Is Obama’s Middle Name Hoover?
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We tried raising taxes, especially on the rich, in the teeth of a recession once before in order to narrow the gap between federal revenues and expenditures. That was in 1932. The results were not pretty, to put it mildly. Both houses of Congress passed Hoover’s proposed tax increases by wide margins, and John Nance Gardner, the speaker of the House (and FDR’s first vice president), even wanted to add on a national sales tax, which would have impacted the poor far more than the rich, in order to balance the budget. It didn’t work and the economic decline sharply accelerated. Government revenues in 1932 were $1.9 billion, despite the tax increases. Expenditures that year were $4.6 billion. The deficit, in other words, was 132 percent of revenues, by far the worst peacetime deficit in the nation’s history. Ever since, the idea that taxes should be raised in a recession has been an off-the-table idea. That, after all, was what Herbert Hoover did, not a model later presidents have chosen to emulate. At least until President Obama, that is.
