Looking at the way government has managed the United States economy since the Great Depression, it is clear that many Democrats have dropped the ball in this particular area. Although long-term consequences are much more challenging to track than short-term, many times the underlying issue can be linked to a specific decision. These issues involved decision making from those in positions of power, and would ultimately lead to some of the darkest times in the history of this country. One of the advantages here is the ability to now look back and identify the signals early enough so that disaster can be averted in the future. Here are some of the most horrible economic mistakes Democrats made over the last century.
1.LBJ Refusing to Raise Taxes for Funding Vietnam War
When Lyndon B. Johnson opted for butter and guns rather than risking Congressional retrenchment, he set a course in motion that would affect the country for years to come. Johnson had the opportunity to include a tax increase in the Fiscal 1966 budget to cover the growing costs of the Vietnam War. He chose to buy more weapons. The consequence of this decision was overstimulating the full-employment economy, causing consumer price inflation to triple from 2% to 6% in only four years. The Great Inflation left behind by Lyndon Johnson should rank near the top of the list when it comes to the most horrible economic mistakes Democrats made over the last century.
2.The Stop-and-Go Policies of the Seventies
When stagflation took hold in the seventies, the Carter administration had a very difficult time in breaking the vicious cycle. His economic policy at the time oscillated between stimulating the employment rate and anti-inflation restraint. The end result was a disastrously ineffective economic austerity program, part of the reason that Jimmy Carter only enjoyed one term in office. This one-term president had a misery index of nearly 20 as Election Day approached. When voters across the country eventually took to the polls, the Carter administration was responsible for a 7% unemployment rate and inflation ballooning to 13%. The policy makers at that time simply underestimated the significance of inflation as a result of productivity decline. His fiscal disciplinary actions were no match for the exploding rate of inflation.