The last chapter of Glenn Beck’s Broke dealt with the actions of Progressives, especially President Woodrow Wilson and how they laid the groundwork of the views we see today touted in government. Today’s chapter focuses on the one President whose programs and agencies we still see today because of a temporary problem. These agencies and programs as we are soon to find out are one of the reasons we are as the title describes, broke.

Chapter #6:  Hoover, Keynes & FDR
The Three Horsemen of the Progressive Apocalypse is the subtitle for this chapter and gives you an idea of the topic at hand and the authors opinion. At the start of the Great Depression, in the last quarter of 1929, unemployment was nine percent but by the next June it had receded back to six percent. The song Happy Days are Here Again seemed to have been the best tune to sing and the party of the 1920s would continue. Unfortunately the big government solutions of Hoover and then FDR would change that six percent unemployment into twenty-five percent. Federal revenue dropped from $4 billion in 19427 to $1.9 billion in 1932. In this crisis “it would take a passionate leader with economic brilliance, a clear vision, and a strict adherence to our Founder’s values if America was to recover quickly,” like many other economic depressions. We got Hoover and FDR (Beck 61).

Hoover was an engineer by training who helped feed Belgium in the buildup to World War I. If the “cognitive elite” poke at the problem long enough a solution could be found. He tried to fix the depression through many different methods, like hiking import tariff, government spending, new social programs, massive income tax increases, and even an excise tax on check writing that led to a run on the banks that closed banks due to drained reserves. Due to these policies our deficits went from $462 million in 1931 to $2.7 billion in 1932. Walter Lipman, a progressive newspaperman wrote in 1935 that FDR’s policies are a natural progression from Hoover’s work in 1929 (Beck 61-62)

FDR did not only continue with Hoover’s policies he expanded them, contrary to the ideas of lower taxes, freer markets, and more individual liberty. FDR, like Hoover, thought central planning and massive government spending could solve our problems. Though, FDR actually spoke against this ideology during the campaign saying, “Too often liberal governments have been wrecked on the rocks of loose fiscal policy.” He billed himself as the “fiscally prudent choice,” saying in a radio address, “Let us have the courage to stop borrowing to meet continuing deficits. Revenues must cover expenditures by one means or another. Any government, like any family, can, for a year spend a little more than it earns. But you know and I know that I continuation of that habit means the poor house.” Democrats took massive majorities in the House that year so that whatever FDR wanted he got from the Congress. He took a $22.5 billion debt in 1993 and doubled in seven years. FDR, other Progressives and followers of the Social Gospel thought it could spread positive benefits across the society if only the government spent more money. “It was all an effort to reflect ‘the hope of the Social Gospel of creating the Kingdom of God on earth'” (Beck 62-64).

Franklin Roosevelt, educated in the Social Gospel about the unfairness of poverty and that it was the governments job to stand with the poor over the rich to redeem them and that the true culprit of the Great Depression was the “‘lure of profits’ by ‘unscrupulous money changers.'” The problem is that profits and their allure is the beloved concept of Adam Smith that inspired of our Founders. John Maynard Keynes would be the basis for challenging Smith’s 200-year-old, out of date views. To Keynes, savings was like hoarding and being greedy. He scoffed at paying down debts and balancing budgets, calling “the morals, the politics, the literature and the religion of the… [nineteenth century] joined in a grand conspiracy for the promotion of savings.” He is to blame for the consumption and materialistic nature of our economy and life because he viewed consumption as the only aim of economic activity. He defended the idea that people and nations could spend their way into prosperity. He mocked the common sense ideas of the Founders of frugal living, rational spending and dedicated saving. Money must be spent and it did not matter how. The view of national debt was that American people were on both sides of the balance sheet as the creditors and the debtors. Politicians could not link their ambitions that spending the people’s money was a good thing and promise the people anything from the government since government debt was good (Beck 64-67).

Just like today, capitalism took the blame for the Great Depression. Roosevelt solution to this problem was to link economic security to the Constitution, an idea not even considered by the Founders. Capitalism could not guarantee a bright future for everyone so it should be modified for the greater good. Some of Roosevelt’s advisers saw Smith’s invisible hand as being dead or mythological, while others tried to question the idea of spending to become rich. Those fighting against Roosevelt had an uphill battle because the people were seeing Fascism working in Germany and Italy (Beck 67-68).

One problem remained, the U.S. was still using gold as its currency with flowing into the U.S. and our the banks gold reserves flowing out of the U.S. Roosevelt ended the exchange of U.S. dollars into gold upon request, saved U.S. banks, and changed the economic course. Roosevelt then took it a setup further and ordered confiscation of all gold held by private individuals exchanged for dollars. This was to prevent a secondary currency from taking over the worthless paper money printed by the federal government (Beck 67).

Roosevelt then went about the practice of setting prices on gold with nothing but arbitrary reasons. Roosevelt used this economic insecurity as way to expand government power and high-ranking officials wanted to take temporary spending and turn it into an instrument of permanent government. Roosevelt created new structures that last even to this day despite the temporary problems of the Great Depression are long gone (Beck 69-70).

Using the economic struggles of the Great Depression, Roosevelt was about to redefine governmental powers in ways our Founders never saw coming, attempting “to make economic security a reality” through the government. He proposed a second bill of rights to replace the original because “Capitalism is evil, the Founders hadn’t adequately prepared us for a depression, and the Constitution led the American people to the condition they now found themselves in.” This was not government reform, it was a government take over of everyday responsibilities of life. The citizens embraced the nanny state idea because of the depleted incomes and few jobs and they thought that these were only temporary measures. But Walter Lippman, a New Deal supporter, said the program was to reduce the “private corporate control by collective bargaining and labor legislation, on the one side, and by restrictive, competitive and deterrent government action on the other.” Many New Dealers supported these actions BEFORE the 1929 crash. These programs double federal spending, most of it domestic or furthering a political agenda. Even the outbreak of World War II only led to a little increase in military spending. Roosevelt borrowed more money in his first four years in office than all the dead presidents before him. In the end though the policies did not work. Henry Morgenthau, Secretary of the Treasury said:

We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong… somebody else can have my job. I want to see the country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot (Beck 70-73).

Massive spending did not solve the problem, but neither did World War II; the answer is not the simple. Roosevelt instituted with Congress the automatic tax withholding system we know today and increased the top tax bracket by six percent. The revenues soared by eight-two percent, unfortunately we now had a massive amount of debt. Roosevelt spent much of his time grasping at straws for the magic fix to the economy but he understood the truth that being dependent on the government could be “a narcotic, a subtle destroyer of the human spirit.” Lyndon B. Johnson would follow in FDR’s footsteps in just twenty years time and he took FDR’s words to the bank by trying to get as many people hooked on to that drug of government dependence as possible (Beck 73).

That ends this chapter of the book.   The next chapter will be a little disturbing to some people because it looks at a man, who by many, is a fighter for Civil Rights (President Lyndon B. Johnson) and turns that view on its head.  It is an eye-opening nonetheless.  I will warn you there might be some offensive language in the next chapter summary.  Realize that when I use that type of language they are not my words but the words of the those who spoke them.

Questions?  Comments?  Concerns?  Class dismissed!