CNN Fact Checks Paul on WW2 Vet Job programs

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hxxp://news.blogs.cnn.com/2012/01/20/truth-squad-3-checks-on-thursdays-gop-debate/?hpt=hp_t1

Does Ron Paul's WWII anecdote ring true?

The statement: "After World War II, we had 10 million come home all at once. But what did we do then? There were some of the liberals back then that said, 'Oh, we have to have more work programs and do this and that.' And they thought they would have to do everything conceivable for those 10 million. They never got around to it because they came home so quickly. And you know what the government did? They cut the budget by 60%. They cut taxes by 30%. By that time, the debt had been liquidated. And everybody went back to work again, you didn't need any special programs."

The facts: The end of World War II did see a sharp decrease in federal spending as the United States demobilized. The U.S. budget grew nearly tenfold between 1940 and 1945, peaking at about $93 billion - $1.2 trillion in today's dollars. By 1948, it had fallen to $30 billion, or about a third of 1945 outlays, according to federal records.

Taxes went down as well during that period, though rates stayed high. The top tax rate in 1945 was 94%. The rate was cut to 91% by 1948, and the threshold for paying that rate went up from about $200,000 to more than 1.8 million in current dollars, according to the Tax Foundation, a nonpartisan Washington research group.

But demobilization was not as smooth as Paul portrays. The U.S. economy saw two recessions between 1945 and 1950 as veterans returned home and factories retooled for civilian work. The war bonds sold to finance the conflict weren't retired until the early 1980s, according to the Treasury Department, though revenue from the eventual postwar boom kept the debt manageable. The top tax rate stayed at 91% until the Kennedy administration.

Most significantly, the libertarian congressman underplays the role of the federal government in helping veterans coming home. The Employment Act of 1946 "committed the federal government to take all practical measures to promote maximum employment, production, and purchasing power," according to a 2003 study by the Bureau of Labor Statistics.

Then there is the law many historians consider one of the most significant pieces of legislation of the 20th century: the Servicemen's Readjustment Act of 1944, better known as the G.I. Bill. It sent millions of veterans to college, provided government backing for home loans and is credited with laying the foundations of the modern middle class.

The verdict: Misleading. Paul is correct that spending and taxes came down after 1945, as would be expected at the end of a conflict that saw the entire might of the United States thrown into the war effort. But he leaves out both the long-term debt and high tax rates left behind as Washington paid off the war and gives short shrift to the efforts made to resettle veterans who came home.

 

[AngryCanadian]

I think CNN is wrong on this on, another Ron Paul Trashing Article but CNN Sure Loves Surging Newty and Romeny.

 

[Kords21]

Wow, CNN printed something beyond "and Ron Paul was also on stage?"' I'm shocked

 

[mczerone]

1 - he was right that there were no "jobs program"

2 - the "recessions" that we're measured then were based on the GDP, which went down only because govt spending went down. The quality of life of general Americans didn't decline.

 

[opinionatedfool]

That's interesting. CNN liars doing fact checks. Real trust worthy.

 

[Steve-in-NY]

They couldnt fact check their way out of a paper bag.

 

[angelatc]

The U.S. economy saw two recessions between 1945 and 1950 as veterans returned home and factories retooled for civilian work.

Wow. Two recessions in 5 years? Apparently they weren't very big or long-lasting.

 

[Diurdi]

So CNN is essentially taking the Keynesian economic view of what happened and then saying that because Paul's free market oriented view highlights different causes for the recovery, that he's misleading.

 

[Dsylexic]

keynesians like samuelson predicted a bigger depression actually.

 

[ZanZibar]

Keynesians giving their economic opinion?! HA!

Read Bob Murphy's book "Politically Incorrect Guide To The Great Deppression And The New Deal"

http://www.amazon.com/Politically-I...sr_1_sc_1?ie=UTF8&qid=1327070701&sr=8-1-spell

 

[howardroark]

CNN is technically right, but obviously misleading. While the highest tax rates were very high, nobody actually paid them. There were so many deductions and loopholes available that nobody had to pay the insane 91% tax rate. That's just common sense. Nobody would work if they were only able to take home 9% of what they made.

 

[Publicani]

CNN is using the fact that there are always some government spending to make a case that RP is wrong. It actually confirms RP point that overall spending and taxes went down.

"The facts: The end of World War II did see a sharp decrease in federal spending as the United States demobilized. The U.S. budget grew nearly tenfold between 1940 and 1945, peaking at about $93 billion - $1.2 trillion in today's dollars. By 1948, it had fallen to $30 billion, or about a third of 1945 outlays, according to federal records.

Taxes went down as well during that period, though rates stayed high. The top tax rate in 1945 was 94%. The rate was cut to 91% by 1948, and the threshold for paying that rate went up from about $200,000 to more than 1.8 million in current dollars, according to the Tax Foundation, a nonpartisan Washington research group."

That's all Ron Paul was saying.

 

[randomname]

Someone care to contact these fact checkers (CNN's Julie In, CNN's Lindsey Knight, CNN's Matt Smith) about Santorum lying about Paul's "50%" NRLC record?

 

[kylejack]

Recession of 1945: The decline in government spending at the end of World War II led to an enormous drop in gross domestic product, making this technically a recession. This was the result of demobilization and the shift from a wartime to peacetime economy. The post-war years were unusual in a number of ways (unemployment was never high) and this era may be considered a "sui generis end-of-the-war recession".[34]

Recession of 1949: The 1948 recession was a brief economic downturn; forecasters of the time expected much worse, perhaps influenced by the poor economy in their recent lifetimes.[35] The recession began shortly after President Truman's "Fair Deal" economic reforms. The recession also followed a period of monetary tightening.[30]
http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

 

[kylejack]

Someone care to contact these fact checkers (CNN's Julie In, CNN's Lindsey Knight, CNN's Matt Smith) about Santorum lying about Paul's "50%" NRLC record?

56% in 2006...he may have been referring to another year.

 

[sailingaway]

Ron Paul didn't at all give short shrift to other acts to resettle veterans and absolutely said we should do what we could for veterans. He was speaking of spending and tax cuts vs STIMULUS proposed by Keynesians, and they proved his point, even the way they put it. They were cut. You can look at rates or you can look at revenues, which is what Ron is likely looking at since these days we structure our taxes very differently.

 

[sailingaway]

1 - he was right that there were no "jobs program"

2 - the "recessions" that we're measured then were based on the GDP, which went down only because govt spending went down. The quality of life of general Americans didn't decline.

this is key. GDP going up under Obama means we are borrowing to spend more in government, not that we are producing anything, as well.

 

[Jeremy Tyler]

GDP going down does not mean recession when only reason GDP was so high was because of govt. spending. People have to live on rations during WW2 and we saw a huge growth in the wealth of people when the war ended and people were no longer rationalized. The idea that this was a recession is absurd.

 

[sailingaway]

56% in 2006...he may have been referring to another year.

that would be pretty misleading too -- out of all your 22 years in Congress ONE YEAR you got 56% (likely because they wanted something in a bill that had other unConstitutional stuff in it) is very different than what Santorum said.

 

[slamhead]

Ron Paul should have just said that there were already private organizations helping returning veterans get employment. He should of just said the private sector can do it much better than a new GSE.

One thing that I did not understand in Paul's explanation was the liquidation of the debt? Which debt? War bonds?