that was never sustainable). Some argue FDR did not go far enough, did not spend enough. FDR wanted to keep the deficit somewhat under control. How did he achieve this? Taxes, especially on the wealthy and small business (those that survived). It’s the private sector, the small businesses that will create long term sustained job growth. However, not when they face no incentive to create jobs as their government will simply tax their profits to some extreme measures. Spending money by the government can be just fine and dandy, but when that is combined with heavy taxation, the private sector is doomed. Spend money on what you must, but cut taxes on the small businesses (and corporations) and watch them grow and grow and before you know it, you have the tax money needed because the private sector has grown, thus producing more tax revenue. Think of it this way, when Henry Ford introduced his assembly line and sought to produce more and more cars at a cheaper price in order to create more demand, he made more money. Same thing applies to taxation, create more tax payers without increasing the tax, and you make more money.

Several arguments. What got us out of the Great Depression? You could argue that the New Deal created the infrastructure that allowed the country to survive. The massive spending on war materials in the late 1930s early 40s. But mainly, and this is a point of serious debate, is the simple fact that after the war the United States was the only industrial economy left standing and this allowed the private sector to blossom and with it the complete recovery of our economy.

In comparison, the Great Depression did not truly become great until three years after the stock market crash of 1929. When the floor fell out of the economy (1932) is when true suffering occurred and thus produced the  “great” depression. Recently, our stock market crash was 2008-09.  Will we see a similar result by 2012 that we did by 1932 (per graph unemployment hits 25%)? I hope not.

FDR did not listen to small business owners. Henry Ford (you know, that great capitalists mentioned above) equated FDR’s policies to communism and refused to sign into the National Recovery Administration’s policies [for more on that click here]. FDR relied on economists who were ideologues and theorists who knew little about running a business. I hope our current President is not making the same mistake?

The facts are daunting. A $14 plus trillion dollar deficit will probably doom my generation from ever enjoying the sustained prosperity of our parents. The Republicans started the spending under Bush, and now the Democrats are doing the same times ten. Meet the new bosses, same as the old bosses. It’s hard to keep a straight face when I teach American Government and Politics as a high school teacher.

We can, however, hopefully, do something for our children. That probably starts this year when we elect fiscally responsible politicians? I don’t care if these include Democrats, Libertarians, Tea Partiers, whoever, it is our most direct way to avoid a potential disaster if Glenn Beck and others are right. And I hope they are not!

UPDATE: Lone voice warns of debt threat to Fed

The US must fix its growing debt problems or risk a new financial crisis, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, warned on Tuesday, adding a mounting deficit could spur inflation.

Economists Predict Cutbacks, Tax Increases That ‘Aren’t Even Imaginable’…

American political and economic leaders have sounded the alarm for years about the red ink rising in reports on the federal government’s fiscal health.

David Muir looks into how the deficit has become so large.But now the problem of mounting national debt is worse than it ever has been before with — potentially dire consequences for taxpayers, according to a report by the nonpartisan Peterson-Pew Commission on Budget Reform.

Financial Services Subcommittee on Oversight and Investigations hearing of May 5, 2009

Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligations. Inspector General Elizabeth Coleman responds that the IG does not know and is not tracking where this money is.

The Treasury announced Thursday a record $104 billion worth of bond auctions for next week, part of its herculean efforts to finance a rescue of the world’s largest economy.

The sales will exceed the previous record of $101 billion set in auctions that took place in the last week of April and consist of two-year, five-year and seven-year securities. That record was matched by another $101 billion week in May.

Though next week’s total was broadly in line with expectations, worries about supply have weighed on the U.S. government bond market, which will see a mammoth $2 trillion worth of new debt issued this year.

To read the bloody rest…

This would be funny if it wasn’t so scary; and telling all at once…

Two men carrying bonds concealed in the bottom of their luggage also would be the fourth-largest U.S. creditors.

Note: there are no hard facts involving this report yet, but we will see.

UPDATE: United States Treasury announces that these bonds were fakes, thank God.

But, it’s a strange case. They were exceptional fakes from the reports. You don’t just print these out from a computer. So the questions arise: Who are these people? Are they stupid? Makes no sense. Why did it take 10 days to declare them as fake when all bonds come with serial numbers?  These weren’t just million bonds or something, but billions of dollars in bonds. The purchaser would check them out, hands down. Are there other countries involved trying to devalue our currency even more? Is there an economic war coming in the near future?

UPDATE 6.21.08: “… late last week American officials confirmed that the notes were forgeries. The men, it appeared, were nothing more than ambitious scamsters. But many remain unconvinced. And whether fake or otherwise, the story underlines one important point about the world economy at the moment: that the tension and paranoia surrounding the fate of the US dollar has hit a new high. It went to the heart of the big question: will the central bankers in Japan, China and elsewhere continue to support the greenback even in the wake of the worst financial crisis in modern history, or will they abandon it as America’s economic hegemony dissipates?” To read more…

WASHINGTON, March 16 /PRNewswire-USNewswire/ — The leader of the nation’s largest veterans organization says he is “deeply disappointed and concerned” after a meeting with President Obama today to discuss a proposal to force private insurance companies to pay for the treatment of military veterans who have suffered service-connected disabilities and injuries. The Obama administration recently revealed a plan to require private insurance carriers to reimburse the Department of Veterans Affairs (VA) in such cases.

“It became apparent during our discussion today that the President intends to move forward with this unreasonable plan,” said Commander David K. Rehbein of The American Legion. “He says he is looking to generate $540-million by this method, but refused to hear arguments about the moral and government-avowed obligations that would be compromised by it.”

The Commander, clearly angered as he emerged from the session said, “This reimbursement plan would be inconsistent with the mandate ‘ to care for him who shall have borne the battle’ given that the United States government sent members of the armed forces into harm’s way, and not private insurance companies. I say again that The American Legion does not and will not support any plan that seeks to bill a veteran for treatment of a service connected disability at the very agency that was created to treat the unique need of America’s veterans!”

To read more…

This is a mistake Mr. President. The effect of this will be on veterans having to pay more, and premiums will go up. This impacts the middle-class and lower classes, everyone. But not surprising, to spend like our government is will require new and creative ways to tax, and that includes all of us, not just the evil rich people making over 250k.

Also, why are the Democrats so concerned with “quick” and undemocratic debate concerning things like the stimulus bill and now the disastrous Cap and Trade Bill.  This is not democracy in action, this is not change.  Well, thankfully, some Democrats are starting to speak out.

And before you cry out that the debate on global warming as a man made thing is over, maybe read this.

O.k. I feel better, no political posts for, hopefully, a month or so…

http://www.cnbc.com/id/15840232?video=1039849853

“But one of the good things about reading history is you learn a good deal. And, we know for sure that the big spending programs of the New Deal did not work.

“In 1940, unemployment was still 15%. And, it’s widely agreed among economists, that what got us out of the doldrums that we were in during the Depression was the beginning of World War II”

He is right. The New Deal DID NOT create the jobs and sustain them. This bill will have the same results, I fear. I hope McConnell is wrong. Here’s a prediction: in 12-24 months or so there will be more panic as this bill will not create the jobs it promises. Then there will be another hurried attempt to expand government, destroy free market capitalism, and take us another step towards socialism. After all, it’s working so well in Canada and France. Then taxes will have to be raised, you can’t spend trillions and not raise taxes. But a lot of people feel this should happen anyway. I disagree.

I will refrain from making judgments about President Obama and his performance thus far until after his first 100 days. Frankly, he’s between a rock and a hard place. He has to act on the economy. I just don’t think this bill needed to be so large and commit so much money to things that do NOTHING to stimulate the economy.  My concern with Obama is the promised “change” in government and his pledge to not appoint lobbyists (which has happened), and that some of his appointees (to critical positions) seem to be incapable of paying all their taxes and figuring out things like Turbo Tax. Are these truly the people that represent change? I hope so, but I have my doubts. Finally, Obama promised to install hope and remove fear from government hyperbole, this past week’s doom and gloom from him, was not hope.

Here’s Mr. McConnell’s response to last night’s sellout bill:

WASHINGTON, DC – U.S. Senate Republican Leader Mitch McConnell made the following remarks on the Senate floor Friday regarding the Democrats’ agreement on the trillion-dollar spending bill:

“The question of whether or not the economy needs help is really not in debate. I don’t think there’s a single member of the Senate that believes that no action is the appropriate course for us to take.

“But one of the good things about reading history is you learn a good deal. And, we know for sure that the big spending programs of the New Deal did not work.

“In 1940, unemployment was still 15%. And, it’s widely agreed among economists, that what got us out of the doldrums that we were in during the Depression was the beginning of World War II.

“We have another example.

“What is called in Japan the Lost Decade of the 1990’s, where stimulus packages similar to the one we’re considering tonight were tried again, and again, and again. And, at the end of the 1990’s, Japan, looked very much like it did at the beginning of the 1990’s, except that it had a much larger debt.

“Now, we’ve not seen the compromise proposal, which has been discussed here tonight. And, I know there’s been a good faith effort on the part of those involved to pare down the size of the underlying Senate measure.

“But as near as we can tell, even after those efforts, it is roughly the same size as the House bill.

“According to the figures I’ve been given, the House bill is about $820 billion. The Senate bill, under the compromise, we believe, would be about $827 billion. Bear in mind the interest costs on either of those proposals would be $348 billion. So we’re really talking about a $1.1 trillion pending measure.

“A $1.1 trillion spending measure. We’re looking at a $1 trillion deficit for this fiscal year.

“We believe that the Secretary of the Treasury and the President will suggest to us as early as next week that we need to do — what has commonly become referred to as a TARP round – some kind of additional assistance for the financial system as early as next week. We’re talking about an extraordinarily large amount of money and a crushing debt for our grandchildren.

“Now, if most Republicans were convinced that this would work, there might be a greater willingness to support it. But all the historical evidence suggests that it’s highly unlikely to work. And so, you have to balance the likelihood of success versus the crushing debt that we’re levying on the backs of our children, our grandchildren, and, yes, their children.

“And the need to finance all of this debt which many suspect would lead to ever higher and higher interest rates which could create a new round of problems for our economy.

“So let me just sum it up by saying no action is not what any of my Republican colleagues are advocating. But most of us are deeply skeptical that this will work. And that level of skepticism leads us to believe that this course of action should not be chosen.

“We had an opportunity to do this in a truly bipartisan basis and the President said originally he had hoped to get 80 votes. It appears that, the way this has developed, there will be some bipartisan support, but not a lot. And it’s not likely, in the judgment of most of us, to produce the result that we all desire.

“So, I will not be in a position to recommend support for this product as it has developed in spite, again, of the best efforts of those who worked on the compromise. I commend them for their willingness to try to work this out. It seems to me that it falls far short of the kind of measure that we should be passing.

Amen.