No deal is the best deal.

• Author: Folsom, Burton W., Jr.
• Position: ECONOMIC OBSERVER - New Deal programs

THE NEW DEAL probably has been the greatest political force in the U.S. during the last 100 years, and Franklin D. Roosevelt probably has been the most influential president during this time. In our current economic crisis--which some have compared with the Great Depression--many critics are calling for more Federal programs and a "New New Deal." There are three reasons the country should dread such a deal from Pres. Barack Obama, although these fears already are being realized as the Administration implements its stimulus plan while attempting to prop up banks, insurance companies, and automakers, among others.

First, the Federal programs in FDR's New Deal did not lower unemployment. Sure, the Works Progress Administration (WPA) built roads; the Tennessee Valley Authority put up dams; and the Civilian Conservation Corps planted trees. However, every dollar that went to creating a Federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors.

What is worse, some New Deal programs had terrible unintended consequences. The Agricultural Adjustment Administration, for example, overhauled agriculture by paying farmers not to produce on part of their land. After farmers took the Federal dollars, the U.S. developed shortages of the very crops taxpayers were paying farmers not to produce. By 1935, the U.S. was importing almost 35,000,000 bushels of corn, 13,000,000 bushels of wheat, and 36,000,000 pounds of cotton. Simultaneously, we had an army of bureaucrats in the Department of Agriculture to inspect farms (via, in some instances, aerial photography) to ensure farmers were not growing the crops we were importing into the country.

Second, the taxes to pay for the New Deal became astronomical. In 1935, Roosevelt decided to raise the marginal tax rate on top incomes to 79%. Later he raised it to 90%. These confiscatory rates discouraged entrepreneurs from investing, which prolonged the Great Depression.

Henry Morgenthau, FDR's loyal Secretary of the Treasury, was frustrated at the persistence of double-digit unemployment throughout the 1930s. In May 1939, with unemployment at 20%, he exploded at the failed New Deal programs. "We have tried spending money," Morgenthau noted. "We are spending more than we have ever spent before and it does not work.... We have never made good on our promises.... I say after eight...