Saturday, May 28, 2011

Herbert Hoover, "Hooverite Nonsense", and Government spending.

So I catch this post over at Division of Labor:   Jonathan Chait Peddles Hooverite Nonsense

It's been awhile since I called out someone for being ignorant of Herbert Hoover's record in office. Jonathan Chait has piece about Republicans (supposed) opposition to government spending called"Herbert Hoover Called. He Wants His Fiscal Policy Back."

As anyone with an iota of knowledge about Hoover knows, Hoover didn't cut spending he increased it. Big time. Roughly 50% between 1929 and 1932 (and that's nominal terms--real would be even larger because that was a deflationary period). See Table 1.1 here.

 So my question becomes, where did the "Hoover/Gov. spending" meme come from then?  So I shoot an email over to Brad Delong over at University of Berkeley.  His response...

Fiscal year 1932 includes March-June 1933, I believe. IIRC, you'd be better comparing FY 1929 (i.e., July 1929-June 1930) with FY 1930 and FY 1931.

Between FY 1929 and FY 1930 Hoover raised tax rates and cut spending programs. Even though the economy was in clear (and deep) recession in that second year (thus depressing tax revenues and elevating spending), Hoover collected more taxes in FY 1930 than he had in FY 1931. He continued to raise taxes between 1931 and 1932--but as the recession turned into a Depression, revenues fell off a cliff and his $700 million surplus of which he was so proud turned into a $400 million deficit.

But Herbert Hoover was not a willing deficit spender--no, no, no. He tried to move heaven and earth to keep the federal government in surplus during his administration.

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