idiggory, King of Bards wrote:
In the years leading up to WWII, our gov't spending jumped by quite a bit. But taxes didn't rise. As a result, our economy began to recover (following the Roosevelt recession).
In terms of GDP growth, yes. In terms of employment? Nope. Sound familiar? It's the same problem we're having now. The "economy" has recovered in the sense of the GDP and markets. But the jobs aren't coming back. Not surprising, since the Dems are basically following FDRs play book today (and getting more or less the same stagnant results).
When we entered WWII, our gov't spending skyrocketed. In time, tax rates also jumped (particularly for the wealthiest Americans).
Despite those increased taxes, our economy still boomed.
Uh... That's a really subjective measurement. If by "boomed" you mean that the government built a lot of tanks and planes and people were employed (which was an improvement to be sure), yeah. But that was also a time of incredibly scarcity in the US. We had rationing of most goods, and some things simply were not available at all. It was hardly booming in the sense of consumer options and livelihood.
Shortly after the war,
when the depression had been over for years, tax rates remained extremely high (and our national deficit was hardly small). They did reduce them, since our active military spending wasn't quite as high during the early Cold War as it was during WWII.
I'm striking out the subjective bit. Many people, like myself (and the folks who wrote the WSJ article I linked to), don't believe that the depression was ended by WW2, but that its symptoms were masked by the war effort. The basic problems in the private workplace still existed and had not been resolved.
However, tax rates post war remained extremely high, especially when compared to before the war. That's because our economy had boomed and we were able to sustain those tax rates, and needed to repay the debt we had accrued getting ourselves out of the depression.
Didn't read the article, did you? They may have remained high for a year or two, until the new tax rates took effect. But congress basically took the first opportunity to lower taxes, especially on corporations. And their argument back then, just like the conservative argument is today, is that corporate profits drive job creation. And they were right.
Gov't spending is needed when the economy is struggling.
I disagree. Sometimes, existing government programs become more expensive because the need for them becomes greater, but that does not mean that expanding the actual role of the government during bad economic times is the right thing to do. I can argue (have in fact) that when you do this, you make those economic downturns longer and deeper than they would otherwise have been. By attempting to reduce the negative harm from job losses, you also reduce the rate at which new jobs are created, thus making more people dependent on those government services and lengthening the time it takes to recover.
It is precisely those moments when we should stop caring about a balanced budget, because it is far more effective to spend to get us out and then tax more when our economy is healthy enough to support it.
Show me evidence that this has ever been the case. From what I've seen, it appears like when government keeps spending constant (or perhaps increases it but just slightly), we tend to recovery quickly. When we embark on grand spending plans to fight the downturn, it tends to make things worse, not better. I get that for some people, they just can't accept that money in the hands of the rich benefits anyone else, but it's funny just how often allowing the rich to keep a larger share of their profits does result in exactly the sorts of economic benefits for the whole economy which conservatives predict. At some point, I would hope some people would stop burying their heads in the sand about this, and actually question the assumptions they've been taught. How many examples of the liberal economic strategy you're parroting failing utterly do we have to have before you'll question that too?