By: Amy Lutz
In tough economic times like the ones we are presently facing in the United States, people have a tendency to look to the future. It’s “the grass is greener” in terms of time. According to the people most affected by the sometimes dubbed “Great Recession,” the future must be brighter than their current situation because it’s difficult to imagine things worse. Although this “hope and change” attitude is natural and harmless, the future should not necessarily be our main focus. We should be looking to the past. History holds the answers to our current financial situation, and as Winston Churchill said, “Those that fail to learn history are doomed to repeat it.” America is about to repeat history, but the question of “what history” as of yet remains ambiguous. Most Republicans like to point to 1994 as an ideal result of the midterm elections, and although it is a positive goal, history has shown two more potential, yet opposite outcomes. This November will serve to be the tipping point between two historically determined options: freedom or massive government regulation. These two options have played out before, in two separate elections. One occurred in 1932 under FDR, and the other in 1946 after America emerged from World War II. Although the former might be more widely regarded as a critical election, both elections have significant historical impact; proving the productivity of freedom and the slavery of over-regulation. This November 2, America has a date with history. It is up to the voters to decide whether it is regulation or restoration that seals our place in the textbooks. 

The year was 1932. America was being dragged into the depths of a Great Depression and the world was descending into chaos. The finger of blame for America’s financial situation was pointed squarely at Herbert Hoover, just as modern Democrats blame George W. Bush for our current financial crisis (and everything else, for that matter); then came Franklin Delano Roosevelt. FDR promised “A ‘New Deal’ for the American people” and used “Happy Days are Here Again” as his campaign song. In other words, his slogan was “hope and change.” Not only was Roosevelt elected, but the Democratic Party also acquired the majority in the House and in the Senate. In a span of time now referred to as the “Hundred Days,” Congress, with the prompting of FDR, passed acts for government regulation after government regulation, some of which were even declared unconstitutional. Here’s to hoping that the health care reform bill follows in the footsteps of the latter. Despite the protests from the American people and labeling of the New Deal as socialist and overly-progressive in nature, the Democratic majority shoved through Congress the greatest government power-grab the world has ever seen…yet. Sound familiar? In a move eerily similar to the direction of the Obama administration, the Emergency Banking Act of 1933 gave the Treasury Department the power to bailout large failing institutions. In modern terms, it instituted “too big to fail.” The 73rd Congress even took our currency off the gold standard officially in 1933. Despite the fact that the same Congress repealed Prohibition, every other move they made created an even more inflated Federal Government. The massive government spending and regulation not only didn’t work; it prolonged the Great Depression many years beyond its natural cycle. Elsewhere in the world, it was simply known as the “depression.” The New Deal prolonged and worsened our depression enough to the point where the economy fell again in 1937. The string of government programs didn’t even give the free market a chance to breathe. Had it not been for World War II, it is horrifying to imagine where our country would have gone economically. The election of 1932 put into office a far-left president and congress who set into motion a series of decisions that chipped away at our capitalist, free market system and changed the face of America forever. In 2010, is it really wise to follow the path of 1932? Such a critical election should serve as an historic warning for the possibilities of further government expansion. I would hope that 1932 is not a time in history that we repeat, but again, that is up to the voters to decide this coming November. 

