Guest Opinion

Congress needs a Herbert Hoover reminder
By David Osterberg, Executive Director

As published in the Tuesday, Aug. 16, 2011, Des Moines Register

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The annual celebration of native son Herbert Hoover has just passed in West Branch. This festival reminds us of the accomplishments of this extraordinary man, born in a two-room cottage on the bank of a creek.

Hoover and his wife, Lou Henry Hoover, took a global outlook many years before jet travel. Together, they translated a Latin text to English. They lived abroad as the future president’s mining career took them to Australia and China; they spoke Chinese and witnessed rebellion firsthand. In World War I, Hoover coordinated food relief that saved the Belgian people from starvation.

But these are not what most think of when they think of Hoover. He is remembered for “Hoovervilles” — hobo camps along the railroads — and bread lines and the worst unemployment of the last century.

Hoover’s mistake was to cut budgets in the face of terrible unemployment and poverty in America. He and his economic advisers assumed that budgets should be balanced and if the poor economy brought in too little tax revenue, then government workers needed to be let go.

Hoover faced a financial crisis followed by deep unemployment just as George W. Bush did, but by 2008 economists had learned that balanced budgets in bad times only increase unemployment.

The difference between then and now, why unemployment is around 9 percent and not higher is that presidents after Hoover — particularly Franklin Roosevelt and Lyndon Johnson — established ways to make income flow to needy people and especially to retired persons. They brought us Social Security and Medicare to bolster the American economy, which incredibly greedy Wall Street leaders and incredibly unsustainable financial dealings brought to its knees.

Now policy makers are forgetting the mistakes of Hoover. They worry about balanced budgets and cut both spending and taxes in ways that can’t begin to balance the budget, let alone help the economy. Since tax cuts do not stimulate the economy enough, they demand we cut budgets some more. The federal government removes support for Americans who need help and cuts support to state and local governments. Consequently legislators and governors force firings of teachers and planners and park maintenance workers.

President Obama knows better than Hoover did because economists know more about the economy. Yet he has agreed to unreasonable cuts when there should be more stimulus. As in the 1930s, the rich are few and hold much economic control, but will not invest in the work and ideas of U.S. businesses. They are sitting on billions of dollars. To get the unemployment rate down and put more money in the hands of real entrepreneurs and consumers, government must stimulate the economy.

But in Congress, a small minority has stopped efforts to put the economy back on track with spending by government.

While we can learn from the humanitarian spirit that drove Herbert Hoover, we also can learn from his economic policy shortfalls. President Obama must defeat the budget cutting, teacher-firing ideas of the far right. He must stand up for stimulus spending.

After all, the best thing we can do to reduce future deficits is to get the economy growing again.

davidosterbergphoto

DAVID OSTERBERG
is executive director of
the Iowa Policy Project,
a policy research organization
in Iowa City.
He is a former
state representative and
former candidate for U.S. Senate.

Contact: dosterberg(at)iowapolicyproject.org.