The big falsehood: "no country ever taxed its way out of a recession"

[feargach]

Richard Bruton keeps trotting this sound-bite out, and it sounds dandy. Only trouble is it is blatantly false.

The USA most certainly, and absolutely did tax its way out of a recession in FDR's first term in office, beginning in 1933. That came after Hoover's term, which was a wasted four years of trying and failing to break the recession with useless tax cut after useless tax cut. The FDR policy of taxing the rich and putting their money to use in state projects was the first success in the 1929-1939 war against recession. The success was absolute and unquestionable. The national output grew in every single year of the first term.

Now it is true that FDR's policies did not end recessions forever: there was a stiff one in 1937, for example. But his first term is a perfect example of how shockingly wrong Bruton got it. Somebody needs to tell him to fact-check his sound bites.

<Mod> This thread has been merged with "Tax rises now will be like pouring cement onto the economy", as I take the topic to be a discussion of contemporary policy rather than history. </Mod>

<Mod> This thread has been merged with "Tax Increases dont work". </Mod>

[kirghizlight]

Richard Bruton keeps trotting this sound-bite out, and it sounds dandy. Only trouble is it is blatantly false.

The USA most certainly, and absolutely did tax its way out of a recession in FDR's first term in office, beginning in 1933. That came after Hoover's term, which was a wasted four years of trying and failing to break the recession with useless tax cut after useless tax cut. The FDR policy of taxing the rich and putting their money to use in state projects was the first success in the 1929-1939 war against recession. The success was absolute and unquestionable. The national output grew in every single year of the first term.

Now it is true that FDR's policies did not end recessions forever: there was a stiff one in 1937, for example. But his first term is a perfect example of how shockingly wrong Bruton got it. Somebody needs to tell him to fact-check his sound bites.

Ach lad. FDR was all about stimulus and deficit spending. I think what Brute minor wants to say is that no country ever succeeded in getting out of a recession by levying punitive taxes without a corresponding stimulus package.

At the moment we're looking at raising taxes/levies/whatever you want to cover a huge fiscal deficit. That's potentially disastrous, as any student of Hall's Pictorial Weekly should know.

[ballot stuffer]

FDRs taxes funded a huge public works program.

We on the other hand would be trying to plug our large budget deficit and pay for NAMA. We will get no additional benefit by increasing taxes as we are just filling in a hole in our public finances.

[feargach]

All very well, but the fact remains that his sound-bite is entirely inaccurate.

Of course you can say "well, what he really meant to say is..." but a soundbite that forces your supporters to translate for you is no good.

[Shambo]

All very well, but the fact remains that his sound-bite is entirely inaccurate.

Of course you can say "well, what he really meant to say is..." but a soundbite that forces your supporters to translate for you is no good.

You are going in to too deeply there imho.
The average Jose Soap in the street gets the basic message i.e the more we are taxed the less we have to spend which leads to the economy contracting even more.

[ballot stuffer]

All very well, but the fact remains that his sound-bite is entirely inaccurate.

Of course you can say "well, what he really meant to say is..." but a soundbite that forces your supporters to translate for you is no good.

Well in your opinion was it the tax or the public works that pulled the USA out of recession?

In fact its still hotly debated if FDRs policies had any effect on the recession or indeed made it worse. Many would argue it was the industrialisation leading up to and during the 2nd world war that dragged them out of recession.

[Kensington]

Well, whether it was the massive Government expenditure on public works before the War or weapons during it, it still shows that a country can, most certainly, tax, borrow and spend its way out of a recession.

[dipole]

All very well, but the fact remains that his sound-bite is entirely inaccurate.

No, it's not entirely inaccurate.
This thread is without merit.

[goosebump]

Alex Whyte (Labour) had an even better catch phrase during the Dublin South By Election:

"You can't tax your way out of a recession and you can't cut your way out of a recession."

in other words

"I haven't a fuppin' chance of getting elected so I need to lower the bucket as far into the well as it will go."

[dmc444]

There is alot of evidence that FDRs ABC programmes, continued the recession and that it was WW2 that brought America out of recession. In fact it is now actually a consensus view that the New Deal did more harm than good and onl y when you get past 1939 do the economic indicators rocket upwards.

However, Like anything in economics there are no absolutes- I think you can raise certain taxes in a recession but again it is about striking a balance and not going overboard.