Compared to 1932, the election of 1946 was a drastically different story. Americans were just adjusting to life after World War II and to say that people were tired of an out-of-control government would be an understatement. As the midterm election of 1946 approached, economists predicted that unemployment would rise back up to Depression-era highs now that the war had ended. In 1945, experts had predicted that the unemployment rate would rise to anywhere between 12% and 35%. Keynesian economists pointed to the massive increase in government spending during the War as the final solution to the Great Depression. After the War, they contended, the Depression was bound to return once spending levels were stabilized. Attaching themselves to the disgust of the American people at the failure of the New Deal, the Republican Party ran on the slogan “Had Enough?” in reference to the high taxes, bailouts, massive spending, over-regulation, and growing union influence in national politics. I’ll say it again, sound familiar? In 1945, President Truman had even called for national health insurance, but the public resistance was too strong. He went on to preach that tax hikes might be inevitable, which caused a great number of Americans to side with the Republicans. In the 1946 election, the Republicans took control of both houses. Democrats lost 111 seats in the House and 24 in the Senate. Not since 1946 has the Republican Party claimed such a majority, including 1994. The new majority party promised to lower taxes and reign in spending. Robert Taft, a Republican from Ohio at the time said it best when he stated, “The best reason to reduce taxes is to reduce our ideas of the number of dollars the government can properly spend in a year, and thereby reduce inflated ideas of the proper scope of bureaucratic authority.” Sounds like a message that Obama and the Democrats in Congress need to hear. The Republicans pressed for drastically lower taxes, but were forced to compromise on a slightly progressive, but still lower tax plan. Spending drastically dropped after World War II ended and the Republicans made no motion to revive the massive spending of the New Deal. Under the watchful eye of the Republicans in the 80th Congress, we ratified peace treaties with Italy, Hungary, Romania, and Bulgaria and created the Department of Defense. One of the most important, if not the most important act of the 80th Congress was the ratification of the 22nd Amendment setting presidential term limits. FDR was barely in the grave when America decided that we never wanted to even get close to the dictatorship which was on track to evolve under FDR’s presidency. The Congress that is sworn in next January needs to take a page from the book of the 80th Congress in applying the 22nd amendment to the House and Senate as well. It’s time to put the ever becoming tyrannical majority in Congress to rest. The Republicans in 1946 also eliminated wage and price controls and passed the Taft-Hartley labor act, which prohibited unfair labor practices on the part of unions and attempted to rein in the growing power of union influence. The 80th Congress proved successful in bills passed under their watch, but their greatest triumph actually occurred in what they didn’t do. They did not pass massive government programs similar to those of the New Deal, and neither did they increase the tax burden on the American people. The temporary halt in government growth and intervention allowed the market to self-correct and create the “Golden Age of Capitalism.” 

The “Golden Age of Capitalism” started under the 80th Congress in 1946 and ran until 1973. During that time the economy grew an average of 3.8% per year. Since 1973, the average growth has been 2.7%, peaking at 3.7% under Reagan. In 1947, the US was running a budget surplus close to 6% of the GDP and unemployment remained under 4.5% from 1945-1948. Under the 80th Congress, the “Depression of 1946” became a myth in the likes of Y2K or global warming. 

Unfortunately, the Republicans did not maintain their majority for long. A combination of the Republican Party’s failure to fully attach themselves to fiscal conservatism and the lingering social changes of the New Deal doomed the Republicans in 1948 and they lost their brief majority. Due to President Truman’s labeling, the Congress from 1947-1949 became known as the “Do Nothing 80th Congress,” even though the Republican’s fiscal policy proved successful and 69% of Americans actually did not believe that Congress had cut taxes too much. Truman’s complaints about the Republican majority which eventually got him reelected mirror the “Republicans only want to preserve the status quo” argument that we hear from the modern left. According to Democratic standards, Republicans are preserving the status quo, but in reality, it’s simply not true. Today, nothing short of a “fundamental transformation” means change to the left. Americans, used to the radical, drastic changes that the New Deal provided, were (and to some extent, are) unable to fully grasp the concept that simple tax cuts and spending can revitalize the economy. Time Magazine noticed such a change in 1934, when it stated, “So far has the New Deal shifted the fulcrum of U.S. politics that the old dividing line between Democrats and Republicans is today supplanted by a new line, less regular but more real, between left and right, collectivist and individualist, ‘new socialist’ and ‘old capitalist.’”

So there you have it, America. The elections of 1932 and 1946 serve as classic examples of the opposite effects of laissez-faire and centralized planning approaches. The real question is, who are we? Will voters in 2010 choose to follow the footsteps of the Democratic congress in 1932 or its Republican counterpart in 1946? At this incredible, defining point in America, it is important to see where in history we have succeeded and failed to solve great economic problems. The place of the 2010 elections in history still has yet to be determined. The board is set; the pieces are moving (and yes, for those who noticed, that was a Lord of the Rings reference). We already have the board set with higher taxes, massive spending, and out-of-control-government and it is up to us as voters to decide in 2010 where we are going to move next. The 2008 election has since given us nationalized health care, nationalized car companies and banks, stimulus after stimulus, skyrocketing debt, and a Congress that has seemingly forgotten the existence of their constituents. The determination of our next route comes down to a single question. Just ask yourself this, America, had enough?