Economically, World War II Was Stimulus on Steroids -- And A Massive Tax Hike Was Critical

[steven johnson]

I am amazed at the lack of economic sophistication by right wing "tax-cut, deregulate and starve the beast" solutions.

Keynes was right. We just haven't used enough Keynsian stimulus and taxation to get the economy back on track and fix our crumbling infrastructure.

The next time someone argues that the New Deal failed, and only the Second World War ended the Depression, as 'proof' that government spending does not work, one can respond with the details of economic growth and unemployment reduction up to 1940, or one can ignore the claim and thank them for making your case for massive government spending in a deep, broad recession.

Right wing politicians are loathe to credit the New Deal with any success in hoisting the United States out of the Great Depression, but credit World War II for that achievement, believing that that somehow disproves Keynesian economic theory.

The economic lesson, then, of right wing claims that the New Deal accomplished nothing, and it took the Second World War to end the Great Depression, ought to be that truly massive spending by the government would put get this economy humming again as well.

Should we pay for all this with massive deficits, or by raising tax revenues? During World War II, the tax base was, for the first time, extended to nearly every worker, and those who made a million dollars or more were taxed at a rate of 94%. Today, we are being taxed less than at anytime since prior to the Second World War. So, yes, there is plenty of room to raise revenues by increasing enforcement, cutting loopholes, and raising rates on the wealthiest.




Economically, World War II Was Stimulus on Steroids