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June 11, 2015
When Franklin D. Roosevelt was elected president in 1932, the Great Depression was in full swing. Since 1929, the overall economy had been in rapid decline: unemployment rose to 23.6 percent, 10,000 banks (40 percent) failed, gross national product fell 31 percent to $79 billion, capital growth investments dropped from $16.2 billion to $300 million, farm prices fell 53 percent, international trade fell by two-thirds, top tax rate rose from 25 to 63 percent, and
government leadership seemed clueless what to do. (Hoover should have listened to Coolidge, but I wrote about that in a previous column.)
With his signature optimism, President Franklin Roosevelt offered Americans hope, declaring in his nomination speech at the Democrat convention, “I pledge you, I pledge myself, to a new deal for the American people,” following his cousin Theodore’s example of offering a Square Deal in 1901.
The Roosevelts, Franklin a Democrat, Theodore a Republican, were determined to set American economic opportunity and prosperity back on track.
Fast forward eighty years to 2008; the Great Recession was taking hold. The Dow Jones Industrial Average suffered its worst weekly loss in history, falling 18 percent. The federal government took over mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers filed the largest bankruptcy case in U.S. history, and for the first time in history, the Federal Reserve lowered its interest rate to zero in December, masking the ominous effects of interest payments on the $12.5 trillion national debt.
The gross national product dropped from $15,200 billion in 2008, to $14,500 in 2009. In 2009, the Dow hit the low point of the recession, closing at 6,547 – down 54 percent from its 2007 high. Officially, the unemployment rate peaked at 10 percent in 2009, hitting double digits for the first time in 26 years, but the affective unemployment rate was over 12 percent, taking into account the low labor participation rate of 62.8%.
In a 2008 campaign speech in Missouri, then-Sen. Barack Obama vowed to fundamentally transform America. “Fundamentally transform.” Not maximize America’s potential. Not perpetuate America’s freedom. Not revive America’s economic vibrancy. “Fundamentally transform.” Fundamentally transform what exactly?
Apparently, to fundamentally transform means that in 2010 the number of home foreclosures in one year hit a peak at 2.9 million properties.
Fundamentally transform means a lethargic average of 2 percent economic growth, resulting in the current G.N.P. of $16,400 billion. Six years after the official end of the Great Recession, we should be achieving 4-5 percent in yearly growth, if U.S. economic history is a guide. American history precedes the Great Fundamental Transformation.
Fundamental transformation means almost ten million American workers cannot find full-time work in 2014.
Economic opportunity and prosperity were American fundamentals for four hundred years. Economic stagnation and low productivity are the Obama legacy of fundamental transformation of America.