The raw deal.

• Author: Root, Damon W.
• Position: Soundbite - Burt Folsom interview - Interview

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In his provocative new book New Deal or Raw Deal? (Threshold), Hillsdale College historian Burt Folsom takes aim at the iconic legacy of President Franklin Delano Roosevelt. Drawing on his own research and that of economists such as Milton Friedman and Robert Higgs, Folsom provides compelling evidence that FDR prolonged the Great Depression and permanently damaged America's political and economic landscape. Associate Editor Damon W. Root interviewed Folsom in February.

Q: You argue that the New Deal actually harmed the poor.

A: Roosevelt secured more revenue during the 1930s from excise taxes than from income taxes. For example, we had a six-cent tax on cigarettes, and that hits poor people disproportionately hard. When we look at a lot of New Deal programs, we see direct subsidies to special interest groups paid for heavily by excise taxes.

Q: Nobel laureate economist Paul Krugman says FDR didn't spend enough.

A: It's a clever argument: If you keep spending and it doesn't work, that means that you need to spend more, and then when you spend more and it doesn't work, that means that you need to keep spending even more. One of the ways to look at the New Deal is that as we acquired more debt and the income taxes went up and the excise taxes went up, there was less reason for people to have any confidence in the economy. Forbes, Fortune, and other publications began to poll businessmen and ask them, "Do you have confidence in the economy?" They would say, "No, I don't, and I have no intention of expanding because I don't have confidence." Therefore we don't get expansion and therefore unemployment stays high.

Right after World War I, we had tremendous unemployment and the income tax was up to 73 percent. So when Calvin Coolidge came in, his strategy with Treasury Secretary Andrew Mellon was to cut taxes and cut spending. We cut the income tax down to 25 percent, and we had budget surpluses every year of the 1920s. We cut one-third of the national debt off. The result from the tax cuts and the budget surpluses was an enormous stability and expansion of...