Was it Roosevelt or the Germans?

Recently there has been a lot of doom and gloom about the risks of a double-dip recession. Most commentators from the right choose to compare the policies of FDR, essentially summed up as big government, social spending and anti-corporate with that of the Obama administration.

This of course is due to the ongoing fight about the size of the budget deficit. Funny how the Republicans clamour about the fact that it is far to high and that social spending is the cause. They will go on to cite how Roosevelt's New Deal and his "attack" on corporate American combined to throw the USA back into recession in the late thirties and that Obama is using the same medicine.

Well yesterday Mr Paul Krugman took the wraps off the hypocrisy of the Republicans whose concerns appear to be much more about either lowering or keeping taxes low for the wealthy then about the size of the deficit.

Mr Krugman quoted the second ranking Republican in the Senate, a Mr Jon Kyl. His answer, in response to a question on what should replace the $650 billion or more lost revenue in the coming decade if the Bush Tax Cuts were made permanent exposed the beauty of Republican subterfuge. "You do need to offset the cost of increased spending. And that's what Republicans object to. But you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans."

The math in this is great. $30 billion in aid to the unemployed is too expensive, but $650 billion in tax savings to the wealthy isn't?!

Now the other day I mentioned that the Democrats need to learn how to sell their successes. Maybe they should take a page out of the Republican's book. Obama's stimulus and the TARP got the USA through the worst of the crisis and all that people seem to talk about is the deficit!

The doctrine of "Shock" has earned a bad name since Naomi Klein made it a dirty word. But if you read Mr Krugman's blog-"Redo That Voodoo" he basically foreshadows it in his comment that the Republicans plan to slash revenue with tax cuts and then demand spending cuts is to "...deliberately create a fiscal crisis, in the belief that the crisis can be used to push through unpopular policies...."

Yes perhaps that is what Obama has done with Health Care and Finanial Reform. But he didn't actively create crisis, just took "positive" advantage of it.

But back to the Germans in today's title. Most of the (Republicabn) comparisons with the Great Depression focus on Roosevelt's policies. They all seem to forget that the second largest economy in the world at the time, Germany, defaulted. They also don't mention that the Fed raised interest rates to the roof to prevent a gold outflow, and although price levels are soft, they are not plummeting.

Still I would like to look to the Germans. Out of the midst of a crisis a demagogue emerged promising rebirth, regeneration and perhaps most importantly, employment.

The wealthy generally can weather a recession, even a depression. The poor cannot, and nothing like unemployment to assure poverty in the absence of social spending.

Much of populism is predicated on mistruths or outright lies. Just look at Sarah Palin. And the majority of the population is easily misled. We are at a critical juncture and have to ensure that the current surmountable budget crisis doesn't morph into a full-scale Republican revival-for that would be a true crisis.