Taxes & Government Spending
In 1920 there was a sizable recession, though few talk about it. The Dow Jones Industrial Average dropped 35.2%. Over the next three years unemployment went from 1.4% to 11.7% and the Gross Domestic Product lost 4.2% of its value.
The actions taken by government to combat the recession included reducing the top marginal tax rates from 73% in 1921, to 25% by 1924. Government cut federal spending from 1920 to 1923 by 50.6%.
The results were that by 1923 unemployment was reduced to 2.4%, the Gross Domestic Product increased 16.3%, and the Dow Jones Industrial Average was down just 2.9% from its high in 1920. By 1925 the Dow Jones had improve by 20.6% over 1920. From 1920 to 1929 the United States National Debt DECREASED by 34.76%.
In 1929 there was a ‘great depression’ that everyone talks about. The Dow Jones Industrial Average dropped 35.7%. Over the next four years unemployment increased from 2.3% to 24.9% and by 1935 the Gross Domestic Product lost 29.3% of its value.
The actions taken by government to combat the ‘great depression’ included increasing the top marginal tax rate from 24% in 1929 to 63% in 1932, 79% in 1936, and to 81% in 1940. The government also increased spending by 109.2% from 1929 to 1934, 192.3% from 1929 to 1939 and 336.6% from 1929 to 1941.
The results were that it took until 1941 for unemployment to go down to single digits (4.7%) which was mostly the result of gearing up the Lend-Lease Program which began March 1, 1941. The Gross Domestic Product in 1941 increased 22.3% over 1929, mainly the result of entering into WWII December 8, 1941. The Dow Jones Industrial Average did not return to 1929 levels until 1954, 25 years after the crash. From 1929 to 1942 the United States National Debt INCREASED by 327.75%.
Obama’s spending policy replicates FDR’s failed policy.
George Santayana said, “Those who do not remember the past are condemned to repeat it.”
Sources:
(1) http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=3&Freq=Qtr&FirstYear=2007&LastYear=2009
(2) http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213
(3) http://www.infoplease.com/yearbyyear.html
(4) http://www.marketwatch.com/tools/industry/?bcind_ind=1000
(5) http://www.whitehouse.gov/omb/budget/Historicals/
(6) http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm
(1) http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=3&Freq=Qtr&FirstYear=2007&LastYear=2009
(2) http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213
(3) http://www.infoplease.com/yearbyyear.html
(4) http://www.marketwatch.com/tools/industry/?bcind_ind=1000
(5) http://www.whitehouse.gov/omb/budget/Historicals/
(6) http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm
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Here is a chart (click on it to make it larger) year by year: (WITH sources)
